CHAPTER 4
Changes to the System and its Institutions - Part B
B. AGREEMENTS
1. GENERAL
4.153 A major aspect of the Bill is to refocus bargaining on the individual
and their employer. The core element of the Workplace Relations Bill
is provision for enterprise agreements which place responsibility for
bargaining on individual employees and employers. Three types of agreements
are provided for: Australian Workplace Agreements (AWAs), which may
be negotiated collectively but which must be individually signed; union
Certified Agreements (CAs) and non-union Certified Agreements, both
of which, can be made and signed collectively. Enterprise Flexibility
Agreements, which were introduced with the Industrial Relations Reform
Act 1993, will be phased out.
4.154 The procedure for establishing AWAs is said by the Government
to be streamlined and simple. To be accepted for filing by the Employment
Advocate, an AWA must be in writing, must be signed, dated and witnessed,
and must name the employer and employee. A declaration must be made
by the employer that the statutory requirements have been met. AWAs
must meet the 7 minimum conditions specified in the Bill, including
rates of pay no less than an employee would have received under the
award for working the same hours at the same times. Employees will be
able to appoint a bargaining agent, such as a union, but uninvited external
involvement would be excluded.
4.155 Certified Agreements are scrutinised by the AIRC and will be
able to be made either between employers and unions or directly between
employers and groups of employees. They must have the endorsement of
a majority of the employees involved and all employees concerned must
be provided with access to a written copy of the agreement at least
five days prior to their endorsement being sought. They are non-discriminatory,
and also must include the 7 statutory minima underpinned by the relevant
minimum award wage (the existing 'no disadvantage test' is thus removed).
The legislative recognition of individual agreements is a substantial
deviation from previous Federal industrial relations law. For the
first time, individual agreements will be able to undercut Federal
award wages and conditions.
4.156 Employer groups believe that for industry to flourish there needs
to be much greater flexibility in the way in which businesses can employ
labour. According to employers flexibility can be attained most effectively
by allowing employment contracts to be made at the basic unit of employment,
the enterprise itself. According to the Victorian Employers' Chamber
of Commerce and Industry (VECCI), the Bill 'removes many of the artificial
and unnecessary restraints that have in the past hampered the spread
of enterprise based arrangements'. [65]
In particular, it addresses the deficiencies evident in the previous
system of Enterprise Flexibility Agreements and provides an alternative
set of provisions that are adequately balanced by a set of safeguards
and protections for employees.
4.157 ACCI notes that the Bill provides for a range of options for
agreement:
- individual Australian Workplace Agreements AWAs);
- collective Australian Workplace Agreements (signed individually);
- single enterprise Certified Agreements (CAs);
- multi-employer (sectorial) Certified Agreements;
- individual or collective over-award agreements; and
- State registered agreements.
4.158 While acknowledging that providing for individual agreements
in the workplace is a substantial change from the current system, ACCI
asserts that this move is simply formalising an already increasing emphasis
on individual arrangements in the workplace. This trend is well illustrated
by the increasing use of contracts, particularly in the public sector.
4.159 Furthermore, employers feel that the move away from union involvement,
as reflected by the provision of AWAs and the non-union stream of CAs,
reflects the need for structures that will allow employees and employers
who have chosen not to belong to a union to make alternative legal arrangements
to those provided through the awards system. The submission from the
South Australian government noted that:
… by restricting bargaining processes only to those workplaces
which are prepared to deal directly with an external union, the current
laws effectively disenfranchise the 70% of employees in the private
sector who are not members of a union and the overwhelming majority
of private sector enterprises which do not have union representation
present. [66]
4.160 However it should be noted that under the existing Industrial
Relations Act Enterprise Flexibility Agreements are available without
the necessary involvement of a union (though eligible unions, if they
wish, have a right to be heard in connection with the Commission approving
such agreements). [67]
4.161 According to supporters of the legislation, sufficient protections
are provided in the Bill for employees who enter into agreements: either
through the registration of CAs, or through the lodgement of AWAs, backed
up by enforcement through the courts. ACCI claimed that 'strenuous efforts
have been made to ensure that [agreements] do not lead to exploitation'.
[68] These efforts include legal
obligations on employers:
- not to apply duress in achieving agreements;
- not to knowingly make a false or misleading statement to persuade
someone to make an agreement;
- to ensure that the agreement complies with the minimum conditions;
- to provide the employee with information from the Employment Advocate;
- to file the statement with the Employment Advocate and declare that
it complies with the legal requirements;
- not to file a statement that the employer knows or ought reasonably
to know is false; and
- to provide the employee with a copy of the agreement and a copy
of the Employment Advocate filing receipt.
4.162 The group Australian Business Limited stated in its submission
to the Committee that the proposed system of enterprise bargaining would
greatly assist small businesses. They would benefit by being able to
enter into agreements that would cover the whole work site thereby avoiding
the unnecessary complexity of multiple award coverage applying to a
business that has only a small number of employees. The new system would
make it easier for all parties to understand their legal rights and
obligations. [69]
4.163 More generally, employers groups strongly supported this initiative
in the interests of improving the productivity of the economy:
Reform of employment laws is not an end in itself, it is done for
clear and justifiable economic purposes, with the aim of assisting
the development of a better standard of living for all Australians.
[70]
4.164 They foresaw not only direct economic benefits but also a more
satisfying employment relationship -
The government's initiatives have strong support from the resources
industry as they will provide a framework in which responsible employers
will have an opportunity to develop close bonds with their employees
to the benefit of all participants in the employment contract and
Australia at large. [71]
4.165 In the case of Hamersley Iron Ore Pty Ltd, for example, the Committee
was given evidence both of productivity growth and greatly changed work
organisations and workplace relationships since a move from awards to
individual contracts in 1993:
Towards the end of 1993, the opportunity was there when the state
government,we were under the state jurisdiction and we still are,brought
forward its Workplace Agreements Act. That was the vehicle we chose
to offer all award-regulated employees the opportunity to join salaried
staff. The target was to take away the basis of the them-us mentality
and to generate a single status of employees … Our employees
had the opportunity of joining staff and they did so willingly, en
masse - and they behaved like staff. There is no surprise in that.
But the rate of change of the culture was just incredible. [72]
The major change of culture for me has been an unhampered opportunity
to show the company what abilities I possess other than just being
able to drive locomotives, to use those abilities and to progress
in the organisation considerably faster than would have been possible
under the award because of the opportunity to use and display my abilities.
[73]
4.166 However, many unions, community organisations and academic commentators
believe that the imbalance between the bargaining positions of employer
and employee in the negotiation of individual agreements is so great
that many employees will be placed in a situation where negotiation
becomes a 'take it or leave it' option. which, given the current labour
market surplus, is in fact no option at all. This may also apply to
job transfers and promotions rostering just to name a few instances
where the 'choice' given by employers is to either sign an agreement
or forgo receiving the transfer or promotion. The issue of relative
bargaining power is one which recurs throughout the discussion ahead.
2. SPECIFIC CONCERNS
4.167 There are three areas of concern which are relevant to both the
proposed Certified Agreements and the proposed Australian Workplace
Agreements. They are:
- the minimum conditions that must be included in a CA and AWA;
- the provisions for termination of a CA and AWA; and
- protections for those seeking to collectively negotiate a CA.
'No Disadvantage' versus Minimum Conditions
4.168 The current Industrial Relations Act provides that under any
enterprise bargaining arrangement there be a 'no disadvantage test'.
This test covers the totality of an employee's award terms and conditions,
and ensures that enterprise bargaining does not result in an overall
reduction in the terms and conditions of employment compared to those
provided for in the appropriate award (or if it does, this is in the
public interest).
4.169 The Workplace Relations Bill repeals the 'no disadvantage test'
and replaces it with a so-called 'no less favourable test'. This requires
that the terms and conditions of Certified Agreements and Australian
Workplace Agreements must be 'no less favourable' than the seven minimum
conditions which are detailed in Schedule 13 of the Bill.
4.170 The Government says that this change provides the right balance
between the need to provide employers with a degree of flexibility in
the terms and conditions of employment under which their workforce can
be employed and the need to give employees a degree of protection in
their terms and conditions of employment.
4.171 This aspect of the Government's bill received much support from
employer groups.
4.172 According to these groups, sufficient protections are provided
in the Bill for employees who enter into agreements - either through
the registration of CAs, or through the lodgement of AWAs - backed up
by enforcement through the courts.
4.173 For example, generally the Australian Chamber of Commerce and
Industry (ACCI) claimed that 'strenuous efforts have been made to ensure
that [agreements] do not lead to exploitation'. [74]
These efforts include the legal obligations on employers mentioned above.
4.174 In fact, ACCI argued that the Government is going well beyond
the minimum conditions proposed by the private sector. In ACCI's view
core conditions for agreements should consist only of a minimum hourly
rate of pay; four weeks paid annual leave; one week's paid sick leave;
twelve months unpaid parental leave after twelve months service; and
equal pay for work of equal value without discrimination on the basis
of sex. [75]
4.175 However, the replacement of the 'no disadvantage test' by the
'no less favourable than statutory minima test' was criticised by a
number of groups on the basis that it would expose employees to a reduction
in their existing wages and conditions.
4.176 Objections were raised in evidence to the replacement of one
set of protections, which have functioned effectively since their introduction,
with another set which would almost guarantee a worsening of employment
entitlements and conditions for employees with weak bargaining power.
4.177 The fact that Schedule 13 of the Bill sets the minimum conditions
is said to be no substitute because those seven minima do not cover
many existing award conditions. For example, the ACTU - supported by
many others in evidence to the Committee - stated that 'the exclusion
of significant award entitlements from the minimum conditions [of Schedule
13] will allow agreements to substantially erode entitlements'. [76]
4.178 Moreover, there was concern expressed that the statutory minima
would soon become the actual conditions of employment. The fact that
the wage component of the minima is fixed by reference to the relevant
award, and that awards under the Bill will only provide minimum wages
(as discussed earlier), makes this problem particularly acute. The fear
is that for many employees the award wage calculated on a 'minimum rates'
basis will become the actual wage under an enterprise agreement.
4.179 Thus, while the Government states that the establishment of statutory
minimum conditions is specifically for the 'protection of the low paid',
[77] many witnesses maintained that it will
be these very people who will suffer the most.
4.180 Indeed, the submission from the Industrial Law section of Maurice
Blackburn & Company, Barristers and Solicitors, doubted whether
this protection would be effective at all. They referred to their experience
under the Victorian system where unscrupulous employers have sought
to utilise their superior bargaining positions to force employees to
be engaged under contracts which offer far less than previously existing
award conditions, or even to pressure existing employees to enter new
agreements which also dramatically reduced entitlements. Maurice Blackburn
are concerned that the proposed Federal system will have the same result.
[78]
4.181 The Victorian Trades Hall Council also referred to the likely
consequences of the change in the reality of the employment context.
They referred to the provision for employees to be paid wages 'over
a period no less than wages that would have been earned over the period
under the award' (Bill, section 170XA). This means in theory that an
employee can seek comparison during the life of an Australian Workplace
Agreement between the agreed rate and that which the employee would
have received under the award. However, the Victorian Trades Hall Council
argued that the reality was that very few employees, particularly those
with little or no bargaining power, were likely to avail themselves
of the comparison before or while they had a job and, if they did, they
would be unlikely to pursue any discrepancy during the period of employment.
Fear for their future employment would be an overwhelming factor. [79]
4.182 A number of submissions also cast doubt on the Government's assertion
that the existing 'no disadvantage test' was not offering employers
an appropriate degree of flexibility. For example, the following exchange
occurred between the Chair and Mr Geronimos of the Western Australian
Council of Retailers:
Chair: Within your experience you have achieved an arrangement
within the Federal system that provides you with sufficient flexibility
under the Federal no disadvantage test; is that correct?
4.183 Similarly, the following exchange between Senator Sherry and
Mr Steel of the South Australian Chamber of Commerce and Industry:
Senator Sherry: We have had outlined to us today the various
provisions in the South Australian jurisdiction, for example, the
no disadvantage test for workplace agreements, or the South Australian
equivalent. The no disadvantage test takes into account the overall
package of the agreement, with issues such as testing and penalty
rates, shift provisions, the base rate of pay, et cetera. Does your
organisation agree with that part of the South Australian industrial
legislation?
Mr Steel: I have to say that when that legislation was formulated
we agreed and supported that legislation and we work with that legislation
today.
Mr Steel: In this context, yes, I agree with that legislation.
[81]
Conclusion
4.184 The majority of the Committee views these proposals with very
serious concern. The protection of conditions underpinning agreements
is one of the most important provisions available to ensure that employees
are treated fairly in relation to bargaining. The Government's proposal
in this regard represents a fundamental watering down of the existing
protection.
4.185 In addition, the majority of the Committee is concerned about
the removal of awards as the underpinning of direct bargaining. It is
recognised that as conditions and circumstances change, the benchmark
for setting agreements should change too. Were it otherwise, it would
not be long before the benchmarks became irrelevant and as such did
not provide the protection to employees that they were meant to. This,
in our view, is one of the great weaknesses with the Government's proposal.
4.186 We see this as entirely inappropriate for three reasons.
4.187 Firstly, the majority of the Committee takes the view that this
is inconsistent probably with the letter and certainly with the spirit
of the conciliation and arbitration power of the Constitution, which
does not permit the Commonwealth Parliament to set terms and conditions
of employment (See also chapter 10).
4.188 Secondly, the statutory minimums contained in Schedule 13 (other
than wages), almost by definition, are unrelated to the industries they
are meant to cover. Because such general provisions cannot take into
account the differences between industries, it must by necessity be
crafted in an attempt to make one size fit all. The effect of this is
two fold. It deleteriously affects employees because the only way such
conditions can be moulded to cover all sectors of the economy is by
pursuing a 'lowest common denominator' approach. It also affects business
in that the minimums are not tailored to meet the needs of their industry.
This means that the minimums cannot be crafted in such a way as to assist
in the promotion of issues of relevance to their particular needs.
4.189 Thirdly, it effectively means that the subject of minimum conditions
becomes enmeshed in the political process. To the extent that these
minimums are meant to reflect and move with prevailing conditions in
industries (and we say that they should), there could not be a more
inappropriate forum for these matters to be changed. The United States
experience with legislated minimums is exactly to the point, where it
took many years of political wrangling to effect a change in clearly
substandard minimum wages. This is a situation that the Committee does
not want to see occur in Australia.
4.190 In the view of the majority of the Committee it is far more appropriate
that such matters be the subject of consideration by an independent
statutory body (namely, the Australian Industrial Relations Commission)
which balances all considerations relevant to an industry. This allows
changes to be made in a fair and impartial environment in a way that
reflects both the needs of employees generally and the particularities
of the relevant industry or company. This system also permits new standards
to be developed over time. For instance, a decade ago, it could not
have been anticipated that parental leave would be developed into the
current community standard. As a result, we see great merit in the principle
of ensuring that the benchmark for bargaining is the relevant award,
specifically all the terms and conditions of that award.
4.191 The majority of the Committee considers that there is no justification
for the removal of the 'no disadvantage test'. We consider that the
proposed 'no less favourable than statutory minima test' is not adequate
to protect employees and could very well lead to many employees, particularly
those with little or no bargaining power, being worse off. Given the
Prime Minister's rock solid guarantee that no-one would be worse off
under these proposals this is something which we cannot accept.
4.192 The majority of the Committee therefore recommends that this
proposal (including the enactment of Schedule 13 of the Bill) should
not be implemented.
4.193 The Australian Democrats Member of the Committee agrees with
this analysis but has additional comments in his Supplementary Report.
4.194 The Government members of the Committee disagree with the
conclusion and oppose the recommendation.
Termination of Agreements
4.195 The provisions for both Certified Agreements and Australian Workplace
Agreements provide that after the nominal term of an agreement has expired,
either party can unilaterally terminate the agreement with one month's
notice. Once done, the enforceable conditions of employment revert of
the base award underpinning the agreement (assuming that there is one!).
This is in contrast to the existing arrangements where an agreement
continues in existence and force after its period of operation expires
until it is substituted by another agreement or the Commission varies
the agreement.
4.196 The Government's rationale for this change is that as a matter
of choice an employer or employee who has entered into a contractual
arrangement for a specified period should be entitled to terminate that
arrangement after the period has expired.
4.197 However, this proposal was subject to criticism by a number of
witnesses, who felt that the employer's ability to terminate the agreement
unilaterally was an unfair weapon in the bargaining for a new agreement.
For example -
Where terminated in such a way, conditions of employment are reduced
overnight to the minimum conditions of employment in the award. Not
only is this unacceptable as a matter of principle, it also provides
an employer with an effective 'club' against employees in relation
to negotiating a subsequent agreement. [82]
Presumably, once the agreement is terminated, employees will revert
to award conditions. In some cases , this may occur where there have
been a series of certified agreements over a number of years. The
award conditions may well be markedly out of date, particularly insofar
as salary rates are concerned. It is not difficult to imagine the
imbalance in bargaining power that would result in discussions for
a new agreement where employees are suddenly thrust back onto greatly
reduced conditions of employment. [83]
Conclusion
4.198 The majority of the Committee believes that the effect of the
Government's proposal will be to introduce significant instability into
the bargaining process, instability which outweighs any benefits which
may accrue from the capacity of parties to exercise a so-called free
choice. The following comments are relevant to this.
4.199 Firstly, given the so called 'award simplification' process proposed,
much greater stress will be placed on agreements, with many items previously
in awards now to be provided for by agreements where possible. Many
such matters do not lend themselves to being constantly subject to the
threat or prospect of termination. Superannuation arrangements, accident
make up pay arrangements, consultation provisions are but a few examples.
Once agreed, these matters should not be subject to unilateral termination
after the effluxion of time. Indeed, if workplace agreements are to
be used as vehicles for reform and increasing productive efficiency
(as is hoped by the Government), they should include provisions which
go to longer term goals and processes and which are not appropriately
terminated simply after the passing of time.
4.200 Secondly, while available to both parties, the simple fact is
that overwhelmingly it is employees' conditions which will be the subject
of unilateral termination. This is because, more often than not, the
matters in agreements relate to employees' entitlements rather than
employees' obligations. This means that employees have usually much
more to lose than employers.
4.201 In a bargaining context this can be disastrous. It effectively
means that an employer could threaten their workforce with significant
reductions to existing entitlements if they do not agree to proposals
for a new agreement. In addition, it may well lead to an increase in
industrial action. There seems little justification for effectively
requiring employees to take industrial action in order to simply retain
existing conditions. The public interest is certainly not served by
such a system.
4.202 The view of the majority of the Committee is that it is far more
orderly and convenient for agreements, once made, to continue until
amended by later agreement or by order of the Commission. This permits
expired agreements to be reviewed and varied where there is a case for
variation (the fact that it is an expired agreement would be relevant
in those circumstances), without the disorder associated with the wholesale
non-consensual abandoning of existing arrangements which is inherent
in this proposal.
4.203 The majority of the Committee therefore recommends that this
proposal (proposed sections 170MH and 1 70VM) should not be implemented.
4.204 The Government members of the Committee disagree with the
conclusion and oppose the recommendation.
Collective Bargaining
205 An important consequence of the provision in the Bill for individual
agreements is that it increases the possibilities for an employer to
discriminate in terms of wages and conditions against employees who
wish to bargain collectively rather than individually. This was a matter
of great concern among many who made submissions. A major example given
was the situation in Weipa, about which evidence was given to the Committee,
where the employer offered more generous wages and conditions to those
who signed individual contracts. [84]
4.206 Further, by increasing the emphasis on individual bargaining
and formalising individual agreements, and by removing powers of the
Commission used to protect collective processes, the Bill significantly
reduces the emphasis on the process of collective bargaining.
4.207 In the Weipa case employees who had refused individual contracts
claimed intimidation:
When they brought the contracts in, there was pressure. You were
put in a room with your manager and your superintendent, the two people
where you work who are capable of firing you on the spot for a gross
misdemeanour. They said, `This is your contract. This is how we have
worked it out and this is the money we will give you.' Then they set
you an artificial deadline and tell you that you have to have the
contract signed by then, otherwise it will never be available to you
again. So people were under pressure to sign for the dollars there.
[85]
4.208 On the other hand, the Australian Industrial Relations Commission,
in considering the Weipa dispute, while it found that the company's
policy had discriminated and continued to discriminate against individual
award employees, was satisfied that there was widespread acceptance
and support of the staff contract system amongst employees -
Senator Ferguson: At conclusion No. 9 the commission said:
'We are satisfied that there is widespread acceptance and support
amongst employees for the staff contract system.' Then they go on
to say: 'It cannot be said on any view on the evidence before us that
the staff contract system, since its introduction early in 1994, has
resulted in these employees being disadvantaged.' [86]
4.209 The Bill prohibits coercion or duress in relation to making Certified
Agreements or Australian Workplace Agreements. [87]
However the majority of the Committee considers that these provisions
do not sufficiently account for the practical possibilities for employers
to discriminate in more or less subtle ways in order to encourage employees
to sign agreements.
Conclusion
4.210 Many of the submissions seem to suggest that the Bill should
not recognise individual contracts. This in our view is unrealistic.
It fails to recognise the extent to which such contracting already is
undertaken in the system.
4.211 For our purposes, the question is not whether the bill should
or should not provide for individual bargaining and contracting, but
rather whether provisions should be included in the Bill to promote
and encourage collective bargaining and to ameliorate the adverse consequences
that individual bargaining may cause for those who wish to bargain collectively
(which have been noted above).
4.212 In the view of the majority of the Committee, the legislation
cannot and should not ignore the ability of an employer to undermine
access to the protection of engaging in collective bargaining. Thus
this form of bargaining needs to be promoted and encouraged. Thus as
the workers from Weipa demonstrated, the ability to apply pressure on
employees to abandon collective protectionism is all too real. Further,
we believe that there is no reason at all why the decision to take up
the protection of collective bargaining should be the subject of negotiation
between the parties. There should be no ability for an employer in any
way to entice or pressure employees to abandon this protection.
4.213 Given this, the majority of the Committee believes that the legislation
must ensure that there can be no discrimination against those who choose
to bargain collectively as opposed to individually. There is a fundamental
need to build into the legislation protections for those who choose
to bargain collectively. We also note that this will have the beneficial
consequence of promoting and encouraging collective bargaining rather
than simply providing for it as one of a number of options.
4.214 The Bill places greater store on the process of bargaining to
produce an appropriate industrial relations outcome than is presently
the case. As has been indicated, this presumes an equality of bargaining
power and experience. While many of the projections can be directed
to outcomes (the no disadvantage test is an example of this), the quality
of the bargain is necessarily a result of the quality of the process
dealing with it. Thus an important part of the menu of protections that
the Act must provide go to ensuring some order in the bargaining process.
In this regard, we note the many witnesses who appeared before the Committee
who relayed concerns not only concerning occurrences related to the
conditions they worked under but also the inability to actively participate
in the process that led to an agreement.
4.215 Under the existing provisions, the Australian Industrial Relations
Commission has powers to ensure efficient bargaining and bargaining
in good faith. This does not involve the power to force employers to
make concessions. It does allow the Commission to ensure the process
is as conducive to obtaining an agreement as appropriate. This may include
the ability to order the parties to meet and ensure that neither acts
in a way detrimental to the bargaining process.
4.216 It is possible that the Commission retains the ability to make
orders regarding the conduct of bargaining despite the repeal of the
good faith bargaining provisions because of the scope of S 111(1)(r).
The majority of the Committee does not express a view on this. The majority
of the Committee does, however, find value in having the Commission's
powers properly outlined a way that will allow greater access to its
conciliation function.
4.217 The majority of the Committee therefore recommends that amendments
be introduced into the Bill to meet these concerns.
4.218 The Government members of the Committee disagree with the
conclusion and oppose the recommendation.
Union Role in Review of Agreements
4.219 The Bill proposes to limit the ability of a union to be heard
in Commission proceedings in relation to the certification of a Certified
Agreement, unless it is proposed that the union be bound. In the case
of Australian Workplace Agreements unions have no role at all.
4.220 The Government's rationale for this exclusion is that the parties
to an agreement should be free to seek certification of their agreement
free of so-called 'unwanted third party interference'.
4.221 This proposal received support from most employer groups. For
example:
The approach ACCI and the private sector generally have always taken
to the role of unions is that they have a role where a member or members
requests their involvement, and this is the philosophical approach
to the role of trade unions adopted in the Bill.... The Bill cannot
in any sense be described as an anti-union Bill on this point. It
does allow for example unions to be party to agreements and to have
a reasonable opportunity to participate in negotiations even if unionised
employees are a minority in the workplace, even if there is only one
union member out of hundreds of employees. This is a generous provision.
[88]
4.222 However the union movement was strongly opposed to this exclusion.
4.223 On behalf of the union movement the ACTU said:
… this seems to be based on the view that the only role of a
union in such proceedings would be to obstruct certification. …
Unions have a very positive role to play in such proceedings which
can be helpful to the Commission in ensuring that the agreement meets
the requirements of the legislation. [89]
4.224 The ACTU also sees this as discriminatory because employer organisations
will not be barred. [90]
Conclusion
4.225 The majority of the Committee does not believe that it is in
the interests of employees, or the community at large, for unions to
be totally excluded from review processes, even where they may not be
a party.
4.226 There are several reasons why this is so. Firstly, unions can
play a useful role in providing the Commission with information and
submissions to assist in its deliberations. Perhaps the best example
is the unions' knowledge of industry standards, of which the Commission
should be completely conversant if it is to properly carry out its review
function. Often this also allows the commission to obtain a different
perspective then can be offered from the parties immediately involved.
4.227 Secondly, unions have a legitimate interest in representing people
who may be potentially affected by the proceedings, including the interests
of persons who may be prospectively affected. For example, in the absence
of union involvement there is no party which will represent the interests
of future employees whose employment will be governed by the agreement
in question. There was a startling example of the injustice this can
cause in Tasmania where an agreement was made in relation to the Banjo's
bakery which provided that present employees would be on better wages
and conditions then any future employees. [91]
4.228 Thirdly, and perhaps most fundamentally, unions are of course
parties to awards, and so any certified agreement which is to override
such an award necessarily affects the interests of unions as parties
to the award. It is a most basic principle of natural justice that where
an organisation's interest may be affected it must have a right to be
heard before that occurs.
4.229 The majority of the Committee therefore believes that unions
should have the right to intervene in certification hearings whenever
that it necessary to ensure that all relevant facts and issues will
be disclosed, that the interests of all persons potentially affected
by the matter will be protected, or that the interests of the union
itself is not affected before the union has an opportunity to be heard.
4.230 The Labor members of the Committee therefore recommend that
the Bill's provisions concerning the review process for both certified
agreements and AWAs should be amended to include a right for unions
to intervene whenever necessary to ensure that all relevant facts and
issues will be disclosed, that the interests of all persons potentially
affected by the matter will be protected, or that the interests of the
union itself are not affected before the union has an opportunity to
be heard.
4.231 The Australian Democrats member of the Committee does not
support this recommendation. Further comment is provided in his Supplementary
Report.
4.232 The Government members of the Committee disagree with the
conclusion and oppose the recommendation.
Certified Agreements
4.233 There are three further areas of concern specific to Certified
Agreements:
- Non-union certified agreements;
- Consultation requirements; and
- Multi-employer agreements.
Non-union Certified Agreements
4.234 Certified Agreements will be able to be made either between an
employer and a union (as at present) or between an employer and a group
of employees without the involvement of a union (a new provision introduced
by this Bill).
4.235 The rationale for the non-union stream, advocated by both the
Government and employer groups, is that employers and employees should
be free to choose to enter into a collective agreement without union
involvement and with Commission review.
4.236 Union groups opposed the creation of a non-union stream of Certified
Agreements, predicting that this will encourage employers to pressure
employees to make non-union agreements. For example -
Although the Bill does not give primacy to an agreement with a union
over a non-union agreement, the industrial practicality is that only
employers will be in a position to choose between the two processes.
The absence of any obligation for employers to negotiate with employees
collectively through their union is a major concern. The Bill allows
for an employee to use a union to meet and confer with the employer,
but representation of individuals in this way must be distinguished
from a true right to bargain collectively. [92]
Conclusion
4.237 The majority of the Committee believe that there is no justification
for the creation of a non-union stream of Certified Agreements. First,
these members of the Committee believe that in reality it will be the
employer who will choose to access the non-union stream, presumably
in an effort to avoid the necessity of avoiding collective negotiations
with a union. This fundamentally undermines the alleged rationale of
providing employees with freedom of choice.
4.238 Second, it would seem simpler and more efficient to create just
one stream for non-union agreements. The majority of the Committee note
that this is provided for in the Bill by the creation of AWAs which
have the capacity to be multi-employee agreements. The creation of another
stream of non-union certified agreements is therefore unnecessary.
4.239 In addition, it should be noted that Australian Workplace Agreements,
though they must be signed individually, may be negotiated collectively
as a matter of convenience. [93]
There would seem to be little difference, in principle, between a non-union
Certified Agreement and collectively negotiated Australian Workplace
Agreements. [94] Thus, the Labor members of the Committee
believe that a three tier structure offers the most coherent structure,
with comprehensive awards at the base, Certified Agreements for bargaining
between employers and unions on behalf of employees, and Australian
Workplace Agreements for bargaining between employees and employers
without the involvement of unions.
4.240 The majority of the Committee therefore recommends that this
proposal (proposed Division 2 of Part VIB) should not be implemented.
4.241 The Australian Democrats Member of the Committee agrees in
principle with this conclusion and recommendation but has additional
comments that are outlined in his Supplementary Report.
4.242 The Government members of the Committee disagree with the
conclusion and oppose the recommendation.
Consultation Requirements
4.243 The current Act provides that, in relation to the securing of
Enterprise Flexibility Agreements, an employer must carry out genuine
consultation and also ensure that the interests of particular groups
are taken into account. These groups may include: women, people whose
first language is not English, people under 21, Aboriginal and Torres
Strait Islanders, disabled persons, part-time employees, casual employees
and persons belonging to other categories of relevant employees. The
Bill, however, repeals these provisions and replaces them with much
less rigorous and more technical requirements.
4.244 This attracted criticism. For example, the AWU in Queensland
stated:
The capacity for indirect discrimination to occur through the certification
of an agreement which meets to minimum conditions for male employees,
but not for the minority female employees, is possible. This outcome
will be more evident in employment situations of 'mixed industries,
where for example clerical employees (predominantly female) work alongside
production and maintenance employees (predominantly male). [95]
4.245 Concern was also expressed that the voting requirement for endorsement
of a Certified Agreement was simply a 'valid majority of persons employed
at that time'. [96] This is in contrast with the existing
requirement that all employees must be consulted. The United Trades
and Labour Council of South Australia pointed out that this could be
taken literally, and could thus exclude from the decision making process
groups such as workers on parental leave, or even shift-work or part-time/casual
workers who were not present 'at the time'. [97] Indeed, nothing in the Act prevents
an employer from picking and choosing who the majority shall be.
Conclusion
4.246 As to the first issue raised, the majority of the Committee feels
that the concerns expressed are well-grounded. In our view there is
no warrant for removing or watering down provisions which explicitly
seek to protect the interests of those in the community who are more
vulnerable.
4.247 As to the second issue, the majority of the Committee notes that,
given that certified agreements are oriented around representative organisations
which provide a focus for decision making, it has hitherto been generally
accepted that there has been no need to legislatively guarantee a voting
process for the adoption of agreements. While registered organisations
have said that their own internal processes usually ensure a voting
process, it is appropriate that in a scheme of legislative protections
relating to agreements, that there be a requirement for agreements,
regardless of their context to be put to an election. In this regard
however, the need for the Commission to satisfy itself that this requirement
has been met should not compromise the streamlining of processes before
the Commission. As a result, the majority of the Committee recommends
that the Bill be amended to allow for the Commission to require evidence
of a ballot and its results where it feels that such evidence is needed.
4.248 Government members of the Committee disagree with the above
conclusions and oppose the recommendation.
Multi-Employer Certified Agreements
4.249 The Bill makes it more difficult to secure multi-employer Certified
Agreements: the AIRC may not certify a 'multi-business' agreement unless
satisfied that it is in the public interest and the matters cannot be
more appropriately dealt with by separate agreements. [98] This will make it more difficult for
employees now covered by multi-employer awards to negotiate for Certified
Agreements to preserve conditions outside the 18 allowable awards matters
on a uniform basis.
4.250 In addition, the Bill provides that although industrial action
during a bargaining period for a single business Certified Agreement
will be protected, industrial action in support of a multi-employer
Certified Agreement will not be protected.
4.251 The Government justifies these provisions on the basis of its
desire to emphasise workplace and enterprise agreements rather than
industry-wide agreements.
4.252 However, union groups regarded the prohibition on industrial
action in support of a multi-employer agreement as a particularly unwarranted
breach of the obligation to provide for a right to strike.
4.253 'This restriction is particularly unjust given that multi-employer
awards can be stripped back, but employees have no right to strike in
support of their existing entitlements being preserved on a multi-employer
basis.' [99]
Conclusion
4.254 The majority of the Committee cannot see any justification for
inequality of treatment as between single-business certified agreements
and multi-employer workplace agreements. If the Government was consistent
in applying notions of freedom of choice, the parties should have the
capacity to choose a multi-employer agreement if that is more suitable
for their circumstances.
4.255 The majority of the Committee believes that in a range of industries
many employers would be more comfortable with industry-wide arrangements,
particularly as it tends to remove labour costs from competition between
businesses within that industry.
4.256 The majority of the Committee therefore recommends that these
proposals (especially proposed section 170LC) should not be implemented.
4.257 The Government members of the Committee disagree with the
conclusion and oppose the recommendation.
Australian Workplace Agreements (AWAs)
4.258 There are two areas of concern specific to AWAs:
- Reviewability of AWAs; and
- The possibility of agreement to an AWA being made a condition of
employment for a prospective employee.
Reviewability of Australian Workplace Agreements
4.259 The Bill does not propose any mechanism by which AWAs can be
reviewed by an independent body, such as the Industrial Relations Commission,
before the agreement becomes effective. This means that there is no
independent check that the agreement complies with the 'no less favourable
than statutory minima test' and that the employee has entered into the
agreement with genuine and informed consent.
4.260 The Victorian Trades Hall Council (VTHC) pointed out that there
is a similar lack of provision for scrutiny of individual agreements
under legislation in Victoria and a number of consequential problems
have been identified by the President of the Employee Relations Commission
of Victoria:
- the fact that the document must be lodged gives rise to a reasonable,
but incorrect assumption that the agreement complies with the statutory
requirements and, in some way, has been approved by the Commission;
- there is no protection for employees who have entered into individual
employment agreements which do not comply with the minimum standards;
- there is no protection for individuals who have entered into individual
employment agreements in unfair or onerous circumstances. [100]
4.261 Indeed, the system which has been created of simply filing the
AWA with the Employment Advocate may actually be misleading for an employee.
While the action of lodgement may give an employee the confidence that
his or her AWA has been officially sanctioned, this impression would
be incorrect. [101]
4.262 The Government justifies the lack of pre-agreement review on
two bases. First, it says that it is seeking to provide a system of
agreement registration which is simple and streamlined, to the benefit
of both employers and employees. Secondly, it says there are sufficient
protections provided in the Bill to ensure that the minimum conditions
are included and that the agreement is not made under duress. The protection
referred to is the employee's entitlement to bring proceedings in a
civil court after the AWA is in force to enforce compliance with the
minimum conditions and to set aside the agreement if it has been made
under duress.
4.263 Employer groups were generally supportive of the system as proposed
by the Government. For example, the Australian Chamber of Commerce and
Industry commented:
The claim is made that since Australian Workplace Agreements are
not 'checked' to see if they contain the minima, then the minima will
be breached. Again this ignores the fact that there is a legal obligation
on an employer not to apply duress in connection with an AWA; not
to knowingly make a false or misleading statement to persuade someone
to make an AWA; to ensure that the AWA contains the minimum conditions;
to provide the employee with a copy of an information statement prepared
by the Employment Advocate; to file a statement with the Employment
Advocate declaring that the AWA complies with the minimum conditions;
not to file a statement that the employer knows or ought reasonably
to know is false; to provide an employee with a copy of the AWA and
of the Employment Advocate filing recept as soon as practicable after
the employer receives the filing receipt. [102]
4.264 However, this was an issue about which there was concern expressed
across community groups, academic commentators, holders of relevant
statutory positions in various states and union groups. The fundamental
objection was that the protections included by the Government would
be illusory in practice, and that the only way to ensure compliance
with the law was by pre-agreement review. This was raised as a particular
problem for people who are more vulnerable within the community.
4.265 For example, a representative of the Association of Non-English
Speaking Background Women of Australia (ANESBWA) said:
To think that non-English speaking background women, after they have
signed [AWAs], will be able to take up non-compliance with awards
on their own is just not realistic. It is just not going to happen,
in our experience. We think the checking for compliance is a very
important extension of what is proposed in terms of the office of
the employment advocate. [103]
4.266 Experience in Victoria suggests that employees do not normally
complain about duress or a breach of minimum conditions whilst still
employed. Furthermore, while some complaint may be made after employment
in that particular position ceases, often employees are reluctant to
make any complaint for fear that they will be identified by their new
employer and their prior complaints held against them in their new position.
[104]
4.267 The need for proper scrutiny of agreements was emphasised in
evidence given by the South Australian Employee Ombudsman. Under the
South Australian Industrial and Employee Relations Act 1994, provision
is made that ensures not only should employees not be worse off as a
result of the agreement, but that they should have every opportunity
to examine, discuss and modify the agreement before it is signed. Furthermore,
all agreements must be scrutinised twice, once by the Ombudsman and
subsequently by the Enterprise Bargaining Commissioner.
4.268 Scrutiny of some 250 agreements over the last two years has resulted
in many of them having to be returned to the employer to make changes
necessary to meet the requirements of the legislation.
4.269 The South Australia Employee Ombudsman is firmly convinced that
all agreements must be formally approved and scrutinised. Other important
aspects of the position of Employee Ombudsman include the power to enforce
the legislation where necessary, and the independence of the position.
In conclusion, the ombudsman stated: 'Unless the Office of 'Employment
Advocate' proposed by the legislation has the features outlined above,
it will be ineffectual'. [105]
4.270 Professor McCallum thought that the degree of non-compliance
with award conditions and legal minima is greater than is commonly realised,
and feared that this would increase if the Employment Advocate has no
powers to scrutinise compliance - particularly in view of some of the
complexities involved:
It is true there are minimums set out in the legislation and in the
relevant award,the Employment Advocate must specify a relevant award,but
the provisions are very flexible. It will actually be a nice question
whether, on a three-year averaging period, the remuneration is actually
on all-fours with the award. Some of the areas are so complex that
it will be difficult for an individual employee to make an accurate
assessment. [106]
4.271 In its submission, the Shop, Distributive and Allied Employees
Association of Western Australia illustrated some of the problems it
has faced with the WA system of workplace agreements. Members of the
SDA employed at a Western Australian supermarket contacted the union
to complain that they were being paid under the terms of a workplace
agreement which they had not signed (and not the award wages to which
they were entitled). They did not wish to reveal the fact of their union
membership to their employer.
4.272 The SDA, in accordance with the WA Industrial Relations Act,
sought to inspect the employer's time and wages records to ensure its
members were being properly paid. Restriction on their access meant
that their effort was obstructed.
4.273 The union was forced to commence proceedings before the Western
Australian Industrial Relations Commission to seek redress. The SDA
expresses concern that a similar situation could arise in relation to
AWAs because
- unions will only be entitled to access wages records to ensure compliance
with an award or a certified agreement (not an AWA); and
- details of AWAs filed with the Employment Advocate cannot be released.
4.274 As a result it would be left to individuals to challenge their
employers' claims, either before the Commission or the courts to obtain
access to the records. This obviously leaves such members vulnerable.
[107]
4.275 Several employer representatives also had concerns about the
Government's proposals.
4.276 For instance, the representative of the Australian Road Transport
Industrial Organization referred to:
...the shortfalls of introducing a system of individual negotiations
without recourse to a centralised dispute resolving mechanism. We
do not believe... that you can effectively have an individual employment
system without some recourse to an independent umpire. [108]
4.277 Similarly, the following exchange between Senator McKay and Mr
Elliot of the Australian Institute of Company Directors is instructive:
Senator McKay: I agree that if you were going down the track
that you are going, you would need to have the capacity for that person
to certify an AWA. You would also need to have the final recourse
to the AIRC. That is a corollary, I believe, of the position you are
putting. Would you agree?
Mr Elliot: Yes, we would agree. [109]
4.278 Finally, Mr Steel of the South Australian Chamber of Commerce
and Industry was happy to endorse the South Australian provisions. These
include the necessity for independent review of a workplace agreement
by the Employee Ombudsman before an agreement is effective. [110]
Conclusion
4.279 The majority of the Committee believes there is an strong case
for independent review of Australian Workplace Agreements before they
come into force. This is clearly the only effective way in which it
can be ensured that employees, particularly the more vulnerable, enter
into agreements on a genuine and fully informed basis and are provided
with the statutory minimum terms and conditions.
4.280 The majority of the Committee also believes that although there
may be other bodies who could perform this task (eg. the Employment
Advocate if there is to be such a body), the Australian Industrial Relations
Commission is best-suited to this task. The Commission has the knowledge
and expertise to be able to properly assess whether the terms and conditions
provided in the agreement will disadvantage the employee. The Commission's
knowledge of industry standards will be invaluable in this regard, enabling
it to test the terms and conditions provided in the agreement against
the background of those industry standards.
4.281 In addition, the Commission's expertise in the conduct of hearings
is also a considerable advantage. The majority of the Committee believes
that this is the only way in which there can be a proper assessment
of whether the employee entered into the agreement on a fully informed
and genuine basis.
4.282 Finally, the Bill already provides a reviewing role for the Commission
in the case of Certified Agreements. The review of both CAs and AWAs
should be made by reference to the same tests (whether it be the 'no
disadvantage test' or the 'no less favourable than statutory minima
test'), and so it is only appropriate that the same body be given the
common role. Indeed, the majority of the Committee would be anxious
that if different bodies performed the reviewing role in the case of
CAs and AWAs different standards could be applied as between the two,
thereby creating the potential for one system or the other to be viewed
more favourably.
4.283 The majority of the Committee therefore recommends that the
Bill should be amended to provide for pre-agreement review of AWAs by
the Commission.
4.284 The Government members of the Committee disagree with the
conclusion and oppose the recommendation.
AWAs as a Condition of Employment for Prospective Employees
4.285 The Bill will permit employers to offer employment on the basis
that the prospective employee must sign an AWA. [111]
4.286 Opponents of this provision feel that it will effectively give
an employer the opportunity to require the signing of an AWA on the
employer's terms or the job would not be offered. It was argued that
these provisions mean that employers will have the upper hand in job
negotiations and employees have only one choice: AWA or no job:
The practical effect of this provision will be to allow employers
to canvass prospective employees about their willingness to enter
into an AWA. It will become obvious to any job applicant that the
only way to obtain employment under those circumstance would be to
agree to an AWA proposed by an employer. This provision legitimises
the use of economic duress against job applicants as a means of attaining
an AWA and inferior working conditions. [112]
4.287 Many witnesses described experiences of this sort in the less
regulated States; for example:
I wish to share my experience of being on a [Western Australia] Work
Place Agreement... I was fortunate enough to receive an interview
for my current position.... I was told that the job was a Work Place
Agreement position only and that to get the job I had to sign a Work
Place Agreement. I would have preferred to have been able to join
a union but the interview and the job offer were made in such a way
that you knew if you didn't sign you didn't get the job. You also
knew that if you asked whether it would be possible to join a union
you would kiss your chances of getting the job goodbye. I was obviously
too scared to ask about this as I was desperate for the job …
[113]
4.288 Some felt that particular groups in weak bargaining positions
would be exploited:
We have indicated in our submission our fears regarding section 170VF(2).
This section allows for an AWA to be signed before a person becomes
employed. This allows enormous advantage to the employer. For example,
if one of your children,daughter or son,is going for a job here and
their friends are unemployed, because we have nearly 40 per cent youth
unemployment in South Australia, what do you think they are going
to do? Obviously, they are going to sign. They are going to be totally
defenceless. How the hell would they know otherwise? [114]
4.289 Employer groups stressed the range of protections in the Bill
for employees making agreements; for example, the legal obligations
not to apply duress in connection with making an AWA; not to knowingly
make a false or misleading statement to persuade someone to make an
AWA; and to ensure that the AWA contains the minimum conditions. [115]
Conclusions
4.290 The Committee concludes that the proposal to permit employees
to enter into AWAs before employment creates the potential for AWAs
to be proffered on a 'take it or leave it' basis. The Committee is very
concerned that this will permit pressure to be applied to vulnerable
employees seeking work to accept lower wages and conditions.
4.291 The majority of the Committee therefore recommends that this
proposal (proposed subsection 170VK(2)) should not be implemented. The
Committee also recommends that there be further consideration of a prohibition
on offering an AWA as a condition of employment.
4.292 The Australian Democrats Member of the Committee agrees with
this analysis but has additional comments in his Supplementary Report.
4.293 The Government members of this Committee disagree with the
above conclusion and oppose the recommendation.
[Return to Table of Contents | Go
to Part C]
Footnotes
[65] Submission No. 1126, p. 18, Victorian
Employers' Chamber of Commerce & Industry.
[66] Submission No. 413, p. 2, Minister for
Industrial Affairs, South Australia.
[67] Industrial Relations Act 1988, sections
170NAff.
[68] Submission No. 905, p. 40, Australian
Chamber of Commerce and Industry.
[69] Submission No. 1178, p. 2, Australian
Business Limited.
[70] Australian Chamber of Commerce and Industry,
submission 905 p3383
[71] Australian Mines and Metals Association,
submission 350 p. 2
[72] Evidence, p. E 1495,1498, A. Finucane
(Hamersley Iron Ore Pty Ltd).
[73] Evidence, p. E 1499-1500, M. Hutch.
[74] Submission No. 905, p. 40, Australian
Chamber of Commerce and Industry.
[75] Submission No. 905, p. 32, Australian
Chamber of Commerce and Industry.
[76] Submission No. 1017, overview p. 2,
Australian Council of Trade Unions.
[77] Submission 1016, p. 2, paragraph 8,
Department of Industrial Relations.
[78] Submission No. 1188, p. 2, Maurice Blackburn
& Co. Industrial Law section.
[79] Submission No. 1018, p. 40, Victorian
Trades Hall Council.
[80] Evidence, p. E 1398, N. Geronimos (WA
Council of Retail Associations).
[81] Evidence, p. E 1732, D. Steel (SA Employers
Chamber of Commerce & Industry).
[82] Submission No. 1017, p. 25, ACTU
[83] Submission No. 568, p. 11, Australian
Education Union.
[84] Evidence, p. E 1217ff.
[85] Evidence, p. E 1222, M. Prendeville.
[86] Evidence, p. E 1228.
[87] Bill, Schedule 9, section 170NC, Schedule
11 section 170WG.
[88] Submission No. 905, pp. 42-43, Australian
Chamber of Commerce and Industry.
[89] Submission No.1017, p. 33, Australian
Council of Trade Unions.
[90] Submission No.1017, p. 34, Australian
Council of Trade Unions.
[91] Evidence, p. E 293, P. Lennon MP.
[92] Submission No. 1017, p. 22, Australian
Council of Trade Unions.
[93] Bill, Schedule 11, section 170VE.
[94] There are some differences of procedural
detail.
[95] Submission No. 1139, p15, Australian
Workers Union of Employees, Queensland.
[96] Bill, Schedule 9, sections 170LJ, 170LK.
[97] Submission No. 1140, p. 31, United Trades
& Labor Council of South Australia.
[98] Bill, Schedule 9, section 170LC(4).
[99] Submission No. 1017, p. 22, Australian
Council of Trade Unions.
[100] Submission No. 1018, p.39, Victorian
Trades Hall Council.
[101] See Second Annual Report by the President
of the Employee Relations Commission of Victoria (1994) p.2 and Evidence,
p. E 239.
[102] Submission No. 905, p. 44, Australian
Chamber of Commerce and Industry.
[103] Evidence, p. E 747.
[104] Submission No. 1018, p.40, Victorian
Trades Hall Council.
[105] Submission 511, p. 2, Office of the
Employee Ombudsman of South Australia. The success of the office of
the Employee Ombudsman in South Australia was endorsed in the submission
from the South Australian Government (Submission No. 413, p 20.).
[106] Evidence, p. E 888 (Prof. R. McCallum).
[107] Submission No. 364, p. 8-9, Shop,
Distributive and Allied Employees Association of Western Australia.
[108] Evidence, p. E 775, M. Carter (Australian
Road Transport Industrial Organization).
[109] Evidence, p. E 951, R. Elliot (Australian
Institute of Company Directors).
[110] Evidence, p. E 1736, D. Steel (SA
Employers Chamber of Commerce & Industry).
[111] Bill, Schedule 11, section 170VF.
[112] Submission No. 1017, p. 15, Australian
Council of Trade Unions.
[113] Submission No. 195, p. 381-2, P. Steineck.
[114] Evidence, p. E 1718, G. Walsh (Community
and Public Sector Union, PSA, SA Branch).
[115] Submission No. 905, p. 43, Australian
Chamber of Commerce and Industry.