Chapter 4 - Schedule 1 - Object of the workplace relations ACT
4.1
Schedule 1 of the Bill contains amendments to:
- the principal object of the WR Act set out in section 3; and
- the WR Act’s objects and the Commission’s functions relating to
dispute settlement and prevention, contained in Part VI of the WR Act.
Outline of proposed amendments
Amendments to the principal object
4.2
Item 1 expands the principal object to emphasise
that employers and employees have the ability to choose the most appropriate
jurisdiction for regulation of their employment relationship. This amendment is
designed to ensure ‘that the Act does not create a presumption in favour of the
extension of Commonwealth regulation.’[1]
4.3
Item 2 amends the role of awards as set out in
the principal object. Under subparagraph 3(d)(ii), it is an object of the WR
Act to provide ‘the means to ensure the maintenance of an effective award
safety net of fair and enforceable minimum wages and conditions of employment’.
The amendment replaces the concept of a ‘fair and enforceable safety net’ with
a new focus on ensuring that awards provide ‘basic minimum wages and conditions
of employment’, and that awards do not contain wages and conditions above the
safety net. The amendment also emphasises that the role of awards is to help
address the needs of the low paid.
4.4
Item 3 expands the principal object of the Act
to specifically provide that industrial action which is prohibited by the WR
Act (so-called ‘unprotected action’) should be countered by timely measures to
stop and prevent unprotected action from taking place. The amendment also
recognises the new procedures proposed in the Bill for conducting secret
ballots of employees before protected industrial action can occur.
4.5
Item 4 amends the principal object to recognise
amendments to:
- limit the Commission’s ability to conduct compulsory conciliation
of industrial disputes to those disputes where the Commission could potentially
arbitrate (generally, the Commission can only arbitrate in relation to
‘allowable awards matters’ set out in section 89A of the WR Act);
- introduce a new system of voluntary conciliation by the
Commission to resolve industrial disputes and facilitate agreement-making; and
- legislatively recognise private mediation as an option for
resolving industrial disputes and facilitating agreement-making.
Amendments to Part VI
4.6
Item 5 of Schedule 1 amends section 88A of the
WR Act, which sets out the objects of the Act with regard to preventing and
settling industrial disputes. The amendments relate to the making of awards,
and remove the requirement that awards ‘act as a safety net of fair minimum
wages and conditions of employment’, and replace this with a new paragraph
specifying that awards are to operate as a safety net of ‘basic minimum wages
and conditions of employment in respect of appropriate allowable award
matters’.
4.7
The practical effect of the change will be to
require the Commission to take a different approach to making safety net
adjustments, to ensure, for example, that wage increases are not uniformly
applied to all wage rates contained in an award, but only those which represent
‘basic minimum wages’. See paragraphs 1.23 – 1.26 below for a more detailed
explanation of this amendment.
4.8
This amendment also emphasises that awards are
intended to assist in addressing the needs of the low paid, and must not
provide for wages and conditions of employment that are above the safety net.
Item 5 complements the amendment contained in item 2.
4.9
Item 6 amends section 88B, and relates to the
performance of the Commission’s functions to prevent and settle disputes. This
amendment also replaces the concept of a safety net of ‘fair minimum wages and
conditions of employment’ with a safety net ‘providing basic minimum wages and
conditions of employment in respect of appropriate allowable award matters’, as
discussed above.
4.10
Item 7 inserts a new section 88C into the WR
Act, which provides that the Commission is not to have regard to the
maintenance of relativities within awards when exercising its dispute
prevention and resolution functions. This amendment is designed to reinforce
the principle that awards provide only a safety net of basic minimum wages and
conditions. The role of awards is not to be regarded as providing for a range
of skill-based classification pay points.
Evidence
No presumption in favour of the extension of federal regulation
4.11
The Department’s submission states that the
amendment in item 1 will ‘reinforce the new workplace relations framework
introduced by the Workplace Relations and Other Legislation Amendment Act
1996 by amending the Principal object of the Act to emphasise....choice as to
jurisdiction..’[2]
4.12
This amendment to the principal object
complements more detailed changes to be made to section 111AAA and associated
provisions. The proposed changes will strengthen the presumption in favour of
State employment regulation, including by legislative minimum conditions.
Legislated minimum conditions of employment are a relatively new phenomenon in
Australia. There are currently two examples: the Western Australian Minimum
Conditions of Employment Act 1993 and Schedule 1A of the WR Act, which
applies to Victorian employees.
4.13
These changes were foreshadowed in the
Minister’s More Jobs, Better Pay Implementation Discussion Paper, which
proposed amendments to the WR Act to:
...give greater recognition to cases where an employment
relationship is subject to statutory minimum employment conditions. Recognising
the special circumstances in Victoria (which has referred certain of its
workplace relations powers to the Commonwealth), the Government (in
consultation with Victoria) will examine how a wider range of employment
arrangements provided for by the previous State law can be brought within the
scope of the stronger presumption.[3]
4.14
The proposed amendment to the principle object
enables both employers and employees to choose the most appropriate
jurisdiction to regulate their employment relationship.
4.15
Jobwatch Inc
estimated that approximately 40% of Victorian workers are not presently covered
by federal awards and rely on the minimum conditions established by Schedule
1A:
‘...the 1996 hand over of most industrial
relations powers to the Commonwealth created a situation where not all
Victorian workers were automatically covered by federal awards. We still have a
number of workers who are not within the federal award system...in Victoria, 40 per cent of Victorian workers only have five rights...
In Victoria there is a huge
disparity in the employment conditions between those covered by federal awards
and agreements and those covered by schedule 1A. It is a situation of great
injustice where some Victorian workers have conditions that are so much better
than others, and the ones with the worst are the ones that are the most
vulnerable and the ones that are not organised—they are not in unions.’[4]
4.16
The ability to move to federal award coverage
was not such an important issue for unions and employees in other States, even
in Western Australia, where minimum conditions are set under State legislation.
Western Australian unions were less emphatic that their members would be
better off under federal awards, as the following Hansard excerpt indicates:
‘Senator MURRAY—Is it your
belief that the Workplace Relations Act 1996, the federal legislation, is
better than the state legislation you fall under?
Ms Mayman—It has a better no
disadvantage test than the state legislation. I am prepared to go that far.
Senator MURRAY—There are 20
allowable matters in the federal legislation that you are under. How many
minimum conditions?
Ms Mayman—The minimum safety
net here in this state at the moment on wages, for example, is $40 lower than
the minimum award provision.
Senator MURRAY—So workers
would be better off under federal legislation?
Ms Mayman—Workers are better
off in terms of their minimums under federal legislation.’[5]
4.17
The Western Australian Branch of the Community
and Public Sector Union stated:
‘With respect to conditions
of employment and pay, all things being equal, we maintain awards that have
virtually every condition of employment in them for our membership and we can
continue to maintain those awards in the state (Western Australian) system, on
top of which, of course, there might—and I stress might—be enhancements in an
enterprise bargaining agreement. That has served our members very well. It has
been positive and we have generally been able to achieve reasonable outcomes
under the state legislation. I think our members would generally see that in
terms of pay and conditions they have been pretty well served in the state
system.’[6]
4.18
The Committee received evidence that some
employees currently enjoy conditions well above award standards, so are less
likely to want federal award coverage. For example, the Australian Mines and
Metals Association (AMMA) supported strengthening the presumption in favour of
State regulation, making the following comments:
Combined with the proposed s111AAA(1), the object appears to
extend the protection afforded to employees and companies operating under
various state jurisdictions. Considerable time and expense is incurred by
businesses fending off unwanted attempts by unions seeking to rope those
organisations into the federal system. Employers and employees deserve greater
protection when a strategic choice has been made by such organisations and
their employees to operate under a particular state instrument.[7]
4.19
The AMMA submission highlights their members’
advanced employment relations policies and pay levels well above award
standards.[8]
In this context, attempts by unions to ‘rope’ employers into federal awards are
probably unlikely to be supported by either the affected employers or
employees.
4.20
The Committee was provided with examples of
unions attempting to use the current provisions of the WR Act to ‘rope’
employers into the federal system. For example, the Australian Chamber of
Commerce and Industry provided several case studies in their submission to the
Committee.[9]
Some unions also provided evidence on this point.
Conclusion
4.21
Item 1 implements the Government’s objective of
preventing unions from artificially extending the coverage of the federal
jurisdiction to displace State regulation, where federal instruments provide
higher wages and conditions.
4.22
A majority of the Committee supports this
objective and recommends that the amendment contained in item 1 of
Schedule 1 be enacted.
Award safety net of basic minimum wages and conditions
4.23
The Bill requires the Commission to alter its
approach to safety net wage adjustments. The Safety Net Review decisions made
under the WR Act to date are referred to in the Department’s submission:
The issue of internal relativities in relation to safety net has
been the matter of consideration in safety net review issues. Given the
additional focus now being placed on the low paid, it is appropriate to
reinforce in the legislation the fact that the maintenance of internal
relativities is not a factor to be taken into account in safety net
considerations. Relativities between awards would however continue to play an
important part in the adjustment and operation of the safety net.[10]
4.24
The amendments in Schedule 1 of the Bill, along
with the amendment to remove ‘skill-based career paths’ from the list of
allowable matters in section 89A, will require the Commission, when reviewing
the award safety net, to focus on adjusting minimum pay points for award
classifications, rather than maintaining vertical relativities within award
classifications.
4.25
Over time, this would mean that award pay rates
for employees performing work within a classification at higher skill levels
would be subsumed into minimum pay rates for their classification:
A consequence of targeting protection on the low paid (eg
through flat, differential or capped increases) is that there will be some
compression of internal relations within awards. This was comprehended by the
WR Act – which specifies that the Commission is to have regard to ‘the need for
any alterations to wage relativities between awards to be based on
skill, responsibility and the conditions under which work is performed
(emphasis added),’ without referring to relativities within awards.[11]
4.26
The Department points out that these amendments
reinforce the Government’s understanding of how the WR Act would operate. The
Minister’s speech and the Joint Governments’ submissions to the Safety Net
Review cases indicate that it was originally intended that, through an
incremental process of compressing internal award relativities, awards would
become a true minimum safety net of wages and conditions. Wages and conditions
above this basic safety net were intended to be set by agreement.
4.27
Some witnesses and submissions opposed the
proposed amendments. A representative example is provided by the ACTU’s
submission:
The amendments to paragraph 3(d) remove the concept of fairness
from the safety net, an extraordinary admission by the Government that it sees
fairness as an unreasonable requirement. The redefinition of the safety net as
comprising basic minimum conditions which address the needs of the low paid is
directed at removing from awards any provisions which might be seen as other than
‘basic’, reinforced by the requirement that awards do not provide for wages and
conditions above that ‘basic’ safety net. The notion that awards exist only to
protect the very lowest paid, rather than to ensure fairness for all employees,
and ensure that disputes are resolved after considering the interests of all
parties, is strongly opposed by the ACTU.[12]
4.28
The Human Rights and Equal Opportunity
Commission also opposed the proposed amendments, because in their view a
disproportionate number of women, compared to men, rely on awards to set their
actual pay and conditions:[13]
The current WR Act object provides scope for the AIRC to
consider the impact of safety net increases on all employees relying on awards
to determine their actual pay and conditions with an emphasis on the low
paid....HREOC supports retaining the AIRC’s current discretion to consider both
the low paid and the award dependent when awarding safety net increases as both
aspects impact on the ability of the AIRC to minimise gender based inequitable
pay outcomes.[14]
4.29
The Committee was given evidence suggesting that
parts of the workforce remain unable to make agreements with their employers,
and rely solely on awards to regulate their pay and conditions. It was
suggested that these employees seem to be concentrated in service industries
and rural and regional areas, with low levels of unionisation:
Thirty per cent of the
industries we cover do not have enterprise agreements; they rely strictly on
the award system. These industries include fruit growing and packing, horse
training, shearing, the amusement parlour and entertainment industries,
sportsgrounds, nurseries, primary production and dairies, ski resorts and
catering companies. These are difficult to service, small, isolated workplaces.
Union employee interaction tends to occur only when problems arise. Because of
this, the employees in the above industries depend heavily on the goodwill of
their employers and any safety net decisions made by the Australian Industrial
Relations Commission.[15]
4.30
The Business Council of Australia suggested that
it is only in exceptional cases that employers and employees are unable to
bargain, but evidence presented by other witnesses, including the Queensland
Government, suggests that the problem is much broader than this, particularly
affecting rural workers, small business employees and women.
4.31
The Australian Chamber of Commerce and Industry
supported the proposed amendments as a means of imposing restraint on safety
net increases to awards by the Commission:
The proposed amendments are more than justified because of the
way union claims and AIRC awarded increases have accelerated in recent years.
If the labour relations award system is to be a true safety net, there has to
be an appropriate level of restraint. It is time that this longstanding threat
to the private sector is terminated by appropriate amendments to the objects of
the Act, and for awards.[16]
4.32
The Business Council of Australia submitted:
The [safety net] system should make available basic terms and
conditions of employment that are a sufficient guarantee of fair and reasonable
treatment in exceptional circumstances where (formal or informal) enterprise
bargaining does not apply.
Minimum wages and conditions should not be linked or act as a
disincentive to enterprise bargaining – that generally reward specific gains in
productivity. Under enterprise bargaining wage increases reflect economic
circumstances. Firms doing well will pay well, and firms doing poorly will pay
less.[17]
Conclusion
4.33
An objective of the proposed amendments is to
ensure that safety net wage increases are not generally applied to all wage
rates in awards, but are specifically targeted at the low paid. If awards focus
on basic minimum pay and conditions they will encourage agreement making, linking
increases in wages and conditions to productivity and establishing terms of
employment that suit the circumstances of the particular workplace. The
Committee supports this objective, as consistent with the aim of providing a
floor under wages, which takes modern economic imperatives into consideration
and puts responsibility for workplace relations where it belongs: with
employers and employees.
4.34
A majority of the Committee also supports the
objective of encouraging the Commission to exercise restraint in awarding
safety net increases, as suggested by the Australian Chamber of Commerce and
Industry, as safety net increases do not necessarily reflect improvements in
productivity.
4.35
There is considerable evidence that employees
covered by agreements enjoy better pay and conditions than those employees on
awards. Little evidence was presented to the Committee to suggest that
employees are choosing to remain on awards, or that awards are acting as a
disincentive to bargaining.
Recommendation
4.36
A majority of the Committee recommends
that the amendments in items 2, 5, 6 and 7 of Schedule 1 be enacted.
Unprotected industrial action inconsistent with Act
4.37
This amendment makes it clear that unprotected
industrial action is contrary to the objects of the Act. The amendment
incorporates a reference to the proposed secret ballot provisions in the
principal object. The Committee’s majority conclusions on the secret ballot
amendments are discussed in detail in Chapter 11.
Conclusion
4.38
A majority of the Committee notes the absence of
any real concerns regarding this amendment, which would merely reinforce the
existing provisions of the Act regarding protected industrial action. The
majority of the Committee recommends that this amendment be enacted.
Arbitration, compulsory conciliation, voluntary conciliation and mediation
4.39
The Committee’s majority views on these
amendments are set out in detail in Chapter 6.
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