Opposition Senators' report
2.1
The Opposition is opposed to the Workplace Relations
Amendment (Agreement Validation) Bill 2004 in its current form. Opposition
senators believe the bill demonstrates the Government's eagerness to press
ahead with its divisive second wave industrial relations 'reform' agenda in the
lead up to having a majority in the Senate after 1 July 2005. The Government has already flagged that it
will re-introduce into the parliament a raft of workplace relations bills
previously rejected by the Senate, including the controversial Building and
Construction Industry and Improvement Bill 2003. The Government's claim that the
Agreement Validation bill will provide certainty and stability to both
employers and employees by validating enterprise bargaining agreements
certified by the Australian Industrial Relations Commission ('the Commission') before
the High Court's Electrolux decision of
2 September 2004, does not stand up to scrutiny.
2.2
In this dissenting report, Opposition senators
challenge the assertion by the Department of Employment and Workplace Relations
(DEWR) and employer groups that the bill is sensible and practical, delivering
fair and just outcomes for all concerned, and that its immediate passage
through the parliament is therefore a matter of urgency.[20] This benign view of the bill's likely
impact can be challenged on the basis of evidence presented to the committee by
the ACTU and the CFMEU. It is clear that the bill does not address the
underlying problems and uncertainty created by the Electrolux decision, leaving unions exposed to potential legal
liability for any industrial action that is found to be not protected. The Electrolux decision merely puts a spot
light on ambiguity in section 170LI of the Workplace
Relations Act 1996 (WR Act) over the expression 'matters pertaining to the
employment relationship'. For these reasons, Opposition senators firmly believe
that the bill should be amended by the Senate.
The Government's agenda
2.3
The majority report states that the bill is in large
measure a response to urgent calls to ensure a high degree of certainty for
valid agreements which are currently in force. The Opposition, however,
questions the Government's motive with respect to this bill. It seems clear to
Opposition senators that the bill's main objective is to forestall any attempts
by unions to renegotiate and put in place new three-year enterprise agreements,
especially where claims are being made that were not included in the original agreements.
Opposition senators note that there is nothing unusual or unlawful in unions
wanting to renegotiate enterprise agreements on behalf of employees following the
Electrolux decision. More to the
point, the bill is justifiably regarded by some unions as an attempt by the
Government to impose a political settlement on the enterprise bargaining
process and to realign the rules of bargaining in favour of certain industry
employers.[21]
2.4
Opposition senators also view the bill as an attempt by
the Government to place further limits on the range of matters over which
unions can take protected industrial action. While DEWR claimed in its
submission that the Government is determined to ensure that agreements
certified by the Commission are upheld and enforced and that no one - employers
or employees - can exploit their potential invalidity, there can be no question
that it is unions and not employers which the Government has firmly in its
sights in this regard. This much was acknowledged by the Minister for Workplace
Relations in a provocative press release:
The Government is determined to ensure agreements entered into
by business are upheld and enforced. Unions in the electricity and construction
industry have tried to take advantage of uncertainty caused by the Electrolux
decision by pressuring businesses to re-negotiate agreements which contain
clauses which are union friendly and bad for business. The new legislation will
remove the need for businesses to re-negotiate their agreements.[22]
2.5
DEWR, in its submission, also referred to 'certain
unions' which have discussed publicly a campaign to use potential invalidity as
a trigger to reopen negotiations with employers regarding their terms and conditions.
2.6
Opposition senators take exception to this biased
assessment. It is clear from evidence by the Australian Chamber of Commerce and
Industry (ACCI) that employer groups have also seized on the opportunity presented
by the Electrolux decision to dissuade
unions from legitimately renegotiating enterprise agreements. ACCI is of the
view that a combination of court and Commission judgements, based on test cases
and appeals, will provide clarity to the concept of 'matters pertaining' in
respect of contentious or grey areas. In the meantime, ACCI argues that
certainty in enterprise bargaining is best achieved by parties only including
in their proposed agreements matters which clearly pertain to the employment
relationship. Yet the distinction which is being drawn between matters which
'clearly do' and those which 'clearly do not' pertain to the employment
relationship is largely self-serving. A clear line in the sand has not yet been
drawn by the courts or the Commission. The problem here is that any attempt to voluntarily
restrict the terms of an agreement will in all likelihood leave employees in a state
of uncertainty and unions concerned about the equity of future enterprise
bargaining processes. ACCI claimed in its submission that 'Real certainty lies
in caution'.[23] However, Opposition
senators take a different view and believe that when employers talk about
'certainty' and 'stability' in the context of this bill it is code for wanting
to further restrict the number of allowable matters under section 170LI of the
WR Act.
Why the bill is flawed
2.7
Notwithstanding the Government's motive for rushing
this bill into the parliament, Opposition senators believe it is fundamentally
flawed in at least four ways. First, the bill does not solve the fundamental
problem which it is designed to address; specifically it does not provide certainty
for parties to certified agreements which came into force before the Electrolux decision. Neither does it
provide certainty for parties who negotiated agreements before the decision but
which are currently awaiting certification by the Commission. Evidence
presented to the committee by Suncorp Metway Ltd highlights the bill's
shortcomings in this respect. While Suncorp supports the underlying principles
of the bill, it advised the committee that the bill fails to address the
concerns of many employers and employees who had consulted extensively over
agreements before the Electrolux
decision:
At the time of the High Court decision, Suncorp was in the final
'cooling off' stage of a highly consultative, six-month process involving 4000
staff across the nation. We had circulated the final iteration of the Agreement
to more than 4000 employeers by the time the Electrolux decision was handed
down. Of those who voted, 87% of Suncorp staff voted in favour of the
Agreement.[24]
2.8
The dilemma now facing many employers, including Suncorp,
is that if the bill is passed in its current form their employees face the
prospect of having agreements declined certification, with new resource-intensive
negotiation processes having to commence with implications for cost, resources
and good working relationships with employees.[25]
2.9
The bill also leaves unresolved the important issue of defining
which matters pertain to the employment relationship. While the majority
decision of the High Court found that certified agreements were valid only
where substantive, discrete and significant matters in agreements pertain to
the employment relationship, uncertainty remains as to what constitutes
significant or extraneous matters. In fact, the uncertainty extends beyond
matters pertaining to the employment relationship. As noted by the ACTU: '...parties
to agreements, irrespective of when they were certified, do not know which
provisions of the agreements are enforceable or if their agreements are valid
in whole or in part'.[26] In partially
validating agreements, the Government is attempting to give employers a strategic
advantage in the bargaining process.
2.10
Second, the bill does not attempt to resolve the
uncertainty about the bargaining process and certification of agreements after Electrolux. This, according to the ACTU,
is arguably the bill's major shortcoming:
the fact is that no-one can say whether or not [certified
agreements since 2 September 2004]
are enforceable, even to the extent of the matters which pertain to the
employment relationship. It is completely unsatisfactory that parties are unable
to reach agreements which they know to be final and enforceable[27].
2.11
Third, the bill will have the effect of altering the
terms of existing enterprise agreements, a situation which Opposition senators
find unacceptable. By refusing to validate those matters which may subsequently
be ruled invalid, the legislation interferes with the substance of agreements
entered in to in good faith by employers and employees. It undermines the
bargain that has been struck between groups on the assumption that matters included
in an agreement are those which pertain to the employment relationship. This
was confirmed by Suncorp Metway Ltd in evidence to the committee.
2.12
The ACTU reminded the committee that an important
bargaining principle was at stake; that is, the right of parties to an
agreement to determine for themselves the matters about which they will bargain
and reach agreement: 'Where a union and an employer have reached agreement on
matters which they believe are relevant, the role of Government should be to ensure
that these agreements are valid and enforceable'.[28] The bill does not provide this level
of certainty.
2.13
Fourth, under the proposed legislation parties taking
industrial action will not know with any certainty whether or not the action is
protected from legal sanction.[29] As
noted in evidence by the CFMEU and the ACTU, the Government has taken the view
that it is not necessary, desirable or even practical to validate industrial
action that was taken in the belief that it was protected.[30] The minister's second reading speech
states that parties could not have reasonably expected that protected action
was available to support claims for non-pertaining matters. Opposition senators
do not accept the Government's position and note the ACTU's assessment that it
is perfectly normal for unions to have accepted the ruling of a Full Court of
the Federal Court which found that protected action could be taken in support of non-pertaining matters.[31] To suggest otherwise is unacceptable.
2.14
It is also understandable that unions take very
seriously the threat of legal action by employers which could be used a very
powerful bargaining tool against either unions or individual employees in a new
round of negotiations. According to the CFMEU, parties to an agreement:
...not only get less than what they bargained for by way of the
valid and enforceable terms of the agreement itself, but also a potential
liability for all of the industrial action leading up to that agreement even
where, as would likely be the case, a small part only of the total claim made
the action unprotected because it did not 'pertain'.[32]
2.15
Overall, Opposition senators are reluctant to support a
bill which will partially validate workplace agreements and provide a
transitional arrangement only until the time those agreements have expired. As
previously noted, the Government's primary policy objective in introducing the
bill is to ensure that existing rights and obligations are clear and
enforceable in the light of uncertainty about the correct interpretation of
section 170L of the WR Act. Yet legislating to partially validate agreements
will do nothing to remove this uncertainty. The bill is simply a stop-gap
measure that will not have the effect it so desires. The ACTU concludes that
unless the issue of uncertainty is addressed satisfactorily: 'the only
consequence can be a future characterised by parties litigating the issues in
order to gain some tactical advantage. While good for lawyers, it is not good
for employers and employees and the relations between them'.[33]
Partial validation will not provide certainty or stability
2.16
Opposition senators are of the view that DEWR and ACCI have
understated the degree of uncertainty about the issue of the employment
relationship and 'matters pertaining' following the Electrolux decision. It is not surprising that they both paint an
overly optimistic and simplistic assessment of the bargaining situation faced
by parties before and after the High Court's decision. According to DEWR, since
the decision the Commission has adopted the 'correct approach' to certifying
agreements which has resulted in it declining to certify agreements which
contain matters which do not pertain to the employment relationship.[34] While DEWR claimed that three
categories of matters have been the focus of recent Commission decisions -
those that seek to regulate the relationship between employees and their
representatives; clauses that seek to regulate the relationship between the
employer and third parties; and clauses that contain a mechanism for payroll
deduction - this overlooks the issue of uncertainty surrounding matters that
exist even at the margins of enterprise agreements. In other words, the waters
are far more muddied than DEWR is prepared to state.
2.17
The ACTU, in its submission, emphasised that the High Court's
finding in Electrolux only applied to
the issue of bargaining fees to be paid to a union (and, by implication, a
claim for deduction of union dues). That this has since been interpreted by the
Government and employer groups to support the argument that a large number of
matters, some of which have routinely been included in awards and agreements,
do not pertain to the employment relationship remains a matter for contention
and debate.
2.18
Opposition senators believe it is disingenuous for DEWR
to make out that the Commission now speaks with one voice on this issue and
that unanimity on what constitutes matters pertaining to the employment
relationship is within reach of the full bench of the Commission. How DEWR
knows this for certain remains a mystery to Opposition senators. The AiG is
also confident that full bench proceedings in the Schefenacker case, which is listed for 20 and 21 December 2004,
'will lead to a greater degree of clarity regarding what matters can and cannot
be included in certified agreements'.[35]
The Opposition notes the view of AiG that the High Court ruling has placed a
'significant statutory duty' upon members of the Commission for they must now
ensure that 'every provision of every agreement pertains to the employment
relationship before certifying an agreement'.[36]
2.19
There is every indication that such an expectation is a
long way from being realised. The short term prospect is for more uncertainty
and confusion arising from conflicting rulings of the Commission on a very
complex set of issues. Opposition senators note that important discrepancies
have already begun to emerge in recent decisions by the Commission. As the ACTU
emphasised in its submission, individual members of the Commission have recently
reached different conclusions on a range of issues, including provisions on the
right of entry for unions and paid union meeting provisions, recognition and
rights of union representatives, and employment of contractors.[37] A ruling by Commission vice-president,
Mr Iain Ross,
on 22 October 2004, which
found that only a narrow number of matters could not be included in an
enterprise agreement, is further evidence that the permissible scope of
enterprise agreements is in a state of flux.[38]
2.20
While DEWR states in its submission that recent
decisions by the Commission 'provide guidance to those making agreements about
which matters may fall outside the requirements of s.170LI',[39] this is a far cry from the certainty
and 'settled principles' which DEWR confidently predicts will emerge sometime
in the near future.
2.21
Opposition senators note the ACTU's assessment that: 'A
determination that an issue pertains or does not pertain to the employment
relationship in a particular case does not mean that a similar provision will
elicit the same result in a different case with different factual
circumstances'. This assessment is supported by the CFMEU:
In the case of enterprise bargaining agreements, the problem of
whether or not clauses pertain is compounded. Award clauses dealing with a
common subject matter were and are often in identical or substantially similar
terms. However the wording of agreements can vary markedly. This means that a
decision in respect of a clause in one agreement does not necessarily translate
directly across to a clause that deals with the same topic but in different
terms, in other agreements.[40]
2.22
DEWR told the committee at a public hearing that the
High Court's Electrolux decision had
found that the Commission's role was to certify only those agreements that
contain matters pertaining to the employment relationship. Opposition senators
are concerned by DEWR's admission that the Commission's search for consistent
and objective decision-making on the issue of 'matters pertaining' boils down
to an interpretation of individual clauses based on how they are drafted:
If [a clause] is drafted in such a way as to make it clear that
the clause has some benefits and some relevance to the employees and their
obligations and rights, and the employer, then it is likely to pertain, whereas
if it is drafted in such a way as to simply make a bald statement which would
appear to confer a right on a third party with no reference or relevance to the
employees then it is less likely to pertain. That is the approach the
commission appears to have taken.[41]
2.23
Opposition senators find that it is ridiculous for DEWR
to be arguing for consistency and certainty from Commission rulings on the
issue of 'matters pertaining' when it concedes that matters are determined valid
or invalid on the basis of how clauses in different agreements which deal with
the same matters are being drafted. Opposition senators do not accept the
proposition that rulings by the Commission on whether individual matters do or
do not pertain to the employment relationship are dependant upon the
methodology used for drafting individual clauses. This reinforces Opposition
senators' concern that the bill does not adequately address the current
uncertainty and confusion surrounding the question of how matters which do and
do not pertain to the employment relationship are being decided by the
Commission.
2.24
The important point is that while a full bench of the
Commission may, in due course, resolve differences within the Commission, this
will not necessarily be finally determinative, a point which employer groups
and DEWR seem to have conveniently overlooked.
2.25
Opposition senators also note that certified agreements
are voted on as whole packages. The WR Act does not allow employees to agree to
certain clauses and not agree to others - they are required to vote on an agreement
in its entirety.
2.26
It is unfair for the Government to expect employers and
employees to presume that existing agreements certified by the Commission are
valid when the bill stops short of defining what does and does not pertain to
the employment relationship. Opposition senators believe it is premature for
the Government to use this bill as a vehicle to exclude from validation those
matters that it believes should not have formed part of an agreement when,
according to DEWR, it will be at least several months before 'settled
principles' emerge about what can and cannot be included in enterprise deals.
The Government's proposed legislation is presumptuous because it assumes that
the negotiation of future workplace agreements will further narrow the range of
permissible matters, thus delivering more favourable outcomes for employers.
2.27
In concluding that the bill will be of no assistance in
addressing the problems created by the Electrolux
decision, the ACTU argued that certainty will only be restored to the enterprise
bargaining process by amending the bill, or by making far-reaching changes to
the WR Act. Thus, the ACTU concluded its submission with two suggested options:
-
Amend the Agreement Validation bill to validate
agreements in their entirety, irrespective of when they were certified; or
-
Amend the WR Act to remove the requirement for
industrial disputes and certified agreements to be about matters pertaining to
the employment relationship between employers and employees to permit it to,
alternatively, pertain to the relationship between employers and unions,
employer organisations and employees, unions and employees, or employer
organisations and unions.[42]
2.28
While Opposition senators are sympathetic to calls for more
radical changes to the WR Act, this is clearly beyond the scope of this
inquiry. An appropriate legislative response to the Electrolux decision would be one that validates all existing enterprise
agreements in their entirety irrespective of when they were certified, thus
remaining faithful to workers and employers operating under existing workplace
agreements.
Conclusion and recommendation
2.29
Opposition senators are not convinced that legislation
in response to the High Court's decision is required as a matter of urgency. As
acknowledged by DEWR, to date no court has ruled on the question of whether the
certification of agreements may be invalid, notwithstanding speculation about
the potential invalidity of hundreds of workplace agreements following the Electrolux decision. Opposition senators
believe that it is reasonable to expect some employers and employees to want to
renegotiate their workplace agreements in good faith consistent with any future
rulings of the Commission regarding matters which pertain to the employment
relationship.
2.30
Like previous workplace relations bills introduced by
the Coalition Government and rejected by the Senate, this bill follows a
familiar pattern of the Government rushing legislation into the parliament
before the issues and all options have been properly considered and the
interests of all parties taken into consideration. The extent of the
Government's arrogance in these matters is demonstrated by its blanket assertion
that the bill is in the best interests of employers and employees, contrary to a
range of shortcomings identified by unions in evidence before the committee. This
bill is not a genuine attempt to improve enterprise bargaining and provide for
more certainty and productive and harmonious workplaces. It represents the
Government's latest attempt to legislate to skew future enterprise bargaining agreements
in favour of employers and at the expense of employees and their union
representatives.
2.31
A proposal to partially validate enterprise agreements
is neither sensible nor practical and will only fuel a climate of uncertainty
and speculation about matters which do and do not pertain to the employment
relationship. The Opposition believes that any legislative proposal to address
uncertainty created by Electrolux
must provide real certainty for both employers and employees who have
negotiated enterprise agreements in good faith. The current bill falls short of
this objective. At the very least, any new legislation should validate in their
entirety certified agreements and
AWAs certified, approved or varied before the Electrolux decision, and agreements negotiated but not yet
certified by the Commission at the time of the decision.
2.32
For all of
these reasons, Opposition senators recommend that the Workplace Relations
Amendment (Agreement Validation) Bill 2004 in its current form be amended by
the Senate. Specifically, Opposition senators recommend that the legislation:
-
Validate agreements
certified before the Electrolux
decision unconditionally to the full extent of their existing terms; and
-
Validate protected
action that may have been taken in the process of negotiating an enterprise
agreement.
Senator Gavin Marshall
Deputy Chair