ACTU Assistant Secretary, Richard Marles takes up the role of clairvoyant and predicts a dim future for the Federal Government’s AWAs.
The heading for the topic of this session is predictions and premonitions which puts one rather in the position of a soothsayer. So you’ll forgive me if this speech is not as specific as I might ordinarily give to a group of lawyers but rather is conceptional and in some places general. However, I think this is the nature of pretending to be a psychic.
Individual Agreements and the Problems with AWA’s
The issues surrounding individual contracts are complex. Particularly when one views this from the point of view of whether or not an individual arrangement has any place in the employment relationship which is the way somebody from my constituency would view the topic.
In answering that question it is very clear that there is a place for individual arrangements in the employment relationship.
A gun lawyer who is working for a law firm is not going to want her pay and conditions determined by some collective arrangement which applies equal pay to all lawyers in her law firm or indeed her industry. Similarly a great footballer who scores all the tries or kicks all the goals is not going to want to be paid the same as everybody else on the team. In these situations individual arrangements have their place.
In attempting to describe this kind situation we are really looking at one where people have the ability to compete in the labour market on commercial terms. That is, they have enough bargaining power that they can negotiate with their employer on something like equal terms.
But does this describe the whole workplace and does this describe the position of every employee within the workplace ? Obviously it does not.
If you compare that situation with one of miners in the Pilbara working for BHP (and if there is anyone from BHP in this audience you are going to enjoy my speech) these miners clearly have no bargaining power. They are workers who are working next to somebody who is doing a very similar job to them. There is obviously an ability to differentiate the performance of their work from the person next to them but not to the same degree as the lawyer or the footballer. They are working in the context of an unemployment rate, which is at least large enough that if they refuse the terms and conditions being offered by their employer there might be 10 or 20 other people who would accept those terms and conditions. By and large they are earning a base rate of something in the order of $50,000 a year and attempting to negotiate individually with a legal entity which has a revenue of $21billion a year.
So what we have are two very different situations in the workplace. One where some employees do have bargaining power with their employer, but another where there is absolutely no bargaining power whatsoever. One needs to consider that background when trying to assess the place of individual arrangements in the employment relationship.
Now I want to consider the operation of Australian Workplace Agreements (AWA’s). And I am going to be telling you that we believe AWA’s are bad law. But rather than just chant you a slogan I want to try and articulate why we regard AWA’s as bad law.
AWA’s are not the only form of individual arrangement within the employment relationship. It is quite possible, indeed common, to have a common law individual agreement which forms a contract of employment. It is worth comparing these two forms of individual arrangements.
A common law individual agreement must sit completely above whatever is the existing industrial instrument regulating a particular workplace. That is, there cannot be single term in the common law individual arrangement which falls below any of the terms of the latest industrial instrument in the workplace.
AWA’s on the other hand in order to be registered need simply pass a no disadvantage test, which is not measured against the existing industrial instrument regulating the workplace but rather against the award. Nowadays awards are on average in terms of pay 15% below existing agreements. And in passing the no disadvantage test not every term and condition need be above that of the award but simply all the terms and conditions considered as a whole must be roughly equivalent to the award. This means that many award conditions can be undermined by AWA’s. Even then this is not strictly the final test because AWA’s which fail the no disadvantage test can still be registered if it is in the public interest to do so.
This means that in workplaces where there are collective agreements in place the no disadvantage test can still be passed by an AWA which may nevertheless give rise to extreme disadvantage to the employees concerned.
Common law individual agreements clearly work for the situation we first described. The gun lawyer or the excellent footballer can quite happily have their contract of employment embodied in a common law individual arrangement.
Even in the second situation a common law individual agreement can be used to individualise the workplace and renumerate an employee who has performed excellently. This is often quoted as the reason for needing to have a system of individual agreements. But if these needs can be addressed through common law individual arrangements what can possibly be the purpose of an Australian Workplace Agreement?
Given the fact that AWA’s have their place in the agreement hierarchy, that is they can operate to the exclusion of collective agreements in certain circumstances, and given that the no disadvantage test which they need to satisfy is such that they can undermine the existing collective structures, I put it to you that the real reason for AWA’s is not only to individualise the workplace but in fact to undermine collective structures. Indeed they are there to be used by employers to exploit the very fact that they are negotiating with people that have no bargaining power. AWA’s were very much invented for the second group of people – those who have no bargaining power.
It is also significant in my view that AWA’s form part of a legislative scheme. That is, they are removed from the common law and doctrines relating to unconscionability and inequality of bargaining power simply do not apply to them.
If we couple all of this with the fact that in Australia there are no collective bargaining rights we have a cocktail which can give rise to the situation that occurred at BHP’s operations in the Pilbara. In that case almost the entire workforce came together under the banner of their respective unions and approached BHP and indicated that they wanted to negotiate a union collective agreement as they had done 3 or 4 times before. But BHP, quite lawfully, was able to completely ignore that request and say that as interesting as it is that people want to negotiate a collective agreement BHP itself had no such interest. It was then able, having ignored that approach, to go and approach workers individually and seek to have them sign individual agreements.
At this point I want to take a rest from AWA’s and talk to you about chicken catchers or in fact chicken farmers in a very different situation and in a different state namely NSW. Now there are only a few major chicken producers of which Steggles is one. In NSW there are many small chicken farmers. The chicken farmers together approached the ACCC and sought an authorisation to come together and negotiate on block with the chicken producers for the sale of their produce. This would ordinarily be collusive conduct and a breach of the Trade Practices Act. However, the ACCC examined the situation and agreed that is was unfair and unrealistic to expect each of the individual chicken farmers to negotiate with major companies of the likes of Steggles on anything like equal terms. And so they authorised the conduct of negotiating as a block in order to obtain a fair price for their product with the likes of Steggles.
To my mind this is astonishing. Because what it represents in the commercial context is a right to collectively bargain. Commercial law provides for bargaining rights. It contains within it notions of fairness and equality of bargaining power. The common law in the context of contractual negotiations also has doctrines of unconscionability and equality of bargaining power.
When you think that these laws have such notions it leads me to make this claim that the Australian Workplace Agreement legislation unlike any other law in the land places one party totally at the mercy of another.
You just need to think about the comparisons. When an employee is asked to sign an AWA often the context is one where if he does not sign it his wages and conditions will be frozen indefinitely and in some circumstances his entire employment is dependant upon signing the AWA. Now imagine person A entering a contract with person B and person A says to person B: “I happen to be friends with your boss and if you don’t sign this contract I’m going to have your wages and conditions frozen indefinitely or worse still you’ll lose your job”; and person B then says: “well if that’s the case I’m going to sign this agreement”. How is that agreement not void for duress ? It has to be. And yet AWA’s signed in these circumstances are quite lawful.
And granted that as individuals we often deal in our every day contractual negotiations with large companies; we buy a car from a big car company, or we buy a can of Coke from Coca Cola, or we enter into a mortgage with a big bank. But in each of these situations we are able to shop around. And in even the most significant of these contracts – which would probably be entering into a mortgage that absorbs 40% of our income – none of these contracts is as significant as the contract of employment which delivers 100% of our income.
And so we have a situation where the single most important contract that anyone will ever sign is governed by a set of laws which does not contain any notions of equality of bargaining power or fairness.
And so I will repeat the claim: there is no other law in the land which places one party so much at the mercy of another as the legislative scheme of Australian Workplace Agreements. And in its present form I would even elevate the issue to being a human rights issue. Combined with there being no rights for the collective bargaining in Australia our legislation is very clearly in breach of our obligations as a country under the International Labor Organisation conventions. And so I don’t put this as a socialistic or ultra left view, in fact I’d put it in the context of Australia being a modern civilised market economy and as such we should not allow this kind of law to be on our legal books.
Predictions About the Future
Now at this point I have been rather indulgent. Because I have been asked to talk to you about the future and in fact all I’ve been doing is standing on a soap box and telling you about the present. However, I simply can’t help myself when given this topic to tell people about the evils of individual contracts. But I will get off my soap box and start talking to you about what the future might look like. Now I need you just to remember a little bit of your fifth form maths because I’m going to throw at you a few figures.
This year we will have a federal election. Labor is probably going to win it. Let me just take you through that a little bit. Labor needs about 7 seats in order to win government. If the Queensland election were replicated in a federal context then upwards of 10 seats would be won in Queensland alone. On current polling it is expected that 3 or 4 seats will be picked up by Labor in West Australia and South Australia. On current polling 9 or 10 seats are expected to be picked up in Victoria but I think a more realistic estimate there is 4 or 5 seats. So just amongst those states alone you have twice the number of seats required in order for Labor to win government and we haven’t even considered NSW which many regard as the place where Labor is best positioned to gain seats and is of course the largest state. So it’s on that basis that I say that Labor is likely to win the election.
Having said that there are nine months to go until the election and a week in politics is a long time. I would have said with a much greater degree of certainty that Jeff Kennett was going to win the 1999 State election in Victoria. So anything could happen. But let me make this assessment: I think the chances of Labor winning the next election are about 80%.
If the Liberals win the next election then AWA’s will clearly stay.
However, if the Labor party wins the next election then our next port of call is the House of Representatives. It is the policy of the Australian Labor Party to abolish AWA’s. This was adopted at its National Conference last year in Hobart. So we can say with certainty that if Labor wins the next election then a bill will pass the House of Representatives seeking the abolition of AWA’s.
The next place we go to then is the Senate. The Senate will have a balance of power which will contain a number of parties of which the Democrats will be one. The other parties might include One Nation, the Greens and a range of independents. Of all those parties in the Senate the one in which we would feel least confidence about its attitude to AWA’s is the Democrats.
So we need to try and peer inside the Democrats to assess their view on AWA’s. At this point I apologise to any Democrats in the room because I have to say that having dealt with them over the last year they’re a very weird mob indeed. They have very different views on almost every issue. Andrew Murray, the current Industrial Relations spokesperson, favours the retention of AWA’s. Other Democrats do not. So really it’s anyone’s guess as to what the Democrats attitude would be to AWA’s. But there has been a significant event in that party’s history in the last month, namely the ascent to the leadership of Natasha Stott Despoja. And to the extent that this represents a mood within the Democrats to move away from supporting policies of the Coalition, which I think it does, then I hold some hope that the Democrats might have a favourable position on AWA’s.
Taking all of this into account it leads me to this assessment: that there is a 62.5% chance that a bill abolishing Australian Workplace Agreements would obtain passage through the Senate.
Now you’re asking why 62.5%? Well obviously because I have confidence – in fact to three significant figures – of my predictive ability about the numbers and attitudes in the future Senate.
But coincidentally when you multiply 62.5% with the chances of Labor getting up in the next election, being 80%, it means that the overall chances of the abolition of AWA’s after the next election is exactly 50/50.
Now at this point you should be getting a bit sceptical because when ever I ask somebody about the chances of one thing or another occurring and I get the response “well it’s about 50/50” I look that person straight in the eye and say “what you’re really telling me is that you have absolutely no idea”.
Well what I’m telling you is that the chances that Australian Workplace Agreements will be abolished after the next election are exactly 50/50.
Premonitions About the Future
Obviously there is a lot more to it than simply the abolishment of a legislated scheme of individual contracts. So I want to talk a little bit about how the future might look if the ACTU were lords of the universe. And I hasten to add that we are not. The Federal Labor party does not come to the ACTU and seek instructions about labour law . . . which is a bit of a bummer really. And, I also need to say that the ACTU’s policy on these issues is that AWA’s should be abolished and that the bargaining system should contain collective bargaining rights. Now at this point the appropriate thing is probably for me to simply sit down as this is the official policy of the ACTU. But that alone is not particularly edifying and so I do want to go into a little more detail. But we are now moving into the realms of the musings of Richard Marles and not much else.
As I have described AWA’s then from the point of view of trying to rectify the issue there are basically three problems;
- First, the abolishing of AWA’s;
- Second, addressing the no disadvantage test; and
- Third, dealing with collective bargaining rights.
Accordingly, I want to take each of these in turn.
Obviously, in our view of the world AWA’s need to be abolished. However, we would not be seeking to remove the ability of having common law individual agreements. So in the view of the world as we see it there is still a place for individual arrangements.
Second, in our view a no disadvantage test that applies to any agreement needs to be based on the existing industrial instrument which is in the workplace. In this way it will truly be a no disadvantage test.
And third the issue of collective bargaining is really the one I want to talk to you about in a little bit of detail.
In Australia we have a bargaining system with no collective bargaining rights. The simple history to this situation is as follows.
In 1993 when enterprise bargaining was introduced the collective bargaining rights that were put in place with it provided for good faith bargaining orders to be issued by the Commission. The threshold for obtaining those orders was incredibly low. Essentially a union needed only to have constitutional coverage of the particular workplace involved. And in addition to this the kind of orders the Commission could make were very broad in nature. Not surprisingly, this scheme of good faith bargaining orders was essentially struck down by the courts in the Asahi Case. So we had a bargaining system with a defective collective bargaining right.
In 1996 the Coalition win government and they have little incentive to solve this problem. Indeed, the way in which they solved the problem was to totally remove any reference to good faith bargaining orders from the legislation. This in turn takes us through to the point we are at now where we’ve had our bargaining system for seven years which has contained no effective collective bargaining rights.
This allows for the BHP situation where 100% of the workforce can come to a company and demand a collective agreement and the company can quite lawfully ignore them completely. Only the Gulf states have worse legislation than Australia in this regard. If you’re a union is Swaziland, Indonesia or Paraguay you have better collective bargaining rights than you do in Australia.
Now this leads me to the question that if all the other countries have collective bargaining rights but we don’t and yet the sky hasn’t fallen in why are they so important ? Well, collective bargaining rights are important because what they provide for in that second class of employees that I described earlier, those who have no bargaining power, is an ability to elevate the negotiations around the employment relationship into something of a commercial context, into a realm where there is something like equality of bargaining power, into a realm where there is fairness in the bargaining.
So having said that we want collective bargaining rights – what would they look like?
Well essentially we would be advocating that a group of workers who come together and meet some kind of threshold test, can place a demand on an employer for a collective agreement and it is then a legal obligation upon that employer to negotiate with their employees in good faith. Now there are international standards about what kind of things fall within good faith bargaining and these include: the provision of information to the parties, a requirement to regularly meet, and for want of a better term a requirement to engage in the negotiations – that is, to give reasons when a claim is made and to give reasons when a claim is rejected.
Taken as a whole then;
- The removal of a legislative scheme of AWA’s,
- The elevation of the no disadvantage test to the most recent industrial instrument in a workplace, and
- Effective collective bargaining rights,
all of these I believe would give rise to the kind of legislative scheme which would rectify what at the moment is a blight on our legal framework.
Speech given at the Queensland Bar Association, Gold Coast, 22 April 2001