Chapter 11 - Toward a national system and transitional issues
11.1
This chapter covers issues raised regarding the development of a
national industrial relations system and matters that are required to be
covered by the transitional bill currently being drafted.
National system and coverage issues
11.2
The Fair Work Bill anticipates the eventual evolution of a national
industrial relations system through referrals of power and other forms of
harmonisation. At the Australian State, Territory and New Zealand Workplace Relations
Ministers Council meeting on 5 November 2008, it was agreed in principle that
draft legislation to provide the foundation for a national workplace relations
system for the private sector would be based on Forward with Fairness.[1] Like the later
amendments to the WRA, the provisions of this bill are based on the
corporations power[2]
of the Constitution (s 51(xx)), which has seen at least 70 percent of
employers move into the national system of workplace relations.[3]
Pending the development of a national system, DEEWR estimated that up to
approximately 85 per cent of private sector employees will be covered, while
noting some variance in levels of coverage between the states. Despite
achieving 85 per cent coverage of employees, the bill will not provide a
comprehensive national system for all private sector employers and employees
and this can only be achieved through clear referral of powers by the states.[4]
11.3
The committee has not concerned itself with a national industrial
relations system, apart from considering issues which relate directly to this
bill. It notes that the government has said it will engage in further discussion
with the state governments concerning their approaches to the development of a
national system. In the meantime a number of provisions in this bill, which are
relevant to any consideration of a national IR system, were raised with the
committee.
Coverage of local government and public sector employees
11.4
While expanding the reach of the Commonwealth system, WorkChoices
legislation led to significant confusion over coverage, particularly for local
government and not-for-profit sectors. An employer can be covered only by the
federal system if it is a 'constitutional corporation', that is, a trading,
financial or foreign corporation.[5]
11.5
Uncertainty remains about whether local government is engaged in trading
or financial activities that meet the criteria for being a constitutional
corporation. The NSW Office of Industrial Relations noted:
While there can be no doubt about a proprietary limited company
that trades for profit, there is considerable doubt about the status of a
not-for-profit organisation that has chosen to incorporate to provide stability
and certainty for tax and funding and other purposes, and also it seems
municipal, charitable and educational corporations, to name but a few. It seems
unlikely that the High Court will be in a position to make any authoritative
ruling or rulings in the short to medium term, and so the uncertainty for such
organisations lingers.[6]
11.6
Nonetheless, the New South Wales Government has legislated to ensure
that local government employees, by virtue of the fact that local government is
maintained under state legislation, do not come under the corporations law. The
states and territories retain control of their public sector employees
(including local government) in accord with federalist principles. Currently
there are no provisions in the bill for state referral into the national system,
but should referral of powers result from discussions with some states, the
legislation can be amended at that time to ensure certainty of coverage for
local government.
Trading corporations
11.7
The United Services Union (USU)[7]
and the ACTU have noted the difficulties in establishing whether some employers
are trading corporations. In the event that state governments refer their
powers, the ACTU also urged the government to ensure its commitments to state
employees are delivered. In the absence of referrals it argued the government
should amend the bill and withdraw from covering 'borderline' entities.[8]
11.8
SA Unions supported a national system, noting that about 60 per cent of
the South Australian workforce would be affected by the new legislation.[9]
This would be best achieved through a 'text-based' referral of powers but which
retained within a state industrial system state public sector employees and
those employees not covered by FWA.[10]
The committee notes that already QLD and NSW have passed legislation
de-corporatising local councils which removed them from the potential application
of the federal system.[11]
It also notes that at the hearing on 29 January 2009, Mr Troy Buswell MLA,
Minister for Industrial Relations in Western Australia, announced to the
committee that the WA government had decided not to refer the state's
industrial relations powers to the Commonwealth but would instead reform its
own state industrial relations system.[12]
11.9
Clauses 24 to 30 address how the act affects the operation of certain
state and territory laws. Clause 26 (1) states that the act is intended to exclude
all state and territory industrial laws so far as they would otherwise apply in
relation to a national system employee or national system employer. The Bills
Digest advised that the intention is for the proposed Act to cover the field in
relation to industrial relations to the extent that it is constitutionally
possible. It further explained:
Where the Commonwealth successfully covers the field the states
and territories are precluded from legislating in the area and their existing
laws which regulated this area become inoperable.[13]
11.10
Clause 26(2) defines a 'State and Territory industrial law' to clarify
which laws are excluded. Clause 27 details the areas in which states and
territories will still retain some powers to legislate. The more significant
non-excluded matters set out in 27(2) include superannuation, workers
compensation, occupational health and safety, outworkers, child labour, long
service leave (except for those with entitlements under the NES), and
regulation of employer and employee organisations and their members.[14]
11.11
While acknowledging that clause 26 is better drafted than its equivalent
in the WRA, the NSW Office of Industrial Relations argued that it is unlikely
to do away with the continuing uncertainty about which aspects of which state and
territory laws operate with respect to national system employers and employees.
It noted that again, cooperation between jurisdictions is the preferred method
for achieving outcomes in this area.[15]
Agricultural sector
11.12
The agricultural sector laments the absence of a
national industrial relations system. The great majority of farm businesses are
not constitutional corporations, operating through unincorporated trusts or
partnerships. The National Farmers Federation (NFF) believes that it is against the commercial interests of farm
businesses to become incorporated entities. The previous government legislated
for the Federal Transitional Award System which continued five years of federal
award coverage of unincorporated entities. The NFF wishes to see this arrangement maintained for a
lengthy, if not indefinite, period. It has doubts that a referral of powers
will be given by all states. If referral or maintenance does not occur, the NFF
claims that a majority of agricultural employers will have to remain within an
'inflexible' state award system adding up to 30 per cent in labour costs to
farming businesses.[16]
11.13
The NFF told the committee that since lodging its submission they have
had discussions with the Minister's office and been given an undertaking that
if referral does not occur then the transitional system will be in place until
its expiry in March 2011. The committee majority notes that this issue will be
addressed in the transitional bill.[17]
The special case of Victoria
11.14
The bill does not include provisions relying on a referral of power from
Victoria.[18]
The Bills Digest notes that the transitional bill may provide for the Victorian
referral.[19]
In its recent Annual Statement of Government Intentions (February 2009) the
Victorian Government announced its intention to refer powers to the
Commonwealth:
The Victorian Government believes in a unitary industrial
relations system that has fairness at its core. The Commonwealth Government has
introduced its Fair Work Bill to replace WorkChoices and restore fairness to
the Commonwealth industrial framework.
Once this legislation is passed through the Senate, the
Victorian Government will work to amend its existing referral of industrial
relations powers to the Commonwealth to ensure that the improved unitary system
will apply comprehensively in Victoria.
The proposed Victorian Fair Work (Commonwealth Powers) Bill will
mean that, for the first time, Victorian businesses and workers will have
access to a fair national industrial relations system.[20]
Foreign ships on the coasting trade
11.15
The application of the bill to seafarers engaged in the coasting trade
was a matter of particular interest to the committee. Submissions were received
from shipping companies and from the Maritime Union of Australia. Shipping
associations were concerned about ships operating under a coasting trade permit
granted under s286 of the Navigation Act 1912, and which have not been
subject to Australian workplace laws. Currently the Workplace Relations Act
1996 and the Workplace Relations Regulations 2006 do not apply to foreign
employers and foreign crew on a permit ship. Shipping associations note that
this approach has been endorsed by the AIRC[21]
and recommended that this exclusion continue.
11.16
A submission from the Maritime Union of Australia (MUA) pointed out that
the bill has the effect of depriving the AIRC or Fair Work Australia from
extending award coverage to foreign-owned or foreign-operated ships competing
with Australian ships in the coasting trade. The MUA stated that all it wanted
was to have the AIRC apply the appropriate award to all crews, foreign as well
as Australian, manning ships engaged in the coasting trade.
11.17
The National Bulk Commodities Group noted that clause 32 of the bill
contains a similar exclusion to section 21(1) of the Workplace Relations Act
but that the regulations to support the bill are yet to be released. It and CSL
Australia recommended that a similar regulation to the current 2.1.1 (which
ensures that current arrangements under the Navigation Act continue in regard
to issuing Coastal Voyage Permits) should be included to ensure continuation of
cost effective and flexible operations.[22]
11.18
Inco Ships also submitted that the current exclusion should remain until
and unless:
...informed policy debate and consideration has been applied to
the question of whether it is appropriate or desirable that non-citizen crew on
foreign flagged vessels be subject to the WRA or the Bill or some other
statutory requirements and if so, the extent of such coverage.[23]
11.19
The Australian Shipowners Association (ASA) pointed out that while the
language is open to interpretation, it believed clause 34(1)(b) extends
coverage of the Act to an Australian company involved in the operation or
chartering of foreign-flagged, international trading ships. In calling for
deletion of this clause, it argued that Australian workplace relations law had
no relevance to industrial arrangements applicable to the international
shipping industry.[24]
11.20
Clarification of clause 33 was supported by the MUA so that an
Australian owned company, based in Australia but operating in the international
trade with a foreign crew is free of the jurisdiction of the AIRC. Mr Crumlin
from the MUA added 'We are not seeking to cover foreign ships trading in
foreign trade, unless they have an Australian crew aboard'.[25]
11.21
The ASA also noted that clause 33(1)(d) could be interpreted as
providing coverage of the bill to some permit ships and noted the phrase 'uses
Australia as a base' is open to interpretation and called for guidance. [26]
The ACTU submitted that when foreign ships participate in the coasting trade
they should be regulated by Australian law and proposed several amendments to
address this issue.[27]
11.22
DEEWR clarified this issue for the committee and explained how the
provisions would operate. The Bill applies generally in Australia, the coastal
sea and the territories of Christmas Island and the Cocos (Keeling) Islands.
As the explanatory memorandum to the bill notes, an express statement to this
effect in the bill is not necessary because the Acts Interpretation Act 1901
makes this clear. In the context of shipping, a foreign ship staffed by foreign
crew would be within coverage of the bill when traversing the coastal sea. The bill
will also apply to the following ships, wherever they are located in the world:
- ships that have Australian nationality under the Shipping
Registration Act 1981; and
- ships that are operated or chartered by an Australian employer
and using Australia as a base. This means, for example, that a foreign ship
staffed by foreign crew would be within coverage when traversing the waters of
the exclusive economic zone (EEZ), the continental shelf, or beyond, if the
ship is operated or chartered by an Australian employer and the ship uses Australia
as a base.
11.23
The department advised that as is currently the case with the Workplace
Relations Act, regulations can be made to modify the bill’s application in all
of these areas. The Government is currently considering the recommendations
made by the House of Representatives Standing Committee on Infrastructure,
Transport, Regional Development and Local Government following its inquiry into
Australian coastal shipping policy and regulation. In the area of shipping, the
Fair Work Bill and any modifications made to its coverage made by the regulations
will reflect the Government’s response to this inquiry.[28]
Committee view
11.24
The committee majority accepts the assurances of the government that the
Fair Work Act will have application to all ships and crews engaged in the
coasting trade, but it sees no reason why this should not be stipulated in the
bill. It notes that the explanation given by the department relates mainly to
legislative drafting conventions than with the principle of award entitlements.
Members of this committee are familiar with the status and limitations of
delegated legislation as instruments of policy. Important principles should be
enshrined in acts. Nor is it recognised that this principle stands apart from
broader policy issues relating to the coasting trade.
Recommendation 12
11.25
The committee majority recommends that the government give
careful consideration to the issues raised in the submissions to the committee
concerning the coasting trade and has regard to the desirability of ensuring
the provision of a decent safety net of employment conditions to workers
engaged in that trade.
Transitional issues
11.26
As mentioned in chapter one the transitional and consequential bills are
yet to be introduced into Parliament. Nevertheless a number of submissions
included issues for consideration by the government and these are outlined
below.
11.27
The Minister for Employment and Workplace Relations the Hon Julia
Gillard MP has written to the Chair of the committee advising of the
government’s intentions for dealing with transitional and consequential
provisions. A copy of that letter is Appendix 3 to this report. The letter
makes clear that there will be further opportunity provided to the Senate to examine
closely the transitional provisions.
Termination of WorkChoices
instruments
11.28
While noting that labour turnover will see the use of old AWAs, employer
greenfields and employee collective agreements decline, the ACTU pointed out
that there will be a number of employees who will remain caught on the
instruments. It argued that although the government has stated that the NES
will apply to these employees from 1 January 2010, including the entitlement to
the applicable minimum wage rate, the terms and conditions that were lost from
AWAs, employer greenfields and employee collective agreements are overwhelmingly
found in awards and not the NES. The ACTU advocated that the transitional bill
must provide a means for employees to initiate early termination of these
instruments.[29]
This was supported by numerous organisations including Unions WA.[30]
11.29
As an example, Unions Tasmania outlined a case where service
stations were taken over and the employer used provisions in WorkChoices to
write an Employer Greenfields Agreement which excluded a long list of basic
award entitlements. It pointed out that although the bill removes the Employer
Greenfields Agreement as an employment mechanism, it provides no detail about
how employees who were removed from awards could transition back to being
covered by an award. Unions Tasmania acknowledges that such issues will be
dealt with in the transitional legislation and requested that the legislation
take into account that some employees were removed from awards by Employer
Greenfields Agreements and other mechanisms under WorkChoices and the
legislation should include a mechanism to ensure these employees have their
award conditions restored.[31]
11.30
Unions Tasmania also outlined a case where a group of workers signed an AWA
that took away their penalty rates. According to Unions Tasmania these
employees are anxious to go back on the award as soon as possible but believe
that whoever terminates the AWA may be singled out for less work. Unions Tasmania
suggested the only way this unfair AWA can be terminated while protecting the
employees is for FWA to be able to terminate it unilaterally without an
individual having to make an application. It submitted that where existing AWAs
are retained, that FWA should be able to terminate unfair AWAs prior to their
expiry if they would not pass the new BOOT.[32]
This suggestion was supported by the ACTU which also suggested an audit of all
agreements and contacting parties where an agreement fails to meet the BOOT.[33]
11.31
Jobwatch was concerned that employees may not be aware of their
entitlement to unilaterally terminate AWAs or ITEAs after the nominal expiry date
has passed and recommended that FWA be able to take action to advise employees
of this right.[34]
11.32
The ASU also voiced concern over the continued operation of some AWAs
and argued that it would be unreasonable to expect employees to be bound by
agreements that would not meet the requirements of the new system. It submitted
that all employees should have the benefit of the minimum standards provided by
the new system.[35]
It suggested that all individual statutory agreements continuing beyond 1 January 2010 should be deemed to include all minimum protections afforded by the
NES and the applicable modern award. Where an employee believes that a
continuing agreement would fail the BOOT if made on 1 January 20210, the
employee should be able to make an application to FWA to have the BOOT applied
to the agreement. If it fails the BOOT, the employee may make an application to
terminate the agreement.[36]
State and federal system issues
11.33
The ACTU suggested that the transitional bill should provide an avenue
for employees to opt into the federal system, where a state government does not
refer the employees, despite the wishes of the workforce.[37]
Police
11.34
The Police Federation of Australia told the committee of the
jurisdictional, constitutional and policy issues facing them which result from
the definition of 'employees' and the complicating factor of the referral of
workplace relations powers by the states. It advised that the current position
of the PFA is that all state police jurisdictions remain within their
respective IR systems and that a specialist tribunal be created for the AFP. It
has made its issues known to the government and suggested ways to move
forward which include a research project to investigate the most effective way
to structure a system for the police.[38]
Construction industry and long
service leave
11.35
TasBuild told the committee about the state and territory portable long
service schemes in the construction industry which have been established to
take into account the nature of employment in that industry. It supported
clause 29 and Division 9 of the bill as they relate to long service leave and
asked for clarity and certainty on this issue for the future. TasBuild argued
that clause 20 and Division 9 should be allowed to stand and not be overridden
by any provisions in the upcoming transitional bill.[39]
State based registered
organisations
11.36
The National Union of Workers raised the issue of transitional
registered organisations (TROs) which arose under WorkChoices when the
corporations power was introduced. It noted that these TROs are state entities
which have the right to operate in the state and federal system for a specified
period. It was seeking clarity to resolve issues around assets and finances.[40]
DEEWR told the committee that consultations on the implications for registered
organisations are underway with the ACTU and state and territory governments
and will be dealt with in a separate piece of legislation dealing with
organisations. These changes will be included in the transitional bill.[41]
Legacy instruments
11.37
The ACTU pointed out that the transitional bill will need to address how
a complex range of legacy instruments and institutions will interact with the
new system as they are phased out. It offered support for certain legacy
instruments to have a sun-setting arrangement, subject to the ability of a
party that relies upon an instrument to make an application to preserve it. It
also supported the notion of conversion of certain preserved state instruments
such as enterprise Notional Agreement Preserving a State Award and Preserved
Collective State Agreements to permanent federal instruments.[42]
11.38
Yum! Restaurants which cover KFC and Pizza Hut told the committee of
their unique industrial instruments which have been negotiated with SDA and
approved by the AIRC. The enterprise awards are used to underpin collective
agreements and the representative asked for reassurance that enterprise awards
could continue as outlined in Forward with Fairness.[43]
11.39
The CEPU were concerned to ensure 'old IR agreements' such as the
Telstra Redundancy Agreement were protected until the new laws come into
effect. This particular agreement provides protections about how employees were
selected for redundancy and accountability measures. Currently it can be
replaced by another agreement which could allow for weakened conditions on
redundancy.[44]
Committee view
11.40
The committee notes that the Minister has said that existing enterprise
awards, as well as existing enterprise NAPSAs, will be a part of the new system
as many businesses were keen to retain their current arrangements.
11.41
The committee majority also notes that to go some way to addressing the
issue of existing unfair agreements, the Minister has stated that the NES will
come into effect on 1 January 2010 for all employees and will override any inferior
conditions. This would ensure that employees on substandard AWAs made under
WorkChoices will receive the full benefit of the NES.
11.42
The committee notes that the issue of the interaction of transitional
instruments with provisions of the bill will be dealt with in the transitional bill.
Conclusion
11.43
In conclusion the committee majority notes that the bill is about
fairness and balance. It is the result of an unprecedented level of
consultation and genuine engagement with small and large businesses, employee
representatives and state and territory governments. No one side has achieved
every outcome it wanted. The bill is even-handed in its treatment of employers,
employees and their unions, seeking to accommodate the legitimate and
reasonable needs of all.
11.44
The bill is a far simpler and less complex law than WorkChoices and is
easier to read and apply. It will bring much-needed stability to workplace
relations legislation for employees and employers over the long term. It
provides for a comprehensive and fair safety net of employment conditions that
cannot be stripped away. It allows flexibility in the forms of agreement-making
available to meet different needs. It provides for individual arrangements that
meet the genuine needs of employers and employees including to assist employees
to balance work and family life, but without stripping away safety net
entitlements. The bill ensures employees have access to transparent, clear and
simple information about their rights and responsibilities. It provides a simple,
fair dismissal system that enables employers to manage with confidence and
protects employees from harsh and unjust treatment. The bill has at its centre
bargaining at the level of the enterprise, with improvements to employment
conditions underpinned by productivity. It helps low-paid employees to gain
access to the benefits of enterprise bargaining.
11.45
The bill provides a framework that will achieve the appropriate balance between
employee fairness, business flexibility and economic competitiveness which is
consistent with continuing economic reform and meets the needs of the nation at
all stages of the economic cycle. Regardless of requests for amendments,
employers recognise the government's mandate for this bill and have stated that
they can work with or cope with its provisions.
11.46
The committee looks forward to the presentation of the transitional and
consequential bills to Parliament which will further detail and clarify the
operation of some aspects of this bill. It will complete the detail of the transition
to the new system.
Recommendation 13
11.47
The committee majority recommends that the bill be passed without
delay.
Senator Gavin Marshall
Chair
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