COVID-19 - An excuse to deliver an ideological industrial relations agenda
The COVID-19 induced recession has seen the loss of hundreds of thousands of jobs across the country. The crisis has pushed to the forefront of the national agenda the need for policies that serve the needs of national reconstruction and economic recovery. Policies such as JobKeeper, an important intervention envisaged and pushed for by Labor and the union movement, staved off many more job losses.
Now when the nation needs a clear path forward, the Government's next step has been to put forward radical industrial relations changes, changes which serve the Government's narrow agenda, but will also hurt workers and undermine national economic recovery.
As we already know, the Morrison Government has decided to arbitrarily end JobKeeper on 29 March 2021. This is despite clear evidence that Australia's recovery is patchy and uneven. Across the country, many regions and industries have not recovered and there is a very tangible risk that businesses and jobs will fall of the cliff after March when JobKeeper ends.
In the context of this arbitrarily timed jobs precipice, the Morrison Government has now proposed to the Parliament changes to the Fair Work Act 2009 (Fair Work Act), arguing that substantial reform is needed to the industrial laws of our nation to create jobs.
Labor recognises that there are very real risks to the Australian economy and its long term recovery because of the failure of the Government to address issues such as wage growth stagnation, which has been a drag on the nation's economic performance and on the wellbeing of many households for almost a decade.
In this context, Labor Senators note that the Australian Council of Trade Unions (ACTU) and unions have sought to engage meaningfully in discussions with the Government about genuine reform on the understanding that workers would not be worse off.
Background
The Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020 (bill) was introduced into the House of Representatives on 9 December 2020—the penultimate sitting day for 2020.
On 10 December 2020, the Senate referred the provisions of the bill to the Education and Employment Legislation Committee for inquiry and report by 12 March 2021. Submissions closed on 5 February 2021.
The bill represents the Morrison Government's industrial relations reform package and is the outcome of months of consultations with employer groups, business and unions through its Working Group process which encompassed five areas identified by the Government:
casuals and fixed term employees;
award simplification (covering awards in industry sectors heavily impacted by COVID-19);
enterprise agreement making;
compliance and enforcement; and
greenfields agreements for new enterprises.
The Minister for Industrial Relations, the Hon Christian Porter MP, claimed the five reform areas dealt with 'specific known problems in the system which all parties agree inhibit job growth or job creation or are causing issues in the system that prevent jobs being saved'.
However, it would be fair to say, apart from modest compliance and enforcement changes which the Government was already well advanced in drafting, the areas nominated represented an employer group wish list of areas in which they wanted to see change.
The predominant and predictable outcome they wanted was to achieve more 'flexibility' with respect to workplace arrangements under the guise of allowing businesses to recover from the impacts of COVID-19 on their businesses.
The process included 32 Working Group meetings over a period of 10 weeks (approximately 150 hours), with additional consultation after that, much of it with employer and other lobby groups.
The deliberations of the groups were highly secretive with all Working Group participants and third parties signing confidentiality agreements and told they would be removed from the process should they breach these rules.
Prior to the Working Groups commencing their deliberations, there was extensive media speculation that the Government wanted to weaken or replace the better off overall test (BOOT) which forms the basis for the Fair Work Commission (FWC) assessing and approving enterprise agreements.
Both Labor and the ACTU flagged from the outset that any outcome from the Working Group process that left workers worse off would not be supported. Labor said the test would be whether the legislation delivered secure jobs with decent pay.
However, given the fact the Working Groups included the ACTU and relevant affiliated unions, Labor at that time stated that it would be prepared to support measures that reflected agreement from the Working Groups.
Despite the extensive time frame of the process, it is not apparent that any such consensus was achieved.
Prime Minister, the Hon Scott Morrison MP, despite stating publicly he was looking for a consensus between employer groups and the union movement, also made it clear the Government would proceed with its own reforms in the absence of consensus.
However, the bill put forward by the Government is severely unbalanced. Rather than reform in the national interest, working for both employers and employees, the legislation before the Parliament favours employer interests in the name of so called 'flexibility'. The legislation shifts fundamental safeguards in our industrial relation system—safeguards that are designed to ensure the benefits of productivity growth are shared by both employers and employees.
The bill put forward by the Morrison Government upholds the Government's ideological belief that business is only motivated to create jobs when labour is cheaper. This belief ignores the economic reality that both company profitability and labour demand is supported by household spending and market demand for goods and services. A reduction in wage growth and labour costs might add to the profits of some businesses. However, such benefits will do little to support jobs when limits on the growth of household spending curtail business growth and therefore jobs in other businesses. It is, therefore, critically important to get this balance right.
Increasing demand, so that both businesses and jobs can grow, requires increased local consumption, which is heavily influenced by consumer confidence.
The bill before us does nothing to address these underlying issues, including the ongoing impact of insecure work and low wages growth on the nation's economic dynamics. Before COVID-19 the Australian economy was already under strain because of the dampening effect of insecure work and low wages growth on consumer confidence.
The Government's claims about a modest and balanced reform package to support jobs growth through increased 'flexibility' has been disproven by evidence from economists and other witnesses to the committee.
Their evidence highlighted the adverse impact of the bill on jobs and the economy, because of the way it can be used to increase casualisation and undermine industrial bargaining awards and agreement making.
Draining those with nothing left to give is not a path to recovery
The stories of people who have borne the brunt of the pandemic and kept the country functioning, reveal the everyday reality of an economy that is already operating at the expense of those in insecure and low-paid work.
Miss Sheree Clarke, an aged care worker for more than 20 years argued in evidence to the committee that 'this bill will already make a broken system worse'. She spoke about the impact of insecure, low-paid casualised work on her capacity to spend money in the economy to meet even basic needs.
Because most of my work is so insecure, I can only plan to live on my minimum contracted hours, and a contract of 16 hours per fortnight is not enough to live on. This impacts all aspects of my lifestyle, including health. My budget does not allow me to choose healthy options and I often miss meals. Paying my car registration or visiting my dentist is a day-to-day decision for me.
Miss Clarke went on to express her distress that she could not afford to assist her own elderly parents or afford her own housing.
I am unable to support my elderly parents as there is no consistency to my hours and I cannot plan ahead. I was unable to complete my bachelor of social work as I could not afford to turn down offered shifts. As a single middle-aged female, I found myself in temporary accommodation in a caravan park. I have been unable to secure a long-term rental lease because I don't have a guaranteed income. As a low-income worker, I'm not alone here.
Labor Senators know that workers like Miss Clarke, have nothing left to give. Providing a pathway for employers to cut the wages and conditions of workers like Sheree, who are already casualised, have insecure hours and low hourly rates of pay is not a path to boosting consumer confidence, jobs growth and economic recovery in our nation. Rather, it is a path to ensuring that good employers are unable to compete in offering reasonable wages and conditions resulting in ongoing stagnation in our economy.
Labor Senators agree with Miss Clarke, who gave compelling evidence to the committee, about the need to advance, not undermine, the interests of workers like her.
It would not be economically or socially responsible to pass the bill in its current form. There are too many fundamental problems and risks which all fall in the lap of working people like Miss Clarke.
No guarantees
To support its legislation, the Government failed to present any evidence that guaranteed or supported their claims of jobs and economic growth. Nor would the Attorney-General's Department (the department) or any employer representatives guarantee that employees would not be left worse off, nor that the bill would lead to the creation of jobs. Neither the department, nor any employer groups could guarantee that workers would not lose rights and pay as a result of this bill.
However, until now, the existence of the BOOT, which this bill seeks to revoke, has meant there is a proper assessment by the FWC of changes to agreements to ensure that workers don’t go backwards.
Employers and business groups who appeared before the committee, one after the other, refused to commit to the notion that employees would not be worse off under these new laws. While some argued before the committee this would not necessarily be the case, witness after witness could not draw on anything in the new laws that would ensure wages and entitlements are protected at the current standards.
National Retail Association:
Senator WATT: Can you give a guarantee on behalf of the retail sector that, if these laws pass, workers will not be worse off?
Ms Lamb: I cannot give you that guarantee. I can't speak for these brands. I can't speak for all retailers. We only represent a portion of them.
Australian Hotels Association:
Senator WATT: So you're happy to give a guarantee that no worker would be worse off if this law goes through?
Mr Ferguson: No—please. As I say, at the moment it's up to the employee to approach the employer and ask to shift from casual to part time…
… The consideration of whether they may be better or worse off is their call, but I don't know that too many would sit down and really dig into the award because they probably wouldn't understand it anyway because the thing's 126 pages with 1,700 different pay rates—that's the first problem. Mr Ryan and Mr Redford from the United Workers Union are some of the few people who can decipher the thing, but I don't think that an 18-year-old school leaver would sit down and go, 'Wow. I'm going to be X amount of dollars better or worse off'.
Australian Retailers Association:
Senator O'NEILL: There were many claims made but there were no guarantees then that it would happen, despite those claims. Can you guarantee that no worker will get a pay cut as a result of the changes that the government is supporting with this legislation?
Mr Tindley: I'm happy to answer that question to the extent I can. I don't think we can make any guarantees about reductions.
Australian Mines and Metals Association:
Senator SHELDON: I'm going very much to the fact that you've supported all this legislation. I'm asking for a guarantee from you on behalf of your members that no worker will be worse off. Yes or no?
Mr Reid: It's very hard to answer complex industrial relations matters with a yes or no.
Recruitment, Consulting and Staffing Association:
Senator Sheldon: Do you believe that there should be the same pay for the same job?
Mr Cameron: I don't think it's as simple as saying 'same pay for the same job'—what is a job, what is they pay—
Senator O'Neill also asked the Australian Retailers Association about whether previous cuts to penalty rates had lived up to the hype that those cuts would create new employment.
Senator O'NEILL: We've had a number of claims that we discussed earlier today, that cuts to penalty rates would create jobs in retail. We haven't had any evidence that supports that claim that was made. Can you give us your sense of the reality? Did the cuts to penalty rates create jobs in retail?
Mr Tindley: It is a difficult question, because of the way that those reductions were structured. The penalty rates did not reduce to their full extent until July 2020. As a result, it is difficult to measure their impact.
In contrast to other employer groups, the Australian Road Transport Industrial Organisation, which doesn't support the changes to the law, highlighted their concern that the new law would create a cut to cut their own income.
Senator SHELDON: You are aware that the protections are being withdrawn in the BOOT—particularly in allowing capacity for the hourly rate only to apply. If allowances, penalty rates and shift penalties were taken from employees in an agreement in a highly competitive industry, what would be the effect on a company which was still paying those allowances and conditions in this low-margin industry?
Mr Ryan: Eventually they would be undercut for the work and it would go to another operator who is a lot more footloose and fancy free with how they pay their employees.
These were key tests for Labor's judgment of the legislation—will it create secure jobs with decent pay? The answer is no.
Key facets of the bill
Definition of casual employment
Concerningly, the proposed new definition is not consistent with what the courts have said about the nature of permanent versus casual employment.
In fact, the Centre for Future Work provided evidence that extinguishing current jurisprudence about the definition of casual work seemed to be the primary motivation for the casual employment provisions in the bill. This was supported by Professor Andrew Stewart and colleagues, who found that the new definition was clearly intended to overturn the definitional aspects of recent court decisions. The Centre for Future Work concluded that:
The reality of the proposed definition will mean any job can be casual, so long as workers are desperate enough to accept it.
Accordingly, rather than providing statutory clarity to employees and employers that will avoid the incorrect classification of permanent jobs, this bill provides a 'how to' guide for corporate lawyers who want to construct employment contracts that casualise any job. It will allow well-resourced employers, including the big labour hire firms, to manipulate the system and contrive employment offers that lock people into casual employment.
As acknowledged by Professor Andrew Stewart and colleagues, labour hire has contributed to the problem of insecure work by incentivising a method of engagement that helps 'host' employers 'avoid many of the statutory obligations involved in the direct hire of permanent staff'.
The Centre for Future Work also submitted that 'an expanded employer-controlled definition of casual labour' will work to suppress wage growth and fuel insecure work, which will amplify existing social and economic divides:
The worrying expansion of insecure work in Australia is already associated with major economic and social consequences, including the slowest wage growth at any point since the Depression, undermined consumption spending, rising household financial instability, and rising inequality.
This view was shared by Per Capita, which stated that 'the bill is likely to exacerbate, rather than relieve, the insecurity of hours and income experienced by too many workers in Australia'. It suggested that:
At its worst interpretation, the new definition and conversion clause could encourage employers to offer casual employment to all new employees, giving them a year of ‘try before you buy’ employment for all employees, regardless of the eventual hours worked.
Professor Andrew Stewart and colleagues highlighted the broader societal costs of insecure work, some of which were revealed by the COVID-19 pandemic:
Those costs have certainly been exposed during the current pandemic, when having workers without paid leave entitlements in 'essential' jobs (such as cleaning and security for quarantine hotels, or aged care) has plainly had adverse consequences for public health.
Casual conversion
The bill does nothing to address the 'permanent casual' problem, because the proposed casual conversion provisions do not offer a realistic pathway to permanency. They allow employers an escape route—through the loophole of potentially unlimited 'reasonable grounds'—that employees will not be able to challenge. For example, the ACTU called the provisions 'essentially meaningless', given that employers are not bound to offer permanency if they do not think it is reasonable and can also refuse to consent to arbitration by the FWC. According to the ACTU, the practical impact of this will be that:
… employers may simply avoid their compliance obligations by declining to allow the independent umpire to make a binding determination.
The bill proposes a new provision for casual conversion under the National Employment Standards (NES), an employer is supposed to consider their obligation to offer either part or full-time permanency once a casual employee has worked for 12 months with at least the last six months having been worked in a regular pattern. On the surface this might look like an improvement.
However, further inquiry demonstrates this is not the case as the employer does not in fact have to make an offer if there are 'reasonable grounds' not to. In addition, the time window for the process is relatively small—21 days for the employer to make the offer from the 12 month anniversary and then
21 days for the employee to respond in writing. If an employee fails to respond in writing within that time, they are deemed to have rejected the offer. Finally, employees have a limited residual right to request conversion in the event the employer does not make the offer.
Notably, disputes can only be dealt with by arbitration if the employer agrees, which severely restricts an employee’s ability to challenge a refusal to offer permanency. The Law Council submission argued that the conversion right would be strengthened by the ability for a dispute about conversion arbitrated at the FWC.
Rather than addressing the 'permanent casual' rort as Professor Andrew Stewart and colleagues noted, this process will actually 'entrench the practice of long-term (or 'permanent') casuals doing jobs which are not truly casual'. This is particularly problematic in relation to labour hire companies:
The casual conversion provisions … will do nothing to address this in the case of workers hired by labour hire agencies, because the nature of the commercial arrangements between labour hire agencies and host employers will generally justify a claim by the labour hire agency that its contracts with workers cannot be other than casual, because they are subject to the risk of termination if the commercial contract is terminated. Unless labour hire employees have an option of converting to permanent employment with the host employer, the conversion entitlements are of no real benefit to these employees at all.
The double-dipping myth
In addition, the offsetting provisions in the bill will retrospectively deprive workers of their legal entitlements when they have been wrongly classified as casual. As described by the CFMMEU Construction and General and MUA divisions, this is:
… nothing short of the government seeking to change to goal posts mid game, in order to punish employees who have done nothing more than seek to assert their existing legal rights.
This is despite the fact that the claims currently being made about 'double-dipping' are misleading. As noted, by Per Capita, this practice does not exist:
In the WorkPac vs. Skene decision, the Court did not decide that casual employees could claim both the 25% loading and the annual leave entitlement. In fact, the Court found that the company had not paid
Mr. Skene a casual loading at all.
The Court did allow WorkPac to offset the cost of back-paying Mr Skene his annual leave entitlements against any casual loading they had paid him. The problem for WorkPac was that they were unable to show that they had paid Mr. Skene a casual loading … The Court dealt explicitly with the 'double dipping' argument and rejected it as fallacious. In the words of the Court, 'no 'double dipping’ is possible' under our current workplace laws.
These claims also fail to recognise that many casuals do not even receive the 'casual loading' that is meant to compensate for the loss of entitlements that are due to permanent employees:
While this is justified by the claim that casual workers receive extra pay 'casual loading') to compensate loss of entitlements, this is not always the case. Most casuals are in fact worse off. One third receive no loadings, and most casuals are paid about the same as permanent workers doing the same jobs. In industries with a high casual workforce, the effective premium is around 4–5 per cent—rather than the presumed statutory loading of 25 per cent.
Awards
Schedule 2 of the bill predominantly deals with two issues – the introduction of 'simplified additional hours agreements' for part-time employees and the further two-year extension of flexible work directions initially introduced as a temporary measure for the purposes of implementing JobKeeper.
This means the Government is seeking to implement flexibility work directions to all businesses covered by the awards including those that were never eligible for JobKeeper.
Simplified Additional Hours Agreements (SAHAs) will no longer be a temporary COVID-19 measure, but a permanent reduction in the award safety net for hundreds of thousands of workers.
Even more awards can be added to the list by the Minister through regulation. Part-time workers need predictability not uncertainty. However, this measure is more likely to casualise the part-time workforce than provide real benefits to part-time workers. For example, the Queensland Nurses' and Midwives' Union stated it had seen 'a proliferation of part-time employees who are being treated as casual employees, whilst negating the need to pay the 25 per cent loading required for casual employees'. It argued that:
Effectively, the employee has limited control over hours worked and loses the benefits of part-time employment, whilst the employer gains flexibility and reduced hourly rates. Expansion of part-time employment practices by employers will further exacerbate insecurity and precarious employment.
Per Capita also warned that the use of SAHAs, in conjunction with the casual employment provisions, would be open to abuse:
… it would effectively mean that a worker could be employed casually for a year, and then offered a flexible part time contract without the loading. Effectively, this would render the provision to require an offer of permanent work after 12 months meaningless.
These fears were echoed in evidence given by Ms Teagan Heatley, a member of the Health Services Union:
The changes will lock in more insecure casuals and minimum hours in part-time work and it will lock out protections in bargaining—all this at such a fragile time. It's hardly what these workers need or deserve, those who are so critical to our society and economy. The bill should be rejected.
These provisions are also likely to impact women the hardest. The
NT Working Women's Centre pointed out that women are more likely to work part-time and have caring responsibilities, which would likely conflict with SAHAs. While employees have the option to refuse to enter a SAHA, in reality, workers with limited bargaining power are unlikely to be able to refuse extra hours at ordinary time even where this does not suit them.
The Australian Nursing and Midwifery Foundation also gave evidence that SAHAs would encourage employers to offer low contract hours to part-time workers, given that additional hours can be offered on short notice. It also raised doubts that SAHAs would represent a genuine agreement between employers and employees, particularly as they will not be subject to compulsory arbitration:
Despite being described as an agreement between the parties, the reality is that many part-time employees will be obliged to accept low hours contracts with ad hoc SAHAs in order to procure employment and gain enough shifts to earn satisfactory income.
As noted by Per Capita, the power imbalance between employers and employees is likely to exacerbate the situation:
As has been shown to be the case in the prevalence of wage theft in industries with high rates of part time employment such as like hospitality and retail, this power imbalance makes it less likely that individual workers will refuse, speak out or be treated fairly.
SAHAs are also likely to spread to other awards, with some employer groups already advocating for this. For example, Business South Australia listed an additional 11 awards they thought should be added straightaway.
The Flexible Work Directions provisions will be available to employers on a subjective self-assessment of economic recovery impacts. Employees will no longer have the security of JobKeeper payments or their job security but will still be subject to these flexible directions. A number of participants suggested that retaining these flexibilities was not justified beyond their original purpose and that they should only continue in workplaces attracting JobKeeper subsidies.
The Queensland Nurses' and Midwives' Union also questioned the potentially broad application of the provision:
We question the impetus for allowing employers who have not been impacted by the pandemic to provide directions and consequently have greater flexibility over employees. This appears to place unfair and unnecessary directions on employees, with no provided reasoning.
Labor agrees that the bill presents significant over-reach in this regard. As noted at the outset of the report, the Morrison Government has sought to paint a picture of economic recovery that justifies its decision to wind back JobKeeper payments to businesses, at the same time as arguing the COVID-19 economic recovery requires a wind back of workplace bargaining power and rights and entitlements.
A key example of this problem is the bill's removal of the right for employees to have disputes about unreasonable directions decided by the FWC. Legal Aid NSW raised concerns about the safeguards in place to protect workers:
… we are concerned that the safeguards are not sufficient to protect employees from potential exploitation by unscrupulous employers. Given the hospitality and retail sectors are particularly award-reliant and have a high representation of workers already experiencing disadvantage, it is vital that the safeguards are strengthened to prevent potential exploitation.
The government says the economy is doing well enough that businesses no longer need JobKeeper.
But then they say the economy is doing so badly they need to cut the pay of workers. They can't have it both ways.
Agreements
The system of agreement-making in the Fair Work Act is to allow for agreements between employers and employees. When you have such a system it is important that there are inbuilt protections for the unrepresented workers otherwise agreement making just becomes another vehicle for cost-cutting at the expense of employee entitlements. Per Capita described the changes as 'a thinly described attempt to hinder the activities of trade unions'. Further, it argued that the bill:
… restructures enterprise bargaining further in the interests of employers. The burden of proof shifts onto unions to show that they are not impeding business growth by bargaining to improve wages and conditions of workers. This is a tacit admission that, under the provisions of the bill, the benefits of business growth, which is almost entirely driven by labour productivity, are no longer to be shared with labour, but protected entirely for profit.
The Community and Public Sector Union argued that the bill was a 'missed opportunity' and risked entrenching existing power imbalances even further:
…[the bill] further entrenches the unevenness of bargaining power inherent in the current system. This is likely to perpetuate low-wage growth in this country, which was recognised before the COVID-19 pandemic as one of the key obstacles to economic growth.
This view was shared by Professor Andrew Stewart and colleagues, who argued the bill would worsen the current situation, which already does not require agreements to be the product of genuine negotiation:
The proposals to 'simplify' the process and preclude intervention by 'outsiders' will weaken some of the few procedural safeguards the Act provides for unrepresented workers. There will be no process clearly set out in the legislation for ensuring an agreement is genuinely made, and it will be harder to identify substandard deals, or to challenge the approval of agreements voted up by small and unrepresentative cohorts of workers.
The Centre for Future Work argued that:
Together, the proposals will expand the incidence of lower-wage
non-union EAs, further restrict union representation, and reduce the effectiveness of the already weakened collective bargaining regime. This will lead to a significant increase in the number of employer-designed EAs that serve to reduce compensation and conditions, rather than improving them. Broadly, these changes signal a return to a pattern of EA-making reminiscent of the WorkChoices policies of the late 2000s.
Further, complaints about the complexity of the system are overstated and ignore the employers' role:
Complaints about the complexity of the bargaining system are overstated, and ignore the fact that much of this complexity arises as a consequence of employers attempting to manipulate the enterprise bargaining process. Where genuine bargaining takes place, with a properly represented workforce and resulting in an agreement which builds on award conditions, complaints about the 'complexity' of the system are rare. Rather, the problems arise where fake bargaining takes place leading to the making of an agreement with a small and controlled cohort of employees, without union involvement, where issues about the capacity to provide informed consent, and the actual benefits of making the agreement, arise.
Information provision and its impact on bargaining
This bill does away with fundamental bargaining protections. It replaces the pre-approval steps with a far weaker process that would allow employers to abuse the system by not providing enough information to employees to ensure that employee agreement is based on informed consent. Substandard agreements like 'One Key' will become the norm.
The ACTU submission placed important weight on this, noting in their submission that:
Currently, s 257 of the FW Act permits an agreement to incorporate material as it was in force at a particular time, or as it is in force from time to time. Commonly this will include provisions of an earlier agreement, an award, a State or Territory law, or a workplace policy.
The effect of such material on terms and conditions of employment can be very significant, hence the need for the access and explanation requirements to extend to it.
The Government's arguments that an extension of time makes up for the obligation to provide material incorporated in an agreement by reference is extremely problematic. While awards, agreements and laws will technically be 'publicly available', it can be very difficult for employees to readily locate documentation or even know what to ask for.
Labor Senator’s support the view that both employees and employers cannot be expected to properly understand the effect of an agreement without complete information. Employees cannot be expected to vote on an agreement unless the terms are provided as part of this process in writing and in full.
Labor Senators argue this lack of process will undermine conditions for all workers, and we are also particularly concerned for employees who do not have access to a bargaining representative during negotiations; young workers, workers with disability, or workers for whom English is not their first language. The ACTU submission highlighted the FWC's important role in overturning decision where such information had not been properly provided.
In Bachy Soletanche Australia Pty Ltd [2019) FWCA 3962, employees were asked to approve an agreement expressly incorporating the terms of the Building and Construction General On-site Award 2010. The employer failed to provide a copy of the incorporated Award to employees because no employee had specifically asked for it. The Commission held that it is not enough for an employer to simply be prepared to provide a copy of the document on request, 'particularly where the employees are not advised of the award's relevance or availability by that means'. The Commission held that the employees suffered disadvantage by not being provided with, or being given access to, the Award because in its absence, 'they cannot be seen to have had effective access to materials to make an informed decision'.
Labor cannot support the overturning of these principles as these changes seek to do.
Workers won't be better off
The requirement that an independent umpire be satisfied that workers will be better off overall is the foundation of the existing agreement making system. Despite this requirement voting processes can already be manipulated and pressure brought to bear on employees participating in these processes to achieve unfair outcomes. A bare 'yes' vote is only part of the story.
In this context, Labor strongly asserts that an objective assessment between the award, NES and the proposed agreement must be retained. The current BOOT should remain as an objective test in the public interest.
The ACTU gave the following example of the risks involved:
The reduction and removal of employee protections is at its starkest with a proposal to allow a new, wide exemption (for 2 years) allowing the FWC to approve agreements that do not pass the BOOT if 'appropriate in all the circumstances' and 'not contrary to the public interest'. Once approved, these agreements which have a nominal term of up to two years remain in force until replaced or terminated.
Some employers who submitted to the inquiry argued that non-monetary benefits such as food or training should be given greater weight. Labor strongly opposes this, we recognise the potential for this to lead to the significant deterioration of wages and conditions.
It is also critical that agreements do not undermine the NES which are bedrock employment standards. Simply having a standard clause that says some terms may not be legally binding will not prevent employers including substandard clauses in agreements. As noted by Professor Andrew Stewart and colleagues:
The problem with this approach is that it means that enterprise agreements can be approved with terms that have no legal effect, but which remain in the agreement itself. …
But employees reading the agreement would have no way of knowing that. All the model interaction term would do is to tell them that in the event of any inconsistencies, the NES would prevail. But they could not know where those inconsistencies were, without a source of expert advice. And indeed unless they somehow guessed at a possible contravention, they might well not even know to look for advice.
The Health Services Union raised similar concerns:
Firstly, the FWC will no longer be required to thoroughly assess agreements to ensure they contain or do not undermine the NES. Secondly, the onus of responsibility for ensuring the agreement meets the NES safety net in practice will fall to employers, who will be entrusted to advise that an agreement does not preclude the NES. There will be no ability for the FWC to ensure or enforce the terms of the agreement in relationship to the safety net. Thirdly, it will then be on employees to ensure that the agreement and practice of the employer with regards to it is compliant.
The bill purports to fix issues in the existing law that affects restructuring companies. Rightly, section 311 of the current act binds companies to existing agreements, in other words companies can’t simply seek to restructure in order to avoid upholding an agreement (subject to the provisions in ss318–320 empowering the FWC to make other arrangements in certain circumstances).
However, the existing arrangements also apply to employees when they apply for positions in other entities within the group. Labor senators recognise that this is an unintended consequence that does need to be addressed. However, we endorse the concerns raised by labour law academics who in their submission raised concerns that the proposed solution would allow companies to potentially avoid their obligations under section 311 altogether. We note that their submission suggests new legislative wording to enable a better resolution of this issue.
Transparency in decision making
Labor believes the FWC's processes should be open and transparent. This should continue to include discretion for the FWC to allow unions to appear in approval processes, especially where they think this will assist them with their task.
The Centre for Future Work argued that:
Provisions in Australia allowing for unilateral employer-designed EAs to be drawn up and implemented without meaningful independent representation for workers are exceptional by international standards. Without organised and consistent representative structures through which workers can advance their claims and take action in support of them, non-union EAs are already subject to unilateral influence and manipulation by employers. The Fair Work Amendment bill proposes to deepen employer wage-setting power by reducing scrutiny of those EAs submitted to the FWC for approval.
Further, the Centre for Future Work concluded that:
In sum, the Fair Work Amendment bill proposes a suite of measures eroding protections for employees who have not received genuine representation or have limited bargaining power during settlement of an EA’s terms and conditions. These protections constitute the “last line of defence” for the majority of private sector workers who are not represented by unions in collective bargaining. Current laws place minimal restrictions on employer-led EA-making, yet the bill proposes still-weaker EA scrutiny by the FWC and unions. Less scrutiny of EAs, combined with the exemption from the BOOT, will see implementation of more sub-par, employer-designed EAs across Australian workplaces.
Greenfields Agreements
Schedule 4 provides for new extended (up to eight-year) agreement periods for greenfield agreements. This includes a new meaning of 'major project' which defines it as having a capital expenditure value of at least $500 million or, if the responsible Minister has declared it as major, $250 million to $500 million capital value.
These longer agreements will not only control pay rises they will also effectively prevent employee action over other important issues, such as accommodation issues on a mine site, that may arise over the course of the agreement. These jobs are already plagued by mental health issues because of the extreme working conditions. Historically there are many examples of suicides, arguably contributed to by long stints away from home. In addition, other issues like poor accommodation, food, communication facilities, travel times etc., all frequently arise on these sites.
Labor is concerned that this lack of flexibility will create and exacerbate industrial and social problems on and off site. Being unable to bargain about these issues or even properly ventilate grievances over such an extend period will make these projects less, not more productive.
The Centre for Future Work describes the new provisions as:
Making a mockery of claims about the need to increase 'flexibility' in industrial relations, the Fair Work Amendment bill would allow employers to fix wages in agreements at major new projects for up to
8 years—double the time now currently allowed for EAs.
Further, the Centre for Future Work argues that:
By allowing employers to lock in greenfields for 8 years, the government will incentivise and accelerate the implementation of non-democratic, low-wage 'seed agreements'. By no longer subjecting greenfields to normal renegotiation rules that apply to other expired agreements, Australia walks further away from its obligations under international labour law conventions to guarantee the rights of workers to collectively bargain their pay and conditions.
Whilst giving evidence at an inquiry hearing, Mr David Noonan, Acting National Secretary, cross divisional, Construction, Forestry, Maritime, Mining and Energy Union (CFMMEU), drew the committee’s attention to the so-called guaranteed pay increases and their potential inadequacy as compensation for eight-year agreements. Mr Noonan argued that:
…we could see an agreement certified with wage increases as low as 0.01 per cent per annum, and that would satisfy the legislation, and workers would be bound to that for eight years. If that's not a recipe for wage cuts, I don't know what is.
Greenfield agreements of up to eight years could be approved by the FWC, even if the union/s do not agree to their terms. The CFMMEU highlighted in their evidence how this approach to the setting of conditions not only has the potential to drive down the wages and conditions of employees who are covered by particular agreements, but also the wages and conditions of contractors and sub-contractors down the chain.
Labor shares the concern that these provisions will create significant pressure on employers to adopt similar, or less beneficial conditions. Establishing a dynamic where employers argue that in order to win work they have to cut pay and conditions—a race to the bottom. The CFMMEU also argued that the bill would allow for greenfields agreements to devolve into little more than a convenient mechanism which allows employers to prevent any form of collective negotiation whilst simultaneously making any form of industrial action unlawful, and moving the negotiation of wages into individual contracts where workers have little, or no, bargaining power.
Wage theft
The bill is a missed opportunity to deal with the scourge of wage theft.
The Queensland Council of Unions wrote in their evidence that the 'bill considers the penalty for stealing by a worker to be two-and one-half times worse than stealing by an employer'. They argue that this is 'consistent with the ongoing trivialisation of wage theft by the federal Government and employers'. In contrast, wage theft in Queensland wage theft is set at the same corresponding penalty if the stealing is conducted by a clerk or servant (employee) in relation to their employer's property.
The new criminal offence sets an impossibly high bar for successful prosecutions. Maurice Blackburn believe the adjusted definition of 'dishonest' in Item 42, 'sets an onus which is simply too high to be able to be useful in reducing wage theft'. The proposed test for dishonesty is out of step with other Commonwealth offences and is a much more difficult standard to meet than that set out in state wage theft legislation. This, in combination with the fact that the laws will override state wage theft laws, means that a 'wage theft' offence will exist on paper only but is very unlikely to ever be used.
The Queensland and Victorian Government heavily criticise the proposed wage theft provisions arguing that they trivialise what should be treated as a very serious offence. Both states have maximum penalty of up 10 years imprisonment, whereas the commonwealth regime has a maximum of only four. The Queensland Government said in their submission:
The setting of a lower penalty at the Commonwealth level appears to signal that the Commonwealth Government regards wage theft as a less serious act than, for example, the forgery of postage stamps (which attracts a maximum penalty of 10 years imprisonment…
The Victorian Government said in their submission that they oppose 'both the form and operation of the proposed Commonwealth wage theft laws', arguing that the 'Commonwealth should amend its proposed wage theft provisions to bring them into line with the Victorian offences'.
The bill fails to effectively deal with other serious problems that plague our workplaces, like sham contracting. A simple increase to the penalties without redesigning the law that has so far been completely unsuccessful in dealing with sham contracting is completely inadequate.
Conclusion
The Government has failed the test it set itself at the beginning of the discussions about changes to the Fair Work Act, when it said that any reform would need to be in everyone's interests.
Labor Senators note that the parliament should be open to reform that advances the broader public interest, that issues such as inadequate compliance and enforcement should be addressed, and that this bill canvases reform to some of those issues. However, these so called improvements simply do not meet a better off overall test for the nation. The bill takes big steps backwards, while responding inadequately to key areas such as wage theft and sham contracting.
Labor Senators note that the issues highlighted in the inquiry have not only been raised by unions or business. Economic and academic assessments also highlight the bill's failure to meet a holistic public interest test. Labour academics asserted to the inquiry:
Overall, we are concerned that, in its present form, this package of reforms will not just fail to address pressing issues such as wage stagnation and insecurity at work but will exacerbate them.
The bill is instead a ham-fisted and unbalanced attempt at reform. Alarmingly, the improvements put forward seem to seek to provide cover for an insidious agenda.
What Minister Porter and the Morrison Government have put forward, under the guise of support for economic recovery, panders to a big business wish list that has been around since Work Choices.
This legislation is not a pathway to economic growth and recovery, rather such losses will drive further reductions in consumer and business confidence and therefore also drag down employment growth. There are a very narrow set of economic stakeholders with whom the Government has sought to align itself who will benefit from this so called 'reform'. This bill does not deliver the kind of reform or a pathway to economic recovery that Australia needs.
Labor supports the view that the implementation of this legislation in its current form would see the inevitable further loss of workers' wages and conditions.
An economic recovery that benefits the nation as a whole, rather than narrow interests, would promote productivity, including through improved job security and rising wages. In contrast this bill simply encourages the growing scourge of insecure work.
Recommendation
That the bill should be rejected in its current form
Senator Louise Pratt
Deputy Chair
Senator Deborah O'Neill
Member
Senator Don Farrell
Participating Member
Senator Tony Sheldon
Participating Member
Senator Murray Watt
Participating Member
Senator Jess Walsh
Participating Member