The IR Reform Act 1993. A Union Perspective: Labouring Towards Workplace Reform

The IR Reform Act 1993. A Union Perspective: Labouring Towards Workplace Reform

The Industrial Relations Reform Act will enable employers, their employees and unions to work more closely together to achieve positive, mutually beneficial outcomes. Tim Pallas, Assistant Secretary, ACTU.

Introduction

The Federal Industrial Relations legislative system has recently undergone its most profound changes since the enactment of a national system of conciliation and arbitration in 1904.

 

These changes recognise and reinforce the substantive and attitudinal progress that has been made in labour relations since the implementation of the ACTU/ALP Accord in 1983.

 

The Accord has been altered on seven separate occasions over a decade of application to meet the economic imperatives of the times. It seems logical, therefore, that the institutional structures that form the basis of our system of industrial relations should also be the subject of continuing review and refinement.

 

The Australian trade union movement has been at the forefront of workplace reform. We support the Industrial Relations Reform Act as being both well measured and socially responsible. We agree with the Government's White Paper observations that Australia's future should be as a high wage and high productivity country.

 

The new legislation will support the attainment of this objective by:

 

(1) Preserving and asserting the integrity of the award system as a benchmark against which the bargaining process can be determined.

 

(2) Fixing minimum entitlements for all workers which conform with our international treaty obligations and ensure that all Australian workers, whether covered by an award of the Australian Industrial Relations Commission or not, are provided for adequately in respect of :

 

 

  • minimum wages
  • equal remuneration for work of equal value
  • termination of employment
  • parental leave
  • leave to care for immediate family

 

 

(3) Facilitating the making of enterprise agreements throughout the entire workforce, by encouraging an interventionist but conciliatory role for the Australian Industrial Relations Commission

 

(4) Ensuring that the bargaining process and its outcomes are open to public scrutiny and protect workers and the award safety-net through a no disadvantage test to be applied by the AIRC.

 

(5) Providing for a limited immunity from civil liability for industrial action during the bargaining process.

 

(6) Establishing a specialist court to be known as the Industrial Relations Court of Australia which shall assume responsibility for all matters previously handled by the Federal Court, plus judicial matters concerning termination of employment.

 

This newly amended Act is undeniably innovative and is underpinned by a commitment to fair treatment for all and the encouragement of bargaining at the enterprise level.

 

The Australian industrial relations system is undergoing a transformation and like our industry, is becoming increasingly responsive to international economic forces. Just as none but the zealots of the right advocate the unrestrained application of market forces upon our progress towards internationally competitive industry, so too only the naive or the philosophically obsessed can seriously advocate similar action in respect of the regulation of industrial relations. Such proposals are impractical, unimaginative and un-Australian.

 

They fail to allow our society the right to exercise restraint over the immoderate and excessive behaviour of the market.

 

The Australian trade union movement is an integral part of our national economy and is committed to the process of ongoing well measured and properly targeted reform in our workplaces.

 

We seek to ensure that our enterprises are more flexible and resilient to the forces of international competition whilst improving the skills of the labour force and the quality of working life.

 

Amendments to a legislative regime do not in themselves assure us of the attainment of these objectives, they can however place them in a context that is supportive of social cohesion and inclusion.

 

The Federal Government's White Paper on employment and growth entitled "Working Nation" released on 4 May 1994 recognises the fact that economic development and social inclusion are important to achieve. "The two go hand in hand, and with them go more opportunity, more fairness, more confidence and faith in our country and ourselves, more co-operation and cohesion in communities and across the nation.".

 

The sentiments and initiatives contained in the White Paper are an extrapolation of the Accord's objectives, they provide a framework for society to grow, underlined by social justice and dignity for all Australians. In the words of Veronica Brady of the University of Western Australia "Without a vision, without a sense of values other than the merely practical and present, a people perishes.".

 

The ACTU believes that any system of workplace regulation must be part of an integrated approach to social reform and justice. It is not enough to cost the value of labour, more importantly we must value labour for what it is - our most valuable resource - our people. Counting the cost of reform today without any concern for the future is the myopic conservative agenda; it is a mean and miserly world where fairness is considered a cost against profit.

 

The Industrial Relations Reform Act is an important part of mosaic of policies that seek to extend the competitiveness and institutional fairness of Australian society.

 

The Industrial Relations Reform Act is a robust recognition of our economic status and what is needed to exploit some extremely hard won economic opportunities such as:

 

 

  • in 1992, Australia's exports of manufactured goods exceeded the value of commodity exports for the first time. Total world exports had achieved this crossover in 1957

 

 

 

  • a 30% improvement in our international competitiveness in the past decade

 

 

 

  • 4% growth in GDP in the last financial year with a likely improved performance this year

 

 

 

  • over the last 14 months employment has risen by 215,478, an average monthly increase of 15,398. This figure is well in excess of the 13,899 monthly requirement to achieve the Minimum Accord Jobs Target of 500,000 over the three years February 1993 – 1996

 

 

 

  • The unemployment rate is continuing to trend down and is at its lowest level for almost two and a half years

 

 

 

  • corporate tax rates at 33% are amongst the lowest in the developed world. Australia is now the second most lightly taxed country in the OECD

 

 

 

  • real unit labour costs have fallen by 7.8% in the decade since the March quarter 1983

 

 

 

  • real household disposable income per head which captures some but not all of the social wage has risen by 11.5% since March 1983

 

 

 

  • there has been a shift in factor shares which has boosted the profit share of GDP from the weak and low levels of the 1970's and early 1980's. Profit to wages ratios of GDP are at their highest levels for over a decade (refer to graph)

 

 

Australia's inflation has been reduced to a level below that of our OECD major trading partners. Australia is now a low inflation country. The trade union movement is committed to keeping our inflation rate low for the sake of international competitiveness and we have formed our wages policy accordingly. So in terms of the big picture the Australian economy is poised to move into a period of sustained growth.

 

Corporate profits are at their highest levels since September 1986. There has been eleven consecutive quarters of corporate profit growth. Profit before tax rose by 34% seasonally adjusted and 13% in trend terms for the March quarter.

 

Consumer confidence is rising, sales are rising strongly and manufacturing output rose 9% alone in 1993. In comparison, business costs have remained relatively stable.

 

Amidst these almost euphoric figures heralding unambiguous recovery there are some alarming signs of delayed job growth and reluctant investment.

 

14% of Australia's largest manufacturers reduced their employee numbers by 30,000 between 1990-1993. ABS reviewed these figures and considered that 80% of the job losses were structural.

 

Of these structural job losses:

 

 

  • one-third were attributed to productivity improvement

 

 

 

  • one-third to labour shedding and the rationalisation of production and distribution

 

 

 

  • one-third to divestitures and closures

 

 

The Government is planning on investment of 18.5%, but on past form Australian business has tended to lack the intestinal fortitude to make a real and lasting commitment to economic recovery. How business behaves with the economy in recovery mode will shape the future of industrial relations in the country for the foreseeable future. If we see a repeat of the mid-1980's slash and burn profit taking mentality employers should expect to see the same lack of foresight repaid in kind by a hitherto foregoing labour force.

 

Some believe the commitment to investment is already overdue and runs the potential to impede our growth.

 

For example, manufacturing capacity utilisation is already above the 1980's level. Workers can't be expected to be the brunt of all productive output initiatives. We should demand from industry an abandonment of the mentality of doing more with less - we should insist that we do much more with more. We need bigger, more up-to-date, more sophisticated manufacturing infrastructure. Why is it so slow in coming with inflation, interest rates and wages growth at a pittance? There is no excuse and none should be taken. It should be a case of expand and employ, or pay up in line with your profit share.

Enterprise Bargaining And The Accord

However, to see where we are heading in terms of enterprise bargaining we need to look at the detail of wages policy under the Accord.

 

The Industrial Relations Act 1988 was amended in 1992 by the Federal Government to provide a system for the Certification of Agreements that would facilitate enterprise bargaining.

 

Those amendments to the Act were necessary as a consequence of the Industrial Relations Commission refusal in its April 1991 National Wage Case Decision to accept the urging of all the industrial parties to implement a system of enterprise bargaining. Whilst the October 1991 NWC decision specified an enterprise bargaining principle, it was undermined by the inclusion of a general public interest criteria which on a variety of occasions overrode the express wishes of the parties without any clear reason for such a rejection.

 

As a consequence, legislative amendment was the only way forward.

 

Division 3A of the Act incorporated a process whereby agreements could be certified. The Commissions discretion to refuse to approve these agreements was substantially curtailed. A no disadvantage test was developed to protect employees from the potential of negative bargaining and minimising the risk of exploitation of employees at the hands of unscrupulous employers who gauge their own success at their employees expense.

 

This test was designed in such a way that it was based upon the overall terms and conditions of employment.

 

In effect the agreement was to be considered in a complete manner against the backdrop of existing entitlements. Such a test facilitated innovative and mutually beneficial negotiations.

 

The no disadvantage test is described in Accord Mark VII as "an important safeguard for equity in the system ... it is intended to operate in a way that maximises flexibility but protects well established and accepted standards across the community.".

 

It encourages the implementation of progressive and forward looking systems of work rather than an item by item accounting of an agreement.

 

Accord Mark VII, which was confirmed with the Federal Government's re-election in March 1993, set the parameters for a constructive and productive approach to industrial relations during its three year currency.

 

The Accord is the foundation upon which the Industrial Relations Reform Act 1993 is based. Section 4 of the Accord Mark VII agreement deals with future directions for industrial relations. It states:

 

"The Accord partners support an approach which places the primary responsibility for industrial relations at the workplace level with a framework of minimum standards provided by awards of industrial tribunals.

 

Such an approach is fostering workplace reform and building a new productive culture.".

 

The ACTU accepts and encourages the increased proliferation of enterprise bargaining. This commitment is stated categorically at paragraph 4.5 of the Accord:

 

"In coming years the Accord partners anticipate that the majority of the workforce will be covered by workplace agreements.".

 

The Accord re-affirms the view that the parties at the industry and workplace level should be provided with the opportunity to reach agreement directed at lifting productivity and competitiveness and that wage increases may be negotiated on the basis of such improvements.

 

Responsibility for such agreements are recognised as ultimately resting with the parties directly concerned. In general the following parameters apply:

 

1. Increases not directly linked to improving the production performance of the enterprises should be limited.

2. The continuation of change, in particular work organisation change and job design and the process of reform should be integral to the agreement.

3. A broad agenda of change should be pursued.

4. Agreements should be longer term, comprehensive and closed (that is exclude wage increases from any other sources for the specified duration of the agreement).

 

The Accord has enabled wages and income policy to be used both as a shield and a sword in the development of workplace reform.

 

The Industrial Relations Reform Act 1993 provides for a number of ways in which employers and employees can arrive at the terms and conditions of employment for employees. These are:

 

1. An Award of the Commission.

2. An agreement made pursuant to an enterprise flexibility clause contained in an award.

3. A certified agreement.

4. An enterprise flexibility agreement.

 

The first three categories have been available in substantively the same form for some years.

 

The fourth category, that of enterprise flexibility agreements, has caused the greatest public comment and expression of concern from both those anxious to ensure that workers are protected from exploitation in the bargaining process on the one hand, and on the other those who argue that union involvement is an inhibitor to the increased proliferation of enterprise bargaining.

 

It should come as no surprise to anybody who has followed the debate proceeding the finalisation of the legislation that the ACTU maintained grave reservations about a system that enable a group of employees to reach a collective agreement with their employer without the protection of having a trade union a party to such an agreement.

 

However, we are sufficiently assured by the content of the legislation and the safeguards incorporated within it, to concede that as a total package it should guard against exploitation and provide an adequate minimum protection for all workers.

 

Those who have argued for the need for access for individuals and the non-unionised section of the workforce can no longer point toward structural inhibitions for their own inadequacy.

 

They have already commenced the process of damage control. The latest spin from conservative politicians and employer organisations is that whilst the system enable non-union access to the system it is too hard, too complex, and all in all too public a process for the enterprise flexibility agreements to be widely applied.

 

Their solution to the challenge of workplace reform is not to bargain with, but to beggar the employee. A true vision of reform can not be achieved at a disproportionate cost to employees.

 

The Victorian system provides that a worker is guaranteed only spartan entitlements, not even the skeletal remains of an award and above that whatever else can be extracted from an employer holding the whip hand in negotiations. Such an approach is a systematic recognition of exploitation. It is an insult to the collective intelligence of our community to suggest that such bargains are aimed at improving productivity - they are all about reducing costs and more tellingly, reducing our expectations. It is an admission of defeat of ideological and moral bankruptcy.

 

The enterprise bargaining system adopted by the federal government and supported by the trade union movement has demonstrated its capacity to be applied widely and positively throughout the economy.

 

Almost one million workers are covered by enterprise agreements made under the auspices of the federal Industrial Relations Commission. Over 45% of the federal award covered employees and their employers have reaped the benefits.

 

The trade union movement will play its part in continuing to expand the coverage of enterprise agreements..

 

By comparison with the progress made upon the implementation of workplace bargaining at the federal level the same can not be said for the various conservative models.

 

In New South Wales the Premier is quick to suggest the need for changing the legislative framework applying to enterprise bargaining under federal awards whilst securing only approximately 60,000 workers within the scope of their own bargaining system.

 

In Victoria we can only speculate upon how much real bargaining is occurring. Monash University recently published a study that considered that there was very little bargaining going on at all. Most "agreements" were in fact nothing more than the old State award deemed by force of the State legislation to be individual contracts. This is a demonstration of the simplistic approach the Kennett Government has taken to a very real problem.

 

Neither governments, unions, employers or workers, can deem away our problems. The stroke of a legislatures pen can not employ the unemployed or turn around the balance of payments or change any of the other very real challenges that confront us. Real change is not instantaneous - it involves a lot more effort, but equally a lot more satisfaction.

 

In fact, what we know about the Victorian system we must obtain by substantial effort. Any agreements made are not public documents and the logical conclusion we can draw from the State Government's reluctance to place such documents in the public domain is that they would be unlikely to withstand any serious examination on either a criteria of the maintenance of employee welfare or the delivery of an improved productive performance.

 

What we do know about the Victorian system of bargaining is that when workers are provided with an alternative system they vote with their feet. Monash University estimates that over 300,000 workers have transferred to the federal award system and that the State award system has subsequently had a profound reduction in the workforce population under such a jurisdiction from around 60% of all award employees in 1990 to around 36% today. This exodus would be much higher but for the delaying tactics of the Kennett government who are seeking to keep State public servants in a system against their will.

 

The conservative State systems of workplace bargaining with their common theme of worker impoverishment are all destined for failure because they are about stagnation not growth. The federal system of enterprise bargaining assures the participants in the process:

 

 

  • of an effective and relevant award system underpinning the bargaining process

 

 

 

  • of a "no disadvantage" test for all employees benchmark against the relevant award

 

 

 

  • a guarantee to all that bargaining begins from the base wages and conditions contained in the award

 

 

 

  • the agreement terms are not constrained by national wage case principles

 

 

 

  • agreements, or the prospect of agreements, shall be helped along by a specialist of the Australian Industrial Relations Commission to be known as the Bargaining Division

 

 

This Division shall have considerable powers that are to be directed towards assisting the parties to the bargaining process reach agreement. The Bargaining Division can intervene on its own motion or at the request of any party to conciliate.

 

One of the most substantive powers that the members of the Division have are the power to make orders to ensure bargaining is done in good faith.

 

Consequently, either party seeking an agreement faced with an unwilling partner may seek the assistance of the Commission. The Commission may make wide ranging orders in these circumstances, including for example a requirement for the parties to attend regular meetings and to provide all relevant financial documentation.

 

The Bargaining Division's work begins when either party to a minimum rate award notifies the other of its intention to pursue the making of a certified agreement.

 

For the first time the Act recognises and ensures the maintenance of paid rates awards in areas where they have customarily applied. These awards are also the responsibility of the Bargaining Division.

 

The Commission's role as a facilitator of agreements is only augmented by an arbitral function in circumstances where it considers that a bargaining period should be terminated because of the damage done to the economy or the population or part of it.

 

The Industrial Reform Act is therefore all about the parties taking responsibility for their own agreements. The Commission can help and should poke and prod reluctant negotiators to the bargaining table. However, just as the Australian Industrial Relations Commission can not guarantee a good outcome arising from the terms of an agreement, similarly they should not in the normal course of events impose an agreement upon the parties.

 

This is a sign of the new maturity of industrial relations in this country. It is all about accountability - those who make agreements are obliged to make them work.

Bargaining In Small To Medium Sized Firms

The unionised sector of the workforce has made a very real commitment towards the attainment of workplace reform. Unfortunately small to medium firms that are non or partially unionised, particularly in the private sector, are lagging far behind.

 

To illustrate this point, the Australian Manufacturing Council Secretariat has recently estimated that only 10% of enterprises employing between 20-49 workers have registered enterprise bargaining agreements, 7% have non-registered agreements. That means of the most pro-active and reform conscious small/medium sized firms, 83% have not reached a workplace agreement.

 

The ACCI has recently suggested that the real figure concerning agreements in this sector is as low as 6%. They argue that this is a demonstration of the structural inadequacy of the bargaining process contained in the Industrial Relations Act. However, a more apparent explanation is also related to inadequacy and has nothing to do with the legislation.

 

At least in part the reluctance to implement workplace bargaining demonstrates a positive assessment of the current system insofar as it provides a system of award regulation. A recent DIR/ACCI survey reveals that:

 

 

  • 89% of small workplaces have never been effected by industrial action
  • of the major problems identified by small business industrial relations did not even rate a mention
  • two-thirds of small business employers are satisfied with the award system
  • only 13% want individual contracts
  • 13% want industry or enterprise agreements

 

 

On their own survey results it seems nonsense for organisations such as ACCI to assert that the award safety net is an inhibitor to enterprise bargaining. Small business likes the award system. The greatest impediment to enterprise bargaining at the small business level appears to be a general lack of motivation and understanding. The new Act ensures that there is no institutional impediment to change, just safeguards for its proper introduction.

 

The ACTU believes that the maintenance of the award system is a necessity. However the award system must, where possible, be complemented by workplace or industry agreements. A failure for this complementation to occur comes at a price; the price of relevance and the continued integrity of the award safety net. The ACTU does not share the view of certain employers that bargaining should not occur at every enterprise/industry throughout the nation. Nonetheless, a failure or an unwillingness to bargain should, in our view, come at a premium.

 

The ACTU and the trade union movement will seek to ensure that the Accord Mark VII safety net increases are applied on an enterprise by enterprise basis and that they provide real wage increases at those locations. It is our intention that this approach will encourage the more reluctant sectors of the economy to embrace a system of bargaining that offers them productivity improvements, together with real wage appreciation for their employees. The alterative and one that we intend to pursue is that these locations will be required to pay the safety net wage increase regardless of productivity improvements.

The Australian trade union movement will not tolerate an employers capacity to veto the bargaining process as a surreptitious means to drive real wages down.

The Right To Strike

A right to bargain is meaningless without both a right to bargain collectively and a right to withdraw ones labour during a period of bargaining. In short, the right to strike.

 

The Industrial Relations Reform Act provides limited immunity from civil liability for industrial action during a bargaining period.

 

One of the features of a democratic society is that workers have a right to establish and join trade unions. For that right to be substantive, workers must also have the right to engage in collective industrial action in order to protect and to promote their legitimate industrial interests.

 

Both of these rights are accorded widespread recognition in international law (for example, Conventions 87 and 98 of the ILO).

 

The Industrial Relations Reform Act ensures that Australia has lived up to it's international obligations and most importantly that a body of law that evolved in the 17th Century, in an era of master and servant relationships, has been relegated to the outer perimeters of the industrial relations framework of this country.

 

My only regret is that such options remain at all - they have no place in a modern and mature society.

 

Conversely, however, there is clearly force in the proposition that those who seek to enjoy the benefits of a formal industrial relations mechanism must be prepared to accept the discipline of that system.

 

The Act now enables both unions and employers to avail themselves of a process that provides for protected industrial action. If workers are not able to participate responsibly within a system of industrial regulation then they are left with little option other than to operate without restraint outside its terms. The restricted right to strike is another illustration of the socially inclusive and cohesive emphasis of the legislation. The ACTU accepts that with rights come obligations and agreements made must be honoured.

 

The Australian Trade Union Movement has demonstrated that industrial disputation is not an option it applies gratuitously. Since December 1979 the level of days lost per 100,000 employees has been reduced by 87%. These are the lowest figures in the 35 year history of ABS data. [refer to graph]

 

The legislation provides protection for industrial action in circumstances where such action is pursued within a bargaining period and only then after an employer has been given 72 hours written notice of the impending action. There must have been a prior attempt by the notifier to have negotiated an agreement and any other good faith bargaining orders made by the Commission must have been complied with.

 

Protected industrial action is immune from civil or criminal action of any kind (including tort or secondary boycott laws) unless it involved or is likely to involve personal injury, wilful or reckless destruction or damage to property.

Termination Of Employment

There has been a lot said about the incorporation in the legislation of minimum protections of employment complying with Australia's international standards, in particular, that part of the legislation dealing with unfair dismissals.

 

Simply put, the legislation requires fair process to be applied in the circumstances of a dismissal based on conduct or performance. An employer must have a valid reason related to capacity conduct or operational requirements upon which to base a termination. The dismissal must not be harsh, unjust or unreasonable.

 

The legislation does what any fair minded employer would ordinarily recognise as their obligations to their employees. A worker's job is after all their livelihoods and in many cases the sole basis of sustenance of a spouse and dependents.

 

The Act requires an employer to apply due process and fairness to the termination of employment.

 

If you were to believe certain employer organisations who seem to be running a political agenda on this matter, the concepts contained in the dismissal provisions of the Act are alien or an anathema to community standards. They are not.

 

The 60% of employees covered by State awards have all been provided with a right to remedy unfair dismissals in their State jurisdictions for decades.

 

Historically each system had its own idiosyncratic variation. An appealing aspect of this legislation is that it shall require a consistent minimum standard to be applied throughout Australia.

 

It is patronising to the point of insult for employer organisations to suggest that individual employers are incapable of applying adequate procedures based on fair treatment to deal with terminations. The concept of harsh, unjust or unreasonable imparts notions of fairness. A court reviewing an employers decision to terminate and the procedure adopted will no doubt consider it in the context of the resources available to each party. What is fair and reasonable to expect large employers of labour to do is not necessarily the same as one would expect of a small business employer of one or two employees to do also.

 

The truth about the disinformation campaign being waged by various employer groups and ACCI in particular is that they would prefer a return to the good old days where they could appear before the AIRC and dispute it's jurisdiction to deal with a reinstatement claim and therefore be unaccountable for their termination decisions.

 

Under the new Act everybody has a right to have their grievance dealt with. If we start from this point then the jurisdictional debates are marginalised and the real matters can be dealt with.

 

History suggests that they are dealt with very successfully and co-operatively. An application to the Court must first be referred to the Commission for conciliation. The experience in State jurisdictions of a conciliation process suggests that up to 90% of such cases never go beyond this stage. That is an agreement of the parties. The system is all about real issues being dealt with responsibly.

 

What is not responsible is the errant nonsense being spread by employer organisations claiming that this legislation adds $2 Billion annually to business on-costs.

 

A more spurious or deceptive exercise in cost accounting is hard to conceive.

 

It is all about inciting fear when in fact confidence, security and certainty are the real net result of this legislation.

 

ACCI are using the rhetoric of the recession in the circumstances of an unambiguous recovery. Their desire to beat down wages, talk down the recovery and to treat employees as an expendable commodity has marginalised them and their political agenda.

Conclusion

In summary, the Industrial Relations Reform Act will enable employers, their employees and unions to work more closely together to achieve positive, mutually beneficial outcomes. Enterprise bargaining is now the primary objective of the Act. This is a bargain underpinned by an effective award system.

 

Employers who have argued that they have been denied access to the bargaining system because of a requirement of union involvement must now prove that there is a demand for the so called flexibilities of enterprise flexibility agreements. If they fail they only have themselves to blame. The Australian trade union movement will not wreck the opportunities for bargaining even if and when agreements do include us as a principal party. We will of course seek to ensure that the no disadvantage test and therefore the integrity of the award system is properly applied and maintained.

 

I believe that the new legislation provides rights and responsibilities in equal measure. The end result is opportunities for all Australians.

 

Tim Pallas, Assistant Secretary, ACTU. Melbourne 8 June 1994