Chapter 2 - Enterprise
Bargaining and Australian Workplace Agreements
2.1
This chapter examines the issue of bargaining in the making
of workplace agreements. It asks whether concepts of 'good faith' and 'genuine'
bargaining have any practical relevance for workers, especially when the
Workplace Relations Act does not guarantee that collective bargaining will
occur just because workers want it. It examines the disparity of bargaining
power between employees and employers and how the Government's real agenda in promoting
individual statutory agreements, or Australian Workplace Agreements (AWAs), is to
further tilt the balance of power the employers' way. It considers whether
employees can choose the form of agreement-making which best suits their individual
preferences and circumstances and genuinely bargain over terms and conditions
of employment.
2.2
The committee takes a closer look at the practical
effects of AWAs on workers' wages and conditions. It examines independent
academic research and evidence from unions which challenge the Government's
claim that AWAs provide employees with 'freedom' and 'choice' to negotiate higher
wages and more flexible employment conditions than under a collective agreement.
This research leaves the committee in no doubt that data published by the
Department of Employment and Workplace Relations (DEWR) and the Office of the
Employment Advocate (OEA) is misleading, unreliable and in some instances
false. The committee does not take issue with figures released by the Australian
Bureau of Statistics (ABS) on wage levels under different types of workplace
agreements. The ABS data is an indispensable source of reliable information for
researchers of industrial relations and labour market issues. The committee
instead calls into question the methods used by the department and the OEA to assess
and interpret ABS figures and the political 'spin' which accompanies their published
findings.[31]
2.3
The committee notes that peak employer groups such as
the Australian Industry Group (AiG) and the Australian Chamber of Commerce and
Industry (ACCI) accept uncritically the DEWR and OEA figures and quote their
findings while failing to address the issues raised by critics. The ACCI
submission in particular used unsourced figures to make an unsubstantiated
claim that AWAs provide superior wages and conditions for workers compared to
federal awards and collective agreements.[32]
The committee knows of no research by employer groups which supports this claim
and, as will become clear later in the chapter, it is a claim rejected by most
academic specialists in the field.
2.4
Australian Workplace Agreements can be used as a convenient
mechanism for employers to unilaterally dictate the pay and conditions that workers
receive. Used in this way, their main effect can be to lower wages and conditions
below award rates by reducing or abolishing penalty rates. They are also a
mechanism for employers to weaken the role of unions and third parties,
particularly the industrial relations commissions. That this is the inevitable
outcome of a system of statutory individual agreements is demonstrated by New
Zealand's and Western
Australia's failed experiment with individual
contracts during the 1990s. This had disastrous consequences for workers who had
relied on the protection of awards. The committee believes there are salutary
lessons about the dangers of further individualising agreement-making and
enhancing managerial regulation of the workplace.
2.5
The chapter concludes with a brief description of the
Government's plan for a streamlined, simpler and less costly agreement-making
process under its new industrial relations policy, WorkChoices. The committee casts
an eye over the Government's proposals for agreement-making outlined in the information
booklet which was released in October 2005, ahead of the WorkChoices
Bill being introduced in the Parliament.[33]
Agreement-making, bargaining power and choice
2.6
The submission from Dr Chris Briggs identifies three formal
principles which frame workplace bargaining as characterised in the Workplace
Relations Act: neutrality towards different types of agreements, freedom of
association which aims to protect the rights of individuals to associate or not
associate, and agreement-making at the enterprise level to enable parties to
develop work arrangements which best suit their needs.[34] The committee accepts that the balance
of power between employers and employees is an important determinant of
bargaining outcomes. One of the WR Act's objectives is to provide a framework
for cooperative workplace relations which supports 'fair and effective
agreement making'. However, the act neither directly requires fair bargaining
nor directly prohibits unfair bargaining.[35]
The analysis by Briggs demonstrates that while the principles
underpinning the act are sound in theory, in practice they do not genuinely
allow employers and employees to structure their bargaining arrangements to
suit their needs, nor do they allow employees to genuinely choose between
collective and individual agreements.[36]
2.7
The Melbourne Centre for Employment and Labour
Relations Law submission to the Government's 2004 review of the WR Act argued
that the act does not regulate how employees might choose the type and content
of the workplace agreement they consider appropriate:
...existing employees in practice have only a negative capacity to select the appropriate form of agreement. They
can refuse an AWA, or vote down an enterprise agreement...but the WR Act provides
no mechanism for employees to deliberate and to express a positive choice about which form of agreement they would prefer.[37]
2.8
The assumption of a level playing field where workers
negotiate wages and conditions with their employers is widely viewed as a fiction
by labour market analysts and academic specialists.[38] The act is undeniably employer-friendly.
Average workers struggle to bargain on an equal basis with their employers,
unless they are supported by a union, have skills which are in demand or are
confident and assertive individuals. The submission from Professor
Andrew Stewart
stated with conviction:
It is a basic fact of life, which only the most blinkered
ideologue would deny, that there is an inequality of bargaining power between
most individual workers and their employers. This inequality arises through the
typical workers' lack of information, lack of resources, lack of negotiating
skills and, in many instances, lack of alternatives...
Without the support of a union, most workers face a simple
choice: accept the terms offered, or find another job. Negotiation rarely comes
into it.[39]
2.9
Professor Bradon Ellem expressed the view that while
the principle of treating individual and collective agreements equally is fair
and reasonable, unscrupulous employers can easily frustrate and evade the
preference of employees for collective representation: 'In the absence of legal
processes to direct employers to respect the wishes of the majority of their
employees to bargain collectively, there is little that employees without
bargaining power can do to redress that'.[40]
2.10
Independent research shows that employees face an
imbalance of bargaining power at all stages of their working lives, from when
they seek employment, start work and establish conditions to when they face
changes at work, have a grievance with their supervisor and are retrenched. The
tendency is for AWAs to be offered to employees on a 'take it or leave it'
basis and as pattern agreements the terms of which are more or less set in
stone by employers. The only option for non-managerial employees, particularly
women, casual and part-time workers is to accept an AWA prepared by their
employers or find another job. The rhetoric of 'effective choice'[41] promoted by the Prime Minister
presupposes a position of equal bargaining power between employees and
employers which is irrelevant to most workers.
2.11
Under the provisions of the WR Act, collective
bargaining is not freely available to all employees. Employers are able to
pursue individual agreement-making even when employees prefer collective
bargaining. The ACTU submission argued that the act undermines the rhetoric of 'choice'
because employers have the right to choose the form of bargaining at their
workplace as well as the right to refuse to negotiate collectively with their
employees.[42] ACTU President, Ms
Sharan Burrow,
described a number of instances where employers have refused to negotiate
collective agreements even when workers have democratically shown their support
for one.[43]
2.12
Other witnesses pointed out that Australia's
industrial relations laws are out of step with countries with decentralised
bargaining regimes where employees are guaranteed the right to bargain
collectively by democratically voting in the workplace. Employees in Canada,
Britain and the
United States
can vote by majority to decide on the form of bargaining to occur with their
employer. It is a democratic choice binding all employees and the employer. The
idea has been floated in Australia by ACTU Secretary, Mr Greg Combet, who
believes that real choice involves letting workers decide how best to protect
and advance their own pay and employment conditions, and backing it up with an
enforceable right.[44]
2.13
The idea that employees have 'effective choice' and
that the Government's reform agenda is designed to 'enhance choices' is even
dismissed as 'political speak' by the Deputy Director of Melbourne
University's Melbourne Institute, Professor
Mark Wooden.
He is described by one commentator as the person who should be the Government's
strongest academic defender on industrial relations policy, and leader of the
'tiny employer-leaning faction [of industrial relations specialists] in the
continuous battle against the union-leaning majority'.[45] In a paper presented at the 34th
conference of economists in September 2005, Professor
Wooden is highly critical of the
Government's failure to require employers to bargain in good faith and protect
the ability of workers to bargain collectively:
...it is not at all clear that the reform agenda is one which is
particularly interested in promoting collective agreements. The Government has
been concerned with the low level of coverage by AWAs and thus intends...to
encourage further interest in them by employers. But what if AWAs are not
desired by workers? Currently, there do not appear to be measures that ensure
that workers have the ability to choose between individual agreements and
collective agreements. If the aim is to provide employees with real choices,
then I am on Greg Combet's
side – the right to bargain collectively needs to be protected.[46]
2.14
The committee notes that the Western Australian
Government is currently preparing a model of bargaining which will ensure that
any negotiations between employers and employees must be conducted in a climate
of good faith. The Minister for Consumer and Employment Protection, Hon John
Kobelke MLA, told the committee at its Perth
hearing that the model will include a number of features. It will include a
requirement for parties to enter into negotiations through the Industrial Relations
Commission, and give the Commission the power to arbitrate in a dispute,
leading to an enterprise order. An enterprise order will exist for two years during
which time the Commission will be able to arbitrate an outcome if either party
does not enter into negotiations in any reasonable and proper way.[47] The Democrats with the support of the
ALP and other Opposition parties have moved a similar 'good faith bargaining'
amendment to Workplace Relations Act, but the Government has rejected it.
2.15
The committee finds that the WR Act provides little
scope for workers, especially the low-skilled, to either choose the form of
agreement-making which suits their interests or negotiate the terms of an
agreement to take into account their individual needs. Submissions to this
inquiry were critical of the Government's rhetoric of 'choice' and flexibility'
to promote individual contracts, and argued that in most workplaces the choice
of agreement type lies squarely with the employer.[48] National Secretary of the
Communication, Electrical and Plumbing Union, Mr
Peter Tighe,
told the committee that only highly skilled workers will be able to use their
stronger bargaining position in periods of skills shortages to negotiate a
reasonable outcome. The committee notes that while employers have more bargaining
power than workers, the overall balance of bargaining power is also influenced
by cyclical and structural factors in the economy which are outside the
individual workplace.[49] These matters will
be taken up further by the committee in the next chapter.
Australian Workplace Agreements
2.16
A consistent theme in evidence to this inquiry is that
AWAs are not what the Government and business claim they are. National
Industrial Officer of the Shop, Distributive and Allied Employees' Association
(SDA), Mr John
Ryan, told the committee at its Melbourne
hearing:
I quibble with the fact that the current system does everything
opposite to what it says it will do – it is not fair, it is not free, it is not
effective bargaining, there is no employee choice and everything is done in
secret. People only do evil things in secret. If people do good things, they
want to boast about it from the rooftops; if you want to do something evil, you
go and hide.[50]
2.17
A number of leading academic researchers in the field
of industrial relations are highly critical of AWAs and of the Government's
spurious rhetoric of 'freedom' and 'choice' to promote individual agreements
and obfuscate the main agenda driving its industrial relations policy – to make
it easier for employers to boost short-term profits by cutting labour costs.
The significance of AWAs is not that they permit individual contracting but
that they supersede awards and, in some circumstances, enterprise agreements,
and can reduce specificic conditions provided in those forms of collective
regulation.
2.18
The only qualification is that in order for an AWA to
be certified it has to pass a global no disadvantage test, which means the
Employment Advocate has to certify that the agreement does not, on balance,
disadvantage the employee compared to the relevant award that applies under
federal, state and territory laws.[51] The
'global' nature of the no disadvantage test is important because, as suggested
above, it means that an AWA may fall below any individual terms or condition
set by an award, provided that the overall
agreement does not disadvantage employees whose terms and conditions are
covered by the AWA.[52] Where this falls
down and where the committee has serious reservations, is the OEA's ability to
fulfil and enforce this important statutory protection and obligation which,
along with other concerns, is discussed later in the chapter.
2.19
While most witnesses appearing before the committee
were in favour of abolishing AWAs, there was acceptance that an enterprise
bargaining system should accommodate different types of agreement-making, both
collective and individual. The committee does not take issue with individual
agreements per se, both statutory and
common-law, provided they are underpinned by a comprehensive award safety net
and adequate processes and resources are set aside to ensure compliance. As
discussed in Chapter 1, this reflects the reality that some 40 per cent of
workers are on individual contracts of one kind, many of which provide workers
with over-award benefits. Problems arise with the processes involved in making
and approving AWAs. Critics of AWAs raised a number of concerns, including the
capacity for AWAs to provide a standard for setting wages and employment
conditions which is lower than the award system, and the ability of employers
to offer AWAs on a 'take it or leave it' basis.
Managerial prerogative and pattern
AWAs
2.20
The Government's proposed changes to industrial
relations laws are the subject matter of eleven papers by seventeen academic
researchers, which were submitted to the inquiry as a 'report card' on the
effect on workers and workplaces of polices introduced by the Coalition
Government since 1996. It is their collective view that Government policies
have undermined employee rights; specifically, that the narrowing of awards and
collective agreements and the promotion of individual contracts has significantly
enhanced managerial prerogatives, diminished the independence and choice
available to employees and denied them access to collective agreements.[53]
2.21
A coordinator of the 'report card', Professor Bradon
Ellem, told the committee at its Sydney hearing that the narrowing of awards
and the promotion of individual contracts have enhanced managerial prerogatives
– the right of management to unilaterally determine the pay, working hours,
duties and employment conditions of workers. This is a view supported by a
number of studies.[54] Employees on
individual contracts have an inherently weaker bargaining position, and
inherently weaker power, than employees under collective agreements. This is
one of the largest differences between individual and collective agreements.[55]
2.22
Professor Ellem
pointed out that Labor and Coalition governments have a history of intense
interventionism in employment relations. Far from pursuing a policy of
deregulation, the general thrust of the industrial relations policies of the
Howard Government, especially its promotion of AWAs, has been to 'reregulate'
the labour market to enhance managerial regulation of the workplace. This has
involved a significant power shift away from external regulation by third
parties, particularly the industrial relations commissions, towards the internal
regulation of organisations by management.[56]
It is essentially a process which encourages employee commitment to one kind of
collective, namely the corporation, while reducing the role of other collectives,
namely unions. This trend is set to continue under the Government's WorkChoices
policy which, according to one academic assessment, will involve '...profound
state intervention mandating a very particular vision of working life'.[57]
2.23
The committee heard evidence from unions that AWAs are
a 'marvellous mechanism' for employers to isolate and decollectivise
individuals and remove their benefits and entitlements.[58] An employee of Queensland Newspapers, Mr
Ross Franks,
described to the committee at its Sydney
hearing his experience negotiating an AWA and the effect it had on him and his
colleagues within the company, News Limited:
Our experience since...working within an AWA, as compared to a
site agreement with the other employees, is that we have been marginalised,
separated from the main body of workers and have not had opportunities open to
us to negotiate our positions as the negotiation stages came up – for example,
when the AWAs were due to expire. We have found that, as these documents have
come to their conclusion and been up for renegotiation, the company has point
blank refused to negotiate with us on key parts, mainly our annual increase in
salary or wages. That was certainly the one thing that we were most
uncomfortable with.[59]
2.24
The committee finds that the main purpose of AWAs is to
individualise the process of agreement making between employers and employees
rather than the outcome of negotiations. This is why AWAs operate increasingly
as pattern agreements which are offered to workers in the same classification
across like industries. A number of case studies confirm the use of
standardised or pattern AWAs. Research by Dr
Kristen van Barneveld
into the practical operation of AWAs in the hospitality industry found that employers
are not interested in individual agreements but utilise pattern AWAs:
In my research, the only difference was whether you were
full-time, part-time or casual and salaried or non-salaried. Even where
employees did want to negotiate their own wages and conditions, there was only
one instance of an employee...who revealed he had success. There was evidence of
probably three or four other people negotiating minor things like what doctor
they went to if they were sick or whether or not they wore a uniform, but I
would argue that they re not major issues...[60]
2.25
Bray and Waring's survey also concluded that AWAs on
the whole are used by management to extend managerial prerogative and reap the
administrative benefits that arise from contractual standardisation. An
increase in the incidence of AWAs amounts to an increase in managerial decision
making within the workplace.[61]
Contesting OEA data on wages
2.26
One of the main areas of contention between the Government
and critics of AWAs is over the interpretation of official statistics on
earnings under various types of workplace agreements. It became clear to the
committee during the inquiry that this important debate is hampered by the
absence of reliable disaggregated data on wage increases under individual and
collective agreements. Some time after the passage of the 1996 Act, the OEA
provided samples of AWAs to the Australian Centre for Industrial Relations Research
and Training (ACIRRT) from which it published data on wage increases under
AWAs. Yet apparently after a few years, the OEA stopped providing AWAs to ACIRRT
for reasons which are unclear, thus preventing further analysis of this issue.
The figures on earnings included in the OEA submission are based on the
Australian Bureau of Statistics (ABS) survey, Employee and Hours, which is published every two years. Figures
from the May 2004 survey were published in March 2005. According to the OEA
submission:
The published data show that the average weekly total earnings
(AWTE) of employees working under Australian workplace agreements (AWAs) remain
clearly higher than those for employees covered by either an award or certified
agreement (CA).
The AWTE of employees on AWAs are on average 13 per
cent higher than for employees on CAs ($890.93 cf. $787.40), and 100 per cent
higher than those on the award ($890.93 cf. $444.55).[62]
2.27
The OEA figures have been critically examined by Professor
David Peetz
who has found serious flaws with its methodology and findings. Peetz's assessment
is worth quoting in full:
When the advocates of individual contracting cite higher wages
from AWAs than from collective agreements, they are careful to choose the
figure that is most favourable to individual contracting – but which is also
the least valid comparison of like with like. For example, they will typically
use weekly rather than hourly earnings (because AWA employees work 6 per cent
more hours, though they have an hourly rate of pay 2 per cent lower, the total
earnings of AWA employees are 4 per cent more than workers on collective
agreements) and include managerial employees (which makes AWA employees appear
to receive 12 per cent more per week than workers on registered collective
agreements).[63]
2.28
When comparing wages under AWAs with other forms of
agreement it is important that the hourly rate of pay be used as a basis for
comparing wages.
2.29
Another flaw with the argument that workers on AWAs
receive significantly higher wages than workers covered by collective
agreements and awards is that '...it does not tell you anything'. It only shows
that high-paid workers receive more wages than low-paid workers. The committee
finds that evidence used by the OEA and the department is presented at too
aggregate a level, which makes it difficult to make meaningful claims across
the spectrum of industries and occupations about employees being better or
worse off under AWAs. According to Professor
Peetz, the ABS data does not directly
compare the same people in the same workplaces at two points in time: '...the
official statistics do not necessarily compare like with like, they just
compare averages, and are affected by the compositions of the different
groups'.
2.30
Peetz argued that at least six factors should be borne
in mind when using official statistics to compare the hourly wage levels of
workers on AWAs and collective agreements. First, AWA employees include a
disproportionate number of managerial employees, which is the biggest single
factor boosting the average pay of AWA workers. Second, the average hours
worked by employees on AWAs are longer than those on collective agreements.
Third, the average earnings of employees on AWAs are exaggerated by their being
disproportionately concentrated in industries with higher average earnings,
such as mining, communications and finance. Fourth, at the time of the ABS
survey in May 2004, a small number of workers on registered individual
contracts were covered by state systems rather than the federal system. Fifth, the
average pay of workers on registered collective agreements is depressed because
some of them are covered by non-union enterprise agreements which have inferior
wage increases compared with union collective agreements. Finally, roughly 20
per cent of workers on collective agreements are not union members but free
ride on the gains achieved by unionists. This reduces the benefits achieved in
collective agreements.[64] The
assessment is supported by Professor Bradon
Ellem who told the committee that only a
comparison of the hourly wages of award, enterprise agreement and AWA workers within
the same industry, and preferably within the same workplace, will identify any real
wage differences.[65]
2.31
With these cautions in mind, the committee notes that ABS
surveys of employers conducted in May 2002 and 2004 do not support the
Government's position on wages under AWAs and collective agreements. There is
no evidence to support the contention that earnings of employees on AWAs have
increased at a faster rate than those on collective agreements. Quite the
contrary. Average weekly earnings of employees on federal collective agreements
were 6.2 per cent higher in May 2004 than in May 2002, whereas weekly earnings
of employees on AWAs were 11 per cent lower for the corresponding period (see
Figure 1).[66]
2.32
More telling is the data on hourly earnings for
non-managerial workers on registered individual contracts, 99 per cent of whom
are on AWAs (see Figure 2). The figures show that workers on registered
collective agreements were paid about 2 per cent more than workers on AWAs.
Casual workers on AWAs were paid 15 per cent less than registered collective
agreements, permanent part-time workers were paid 25 per cent less and female
permanent full-time workers on AWAs were paid 7 per cent less than collective
agreements. Only male permanent full-time workers had higher average hourly
earnings than registered collective agreements. The committee examines the
gender pay gap for workers on AWAs and collective agreements in chapter 4.[67] The committee finds Peetz's conclusion
compelling:
Overall, the ABS data confirm the conclusions from numerous
other sources and studies: unions, and union-based collective bargaining,
create higher wages and better conditions for workers: individual contracting
creates poorer pay and conditions and does this most effectively for those with
weaker positions in the labour market.[68]
Figure 1 - Change in average weekly earnings, by
agreement type, 2002-2004[69]
2.33
A main area of concern, especially for workers in low
paid jobs, is how wages are calculated and factored into AWAs, which produces
significant cost savings for employers compared to award conditions. A typical
AWA replaces entitlements such as casual and weekend loadings with an 'all-in'
or annualised rate of pay, rather than payment of an hourly rate plus
penalties. This will not always compensate workers for the loss of income from
those other entitlements, which many low paid workers rely upon to make ends
meet.[70] These findings are consistent
with the research by Dr Kristen
van Barneveld which found that employees on
AWAs in the hospitality industry were less likely to gain a wage increase
during the term of their agreement than employees covered by certified
agreements. Employers in the hospitality sector have used AWAs to introduce
annualised salaries with a loading 25 per cent below the award rate.[71]
Figure
2 - Average
hourly earnings, non-managerial employees by method of setting pay, May 2004[72]
Lessons
from New Zealand
and Western Australia
2.34
Between 1991 and 1996, the New Zealand Government
pushed individual agreements under its radical Employment Contracts Act 1991 (ECA). The ECA abolished industrial
awards, ended official recognition of unions, prohibited compulsory unionism
and created a system of individual contracts and collective contracts. The
safety net under individual contracts in New
Zealand was very similar to the five minimum
standards under the Government's proposed fair pay and conditions standard. Analyses
of New Zealand's
industrial relations experiment have concluded that it was a disaster for jobs,
wages, and productivity growth and dramatically increased the numbers of
'working poor' as many jobs were casualised, reduced to part-time hours or
contracted out.[73]
2.35
The committee notes with some concern industry
minister, Ian MacFarlane's,
admission on commercial radio on 16
August 2005 that one of the main goals of industrial relations reform
is to reduce wages to a level which is experienced in New
Zealand. The minister stated: 'We've got to
ensure that industrial relations reform continues so that we have the labour
prices of New Zealand.
They reformed their industrial relations system a decade ago. We're already a
decade behind the New Zealanders. There is no resting'.[74]
2.36
The effects of the industrial relations changes
introduced in New Zealand
were soon to be felt in Australia.
Within six weeks of being elected in 1992, the Kennett Government in Victoria
passed an Employment Relations Act which effectively abolished awards for many
workers and replaced them with individual contracts. In a similar vein, the
Court Government in Western Australia
introduced registered individual workplace agreements (IWAs) under the Workplace Agreements Act 1993. The
Western Australian Government submission notes that under a system of
'minimalist employment contracts', many workers in that state were led to
believe that implementing individual agreements would remove the influence of
awards and unions and automatically enhance their success.[75]
2.37
The outcome was very different. Individual contracts
were not used to facilitate mutually rewarding workplaces. They were used
instead to strip awards and drive down wages and employment conditions. Reports
prepared by ACIRRT in 1996, 1999 and 2002 on the effects of IWAs provided
concrete evidence that the system which promoted individual contracts over
collective agreements did not provide a fair and equitable safety net of wages
and conditions. The first two reports were commissioned by the then Trades and
Labour Council of Western Australia (UnionsWA).[76] The reports found that most individual
workplace agreements did not provide penalty rates for weekend, holiday or
overtime work, discouraged the formal pursuit of grievances and were used by
employers to pursue pattern bargaining.[77]
The 1996 report concluded that 'deregulation may simply result in reduced
accountability in the settlement of wages and working conditions and not the
development of dynamic, innovative agreements that meet the particular needs of
the individual parties involved'.[78]
2.38
The 2002 ACIRRT report prepared for the Commissioner of
Workplace Agreements compared employment conditions in 200 IWAs across four industries
against the relevant state award. The report overall found that workers were
generally worse off under IWAs than under the comparable award.[79] It concluded that IWAs were basic
documents adopting a 'bare bones' approach to hours of work and hourly rates of
pay. The agreements invariably provided open-ended hours of work under the
guise of flexibility, with management and business needs being the key drivers
determining hours of work. A common approach was to expand the ordinary working
time arrangements and thereby reduce penalty costs that would have previously
been paid for working outside ordinary hours.[80]
The report found that while it appeared that workers on IWAs received a
significantly higher rate of pay relative to the award, a closer analysis found
that the 'loaded hourly rate' which absorbed entitlements such as leave and
penalty payments did no make up for the increasingly open and flexible hours of
work.[81]
2.39
A research paper in 2005 by the Liquor, Hospitality and
Miscellaneous Union which analysed the effect of WA workplace agreements also
found that the Workplace Agreements Act of 1993 contained provisions which were
significantly inferior to those contained in the awards. It found that under
the act standard full-time working hours increased from 38 to 40, the accepted
minimum casual loading of 20 per cent was reduced to 15, junior rates applied
up to the age of 21 years and the accrual of unused sick leave was removed as
were penalty loadings for weekend and shiftwork.[82] These were the conditions prevailing
under an act which in 1995 the then Leader of the Opposition, John
Howard, fully endorsed as an industrial
relations system 'I would like to see throughout Australia'.[83]
2.40
The Western Australian Government submission argued
that AWAs in that state have been used by employers to undercut award
conditions. The data on earnings shows that AWAs in that state provide the
lowest rates of pay of any form of agreement – $65.10 less per week than
workers on certified agreements and $21.80 less per week than those on state
industrial agreements: 'Most disturbingly, average weekly total earnings for
AWA employees in the last two years have declined by $212.20 per week'.[84]
2.41
A recent report on the gender pay gap in Western
Australia found that Western
Australia has the largest gap between men's and
women's wages of any state.[85]
'Take it or leave it' AWAs, employer
lockouts and coercion
2.42
As previously noted, the WR Act is based on the
principle that individual and collective agreements should be 'treated equally'
with no preference for either. Yet when the act eased the way for employers to
introduce AWAs, it created the conditions for unscrupulous employers to bully,
frustrate and evade the preference of their employees for collective
representation. The committee is concerned by two loopholes created in the
employee protection provisions under section 170WG of the WR Act. The first loophole
is 'take it or leave it' AWAs where employers can legally make signing an AWA a
condition of employment when starting a job: sign the AWA, agree to this wage
and set of conditions and sign away any right to collective bargaining, or you
don’t get the job.[86]
2.43
According to the ACTU, the freedom of association and
anti-coercion provisions of the act do not provide a sufficient safeguard for
workers who experience pressure or coercion from their employer to sign an
individual agreement.[87] The Job Watch
submission referred to a significant number of workers who had been subjected
to duress or coercion by their employer to sign an AWA, including the threat to
terminate employment and reduce hours and entitlements:
...callers indicated that they would or had signed the AWA because
they feared the repercussions if they refused to sign. For many employees the
threat of losing their job, or a cut in hours, or a reduction in their
entitlements made them feel that they had little room to bargain. This was
despite the fact that rights and protections were available under the Workplace
Relations Act.[88]
2.44
The committee received submissions from two former
employees of the company Krispy Kreme,
who claimed they were 'pressured and bullied' into signing an AWA.[89] One of the submitters, Ms Jasmin
Smith, explained that once on an AWA, many standard award benefits including
overtime, fixed Saturday loadings, 50 per cent penalty rates for Sunday work
and a uniform allowance were abolished. She claimed to have suffered a 9.3 per
cent wage cut without receiving any benefits in return, and a significant
increase in the number of hours of work. She criticised the AWA for not
providing any satisfactory mechanism for workplace disputes to be referred to a
third party such as the Commission, and described how a formal written
complaint of sexual harassment made by her against a company manager was
ignored with no redress available under the AWA, except for a non-binding
mediation provision. This instilled little confidence that the complaint would
be dealt with fairly. Ms Smith
strongly urged the committee to recommend against the retention of AWAs 'in any
form whatsoever'.
2.45
The AiG responded to the issue of coercion and 'take it
or leave it' AWAs by referring the committee to the unlawful termination
provisions of the WR Act which state that employers are not able to force
existing employees onto an AWA. The AiG also referred the committee to
decisions of the Federal Court and the Commission which have held that offering
an AWA to prospective employees as a condition of employment is not coercion:
'It is simply offering terms and conditions to a prospective employee. The employee
then has a free decision about whether or not they want to go and work for that
employer on those terms and conditions'.[90]
2.46
The committee is unconvinced by these assurances as, no
doubt, are workers who have been pressured into signing an AWA. Professor
Andrew Stewart
told the committee at its Melbourne
hearing that employers have developed ways and means of applying pressure on
existing employees who are reluctant to sign an AWA, without being in technical
breach of the legislation:
We saw some efforts being made in that way in the Merbein
Mushrooms case, where all the workers were transferred to a separate company
without being told and then told, 'You're now new employees.' Even in the
simpler situation of casuals or people who want a promotion or a wage rise, it
is pretty easy to say, 'If you want those things, here is the instrument you
have to sign'.[91]
2.47
At a more fundamental level, the committee is concerned
by the lack of an effective remedy for employees who have experienced coercion
to sign an AWA. Evidence to the committee was that enforcement of the
anti-duress provisions is virtually non-existent. The anti-coercion provisions
of the WR Act appear to be beyond the reach of most workers. Under the law,
workers have a right to raise the issue of duress and prosecute an employer
through the courts. Yet, under the legislation even a successful prosecution
does not invalidate an agreement that has been signed, which is the most likely
reason why very few prosecutions for duress have been taken to court. Employees
can raise the issue of duress with the OEA, who has the power to investigate
whether or not consent has been given to an AWA. The committee is not aware of
any evidence that the OEA pursues cases of alleged coercion with any conviction,
if at all.[92]
2.48
The committee rejects the suggestion that the principle
of 'take it or leave it' individual agreements applies equally to AWAs,
collective agreements and awards. While workers covered by the award system are
required to accept the terms and conditions of the award which covers their
employment, it was rightly pointed out by Dr Kristen van Barneveld that workers
would have some confidence that the content of the award had been negotiated by
a collective and voted on or approved by the Commission: 'In that sense, as an
employee, I would have more confidence being under the collective stream than
being told: "Here's an AWA. If you don't like it, you can't have the
job"'.[93]
2.49
The second loophole under section 170WG is the capacity
of employers to lock out employees for the purpose of compelling or inducing
them to sign an AWA on particular terms and conditions. Employers may also lock
out employees in pursuit of a certified agreement or in response to union
action in pursuit of an agreement. The ACTU submission argued that lockouts are
essentially a coercive tool used against employees. There are many examples
where lockouts have been used to deny employees the right to collectively
bargain, compel employees to accept AWAs and drive down the settlement terms in
collective bargaining. In some instances they are used as a disproportionate
response to industrial action.[94] The
committee is particularly concerned by the effect of lockouts on productivity,
especially when they arise from disputes over the form of an agreement and last
for long periods.
2.50
Lockouts are the employer version of strikes. However,
strikes are clearly circumscribed and defined via the instrument of protected
action. The question concerning lockouts is when might they be considered
appropriate or legitimate in the circumstances?
2.51
The committee notes that a dramatic rise in the number
of employer lockouts since 2000 has coincided with a sharp decline in the
incidence of employee industrial action. A research paper on lockout law in Australia
by Dr Chris
Briggs shows that between 1994 and 1998
lockouts accounted for only 1.6 per cent of working days lost. By 2003, the
number of days lost has increased to 9.3 percent.[95] The committee finds that Australia
is alone among OECD countries in sanctioning lockouts. Lockouts are not a legal
instrument in many countries while in others they are permitted only in
response to evidence of a serious imbalance of bargaining power in favour of
employees. The ACTU believes that lockouts have no place in Australia's
labour laws.[96]
2.52
The committee believes that legislation should include
provisions for good faith bargaining and enabling the Australian Industrial
Relations Commission to intervene to assist parties settle a dispute. The
committee notes that the Western Australian Government has accommodated these
changes by proposing that the Industrial Relations Commission be given the
power to intervene and arbitrate in a dispute to ensure that the parties
negotiate and bargain in a reasonable and proper way.
The role of the Employment Advocate
2.53
The statutory position of the Employment Advocate was
established under section 83BA of the Workplace Relations Act. It provides a
long list of functions relating to advising employers and employees about their
rights and obligations under the act and investigating alleged breaches of AWAs
and other contraventions. The act states that in performing his or her
functions, the Employment Advocate must have particular regard to:
(a)
the needs of
workers in a disadvantaged bargaining position (for example: women, people from
a non-English speaking background, young people, apprentices, trainees and
outworkers);
(b)
assisting workers
to balance work and family responsibilities; and
(c)
promoting better
work and management practices through Australian workplace agreements.[97]
2.54
A number of specific concerns were raised in evidence about
the duties performed by the OEA, especially the crucial function of ensuring
that AWAs pass the no disadvantage test. Professor
Stewart's submission noted that the OEA has
adopted an 'evangelical approach' to the promotion of AWAs and has treated the
number of AWAs approved as some sort of key performance indicator.[98] Other commentators identified serious
deficiencies with the OEA's administration of AWAs. It was argued that the impartial
task of regulating AWAs on the one hand and the partial task of promoting them
on the other, represents a direct conflict of interest, especially in relation
to protecting employees' freedom of association under the act.
An impartial body charged with defending freedom of association
would work tirelessly to prevent AWAs being used to de-unionise workplaces. Yet
because of its role in promoting AWAs, the OEA has taken virtually no action
against firms using AWAs to de-unionise. Thus the OEA has been silent in many
Federal Court cases when it was claimed AWAs were being used to de-unionise
workplaces on the waterfront, in banking and in mining.[99]
2.55
The Western Australian Government submission expressed
the view that it is 'absurd' that the same organisation entrusted with
promoting and approving AWAs is also responsible for compliance.[100] The committee agrees, and adds
further that the OEA can not guarantee that AWAs do not disadvantage employees
when it actively encourages employers to use individual contracts to abolish
penalty and overtime rates of pay, sometime without offsetting increases in
base pay.
2.56
There is concern in some quarters over four other issues
with regard to the role of the OEA. First, the submission by Professor
Stewart referred to a number of reported
instances where concerns have been raised regarding AWAs approved by the
Employment Advocate which have almost certainly failed to pass the no
disadvantage test. Perhaps the most celebrated of recent cases involved the
Dernancourt franchise of Bakers Delight which was taken to the Industrial
Relations Court of South Australia for paying a fifteen year old student who
had signed an AWA $1438 less than was required under the terms of the state
award that applied to her position. The committee is aware that the only reason
the claim succeeded before an industrial magistrate was that the employer could
not prove that the employee's AWA had been approved by the OEA. Whether or not
the OEA approved the AWA is a moot point. The important issue is that the
company had over 50 employees on AWAs identical to the agreement which the
employee at the centre of the dispute had signed. The final paragraph of Judge
McCuster's decision reads in part:
In considering [the employer's] submission I leave aside for the
moment the manifest disadvantage of the respective bargaining positions of a 15
year-old Year 10 student negotiating her terms with an experienced
businessman...The AWA sought to cut her minimum
entitlement by approximately 25 per cent. The appellant's contention that the
other AWAs all of which contained the same terms passed the "no
disadvantage test"...does nothing to improve its argument. Rather it shows a
troubling situation.[101]
2.57
At the committee's hearing in Melbourne, Professor Stewart
repeated his concern about the Employment Advocate's willingness to approve
AWA's that may be of dubious merit in terms of meeting the statutory criteria:
'There is hardly a lawyer or practitioner that I speak to who has had anything
to do with AWAs who does not have the view that it is a little easy to get AWAs
through'.[102]
2.58
The second issue that was brought to the committee's
attention was that the Employment Advocate outsources its core function, namely
the approval of AWAs, to private sector organisations known as 'industry
partners', who are responsible for promoting the use of standardised AWAs. It
is widely known that these consultants assist employers to fast track AWAs to
reduce costs. They also typically receive a fee-for-service from clients who
make AWAs. The Western Australian Government submission claimed it is
'ludicrous' for the Employment Advocate to outsource a core function to
organisations that profit from the AWAs being made.[103]
2.59
The third area of concern is that the WR Act provides
no mechanism to review decisions of the Employment Advocate or industry
partners concerning AWAs. While the committee accepts that the confidentiality
provisions under the act are necessary to protect AWAs from disclosure, it is
concerned that the Employment Advocate operates with minimal accountability and
the OEA is effectively a 'law unto itself'.[104]
Mr John Ryan, SDA, drew the committee's attention to the fact that only by
application of a technical and little known prerogative writ is the Employment
Advocate subject to application for review to the High Court. Other than that,
there is no opportunity to review decisions of the Employment Advocate:
He is a strange statutory creature. He is not subject to any
review under the Administrative Decisions (Judicial Review) Act. He is not subject
to any review under the Workplace Relations Act. He seems to be totally devoid
of being subject to any form of review other than when he is subject to review
to the High Court through the application of one of the prerogative writs.[105]
2.60
Having said that, the committee is surprised that the
powers available to the Employment Advocate under the act do not include the
capacity to settle disputes between employees and employers over the terms of
an AWA. The committee received no evidence that the dispute procedures included
in AWAs have ever specified a conciliatory role for the Employment Advocate. While
all agreements, individual and collective, must include a dispute-settling
mechanism, the act does not stipulate what must be included in the provision or
what form it must take. If an AWA lacks a dispute resolution procedure, the
provision that is provided as a template in the act will be deemed to apply.
2.61
The committee believes that the WR Act's dispute
resolution provision gives employers a considerable advantage over employees,
especially where terms and conditions which employees have signed up to are left
to the employer's discretion. It is increasingly common, for example, for AWAs
to include an entitlement to four weeks annual leave but not mention when the
employee can take leave, whether the employer or employee is required to give
notice and under what circumstances leave can be refused. It would be up to the
employer to decide these issues, whereas under the relevant award system they are
set out in clear and simple terms. In these circumstances employers hold the
advantage because it would be acceptable for an AWA to set out a dispute
resolution procedure which states that the decision of the human resources
manager or general manger is to be taken as final. To the committee's surprise
the Employment Advocate, Mr Peter
McIlwain, confirmed at the committee's Sydney
hearing that an AWA would be approved if, meeting all other conditions under
the act, it contained a dispute resolution procedure which said the employees'
avenue of appeal in the event of a dispute was, for argument's sake, the
employer's grandmother.[106]
2.62
A final area of concern is what the Enterprise
Initiatives submission described as 'chronic delays' in the approval of AWAs. Figures
assembled by Enterprise Initiatives show that of nearly 4000 of its clients'
AWAs prepared between December 2004 and August 2005, 821 were awaiting approval
beyond the OEA charter of 20 days, including 187 which took more than 3 months
to be approved and 309 AWAs which took more than 6 months.[107] In 2004-05, a total 6500 AWAs took
longer than 6 months to be approved.[108]
The submission argued that these delays and administrative inefficiencies
contributed to the 'abysmal' take-up rate of AWAs as a proportion of Australia's
total working population. It concluded: 'By any measure, AWAs have been an
appalling and inexcusable failure, with less than 4 per cent of the Australian
working population currently employed on one'.[109]
Agreement-making under WorkChoices
2.63
When the Prime Minister announced the Government's
agenda for workplace relations reform in the Parliament on 26 May 2005, high on the list of proposals was a
simplified process for agreement-making. Among the key principles underpinning
the reforms were greater freedom and flexibility to employers and employees to
negotiate at the workplace level, and providing people with the 'choice' of
remaining under the existing award system or entering into workplace
agreements. It was claimed that the current process of agreement-making is long
and frustrating for employers and employees, preventing them from making their
own arrangements at the workplace. The Prime Minister indicated that a
'streamlined, simpler and less costly agreement-making process' would be
introduced where all collective and individual agreements will be approved on
lodgement with the OEA.[110]
2.64
Although the committee did not have the benefit of
examining the detail of proposals contained in the Workplace Relations
Amendment (WorkChoices) Bill 2005 before tabling its report, a number of
submissions and expert commentary raised concerns about the proposals as announced
by the Prime Minister. The committee notes that three proposals in the
Government's WorkChoices policy will radically change agreement-making between
employers and employees: abolishing the no disadvantage test and replacing it
with a fair pay and conditions standard; having individual and collective agreements
take effect from the date they are lodged with the OEA; and enabling employees
to bargain away a range of award conditions when new workplace agreements are
'negotiated', including penalty rates, shift/overtime loadings, allowances,
public holidays, meal breaks, annual leave loadings, incentive-based payments
and bonuses.
2.65
The government's plan to abolish the no disadvantage
test and replace it with a new minimum standard is one of the most controversial
of the proposed changes. The new standard will comprise the relevant award
wages and four other legislated entitlements including annual leave, personal/carer's
leave (including sick leave), parental leave (including maternity leave) and
maximum ordinary hours of work. According to preliminary assessments, two major
consequences stand out. First, there will be widespread potential for
reductions in employees' weekly pay as it will be easier for employers to
reduce or cut altogether penalty rates, overtime rates, leave loading, shift
allowances and all other items of remuneration not covered by the 'fair'
standard. The Government appears to have responded to this criticism by
including in its WorkChoices policy brochure a requirement that while these conditions
can be the subject of bargaining, they can only be modified or removed by specific
provision in an agreement approved by the employee. The WorkChoices policy
states: 'If these conditions are not mentioned in the new agreement under
WorkChoices these award conditions [penalty rates, overtime rates and so on]
will continue to apply'.[111]
2.66
The committee believes this is a smoke screen. To argue
that award conditions are 'protected by law', as Government advertising makes
out is a deception. The idea that employees will either be able or willing to negotiate
away entitlements defies the reality of AWAs. This report has shown that it
will be straightforward for employers to present new or existing employees with
'take it or leave it' AWAs which exclude many award conditions. It is a
ridiculous proposition to suggest that employees will have any say in this, let
alone be aware of what they are signing up to.
2.67
Second, there is likely to be a surge in registered
individual agreements, with employers being encouraged to download from the OEA
website template AWAs of only one or two pages, with all other employment
matters presumably set by managerial prerogative.[112]
2.68
The committee believes that the concerns which were raised
in evidence about the consequences of the Government's intention to further
simplify agreement-making will be realised after its WorkChoices legislation is
passed into law. It is particularly concerned that the Government's policy will
radically alter and weaken the federal award system which currently provides
the foundation and structure for individual and collective enterprise
bargaining agreements.
Navigation: Previous Page | Contents | Next page