Responding to the different Federal’ and State agendas, facilitating workplace agreements, future role of unions in State and Federal Enterprise Agreements and the future of co-operative workplace change. Martin Ferguson, ACTU President.
“The Keating Agenda For Enterprise Agreements”.
Support For Enterprise Bargaining
The ACTU has supported moves to a more decentralised wage fixing system for two main reasons.
First, to ensure the survival of the Australian trade union movement.
Not only do we believe strategic unionism can survive decentralised negotiations, the ACTU believes such decentralisation is a key part of our approach to union rationalisation.
The ACTU has achieved the basic framework of a revitalised union movement by the establishment of seventeen to eighteen so-called “mega unions”.
The next step is to ensure those unions are responsive to the needs of their membership and truly representative of all sections of that membership.
Going out to the workplaces where their members work, engaging in dialogue with those members about their needs and aspirations and representing those members in workplace negotiations is a crucial part of the new unionism we are advocating
The second reason the ACTU supports enterprise bargaining is to ensure more efficient and productive Australian enterprises capable of competing effectively to international standards.
However, our support for enterprise bargaining is premised on two key provisos.
Safety Net Award System
First that the process of negotiating enterprise agreements is based on a wage fixing system that provides basic protection for all workers.
That protection is provided through the award system and the conciliation and arbitration processes which are unique to this country.
Therefore, the ACTU sees the continuation of an award system to protect the rights of workers and to underpin collective bargaining, and the periodical adjustment of awards so that they remain relevant over time, as essential features of the Keating Government’s approach to enterprise agreements.
We see the role of the Industrial Relations Commission as the establishment and maintenance of an effective award system of fair and reasonable wages and conditions to underpin collective bargaining.
We also see the Commission having a key role in extending a number of basic protections to all workers.
On 2 December 1992, the Prime Minister issued a statement entitled “Protecting Australian Employees”.
That statement sets out the Government’s intention to legislate to guarantee employee rights in three key areas:
- equal pay;
- minimum wages;
- protection against unfair dismissal.
These rights are to be guaranteed by legislation based on the external affairs power and relevant ILO Conventions.
We would see the Commission having a key role in ensuring these minimums are applied generally by:
(i) ensuring that the principle of equal remuneration for work of equal value is effectively implemented and in particular that an employees award wages and conditions are based on the knowledge, skill, effort and responsibility required relative to other work regardless of whether the work is undertaken by males or females;
(ii) providing equality of access to skill based career path structures;
(iii) having a capacity to make common rule awards; and
(iv) in determining the level of wages taking into consideration:
- the needs of workers and their families having regard to the general level of wage and movements in the cost of living;
- the impact on the economy including any effect on inflation and employment.
Similarly, the Commission should have an extended role in relation to unfair dismissals. It is an outrage that in Victoria workers basically do not have that basic protection at present.
During the course of the Federal election campaign the then Minister for Industrial Relations announced the Government’s intention to legislate in relation to parental leave.
The ACTU strongly supports these measures.
They are consistent with Australia’s international obligations and they shall ensure that all Australian workers have those basic protections.
The second basic proviso which must be met in terms of ACTU support for enterprise bargaining is that enterprise agreements should result in an upgrading of workers’ wages and working conditions, not a downgrading of existing entitlements.
That is, the ACTU supports enterprise agreements aimed at creating a highly skilled and motivated workforce which is adaptable to changing industry requirements and which is highly paid. We do not support the use of enterprise agreements to reduce the skills and as a consequence, the wages of workers.
We see the role of unions in reaching enterprise agreements as crucial in ensuring that this requirement is met.
It follows that the ACTU is opposed to the State models of enterprise agreements being implemented in Victoria and New South Wales.
Contrary To New South Wales/Victorian Models
In both Victoria and New South Wales only the most minimal basic protections are guaranteed.
In Victoria there are only four minimum protections provided for employees. These are set out in S.14(2) of the “Employee Relations Act 1992” and are:
- 4 weeks paid annual leave for each year worked, after that year has been worked and with no pro rata entitlements;
- 1 week sick leave for each year worked, after that year has been worked and with no pro rata entitlements;
- an hourly rate of pay equal to the base award rate for the classification of employee as at the time the Act commences;
- 52 weeks unpaid parental and adoption leave, and a right to work part-time for two years after the adoption or birth of a child.
There is no minimum entitlement in respect of the following matters:
- pro rata annual and sick leave;
- hours of work;
- spread of hours;
- penalty rates for shiftwork, weekend work or work on a public holiday;
- rostered days off;
- annual leave loading;
- termination and redundancy;
- compassionate leave, study leave or leave for jury service;
- meal and rest breaks;
- right of entry.
The Victorian Trades Hall Council [‘VTHC’] is monitoring the use of contracts introduced under this legislation. Whilst the Victorian Employers’ Chamber of Commerce and Industry [‘VECCI] estimates 400 agreements have been entered into, the VTHC believes the number is much lower.
They are predominantly being sought in areas such as retail, hospitality and health. These are predominantly low paid sectors and areas of women’s employment.
Agreements that have been made available to unions have all involved a reduction in current award entitlements.
Similarly in New South Wales, Section 122 of the New South Wales Industrial Relations Act 1991, prescribes the only minimum conditions of employment for workers bound by an enterprise agreement. These are:
1. Sick leave – minimum of 1 week in full pay for each year of service.
2. Ordinary hours of employment – maximum of 40 hours per week averaged over a 52 week period.
3. Rates of wages – an hourly rate of ordinary hours of employment that is not less than the rate which would have otherwise been applicable from time to time for the employee under an award, former industrial agreement or other instrument if the enterprise agreement had not been made.
The New South Wales Labor- Council estimates 50% of the agreements under these provisions which have been registered have been without union involvement.
These non-union agreements are predominantly in areas such as the social welfare sector and the food and service industries.
It is apparent that a trend to cut conditions and take home pay is a feature of the non-union agreements, with sick leave provisions, overtime and penalty rates tending to be reduced or removed. An increasing number of agreements have a clause to the effect that wages may be increased or decreased at the behest of the employer.
By contrast enterprise agreements in which unions represent employees have, by and large, included additional benefits to these employees.
Most non-union agreements examined do not represent the “innovative” type of review of existing practices which it was claimed this type of legislation would encourage. Rather, the agreements merely tinker with existing award provisions in attempts to reduce workers’ wages and conditions.
So I would suggest that in the conservative States which have removed both the award safety net and the requirement for union involvement in agreements, we are seeing poor quality agreements designed to reduce workers’ wages and conditions and which are inimical to the pursuit of co-operative workplace change.
All the evidence currently available shows that non-union negotiated enterprise bargains are poor cousins to those where unions are able to represent the workforce.
The Accord Mark VII Model
What the ACTU and the ALP Government have agreed to in Accord Mark VII is a totally different industrial relations system to that which was envisaged by the Liberals federally and which is being introduced in the conservative States.
Accord Mark VII, negotiated by the ACTU and the Federal Government in 1993, provides that the major focus of the wage system over the next few years should be workplace bargaining.
It also provides that there should be no limits on the wage increases which can be negotiated at a workplace level.
The agreements negotiated in this way should be “directed at lifting productivity and competitiveness”. (Paragraph 5.3)
They should also be appropriate to the particular circumstances of the workplaces concerned.
The Accord calls for “a broad agenda of change” to be pursued through enterprise agreements. (Paragraphs 5.4 and 5.6) This is to be contrasted to a negative cost offsetting approach which looks only at unit labour costs.
By “broad agenda” the Accord means “all areas affecting enterprise efficiency, flexibility and productivity’. (Paragraph 5.6)
The issues of ‘work organisation and job design and the process of reform should be integral to agreements”. (Paragraph 5.4)
There is no requirement that wage increases be directly linked to percentage productivity improvements, ie. 2% wage increase for 2% productivity improvement – the totality of the Agreement must be looked at.
The Accords says that where employers are “constructive” in their “actions” (not just words) regarding improving the workplace for employees, unions should support a process of continuous productivity improvement. (Paragraph 5.6)
Any agreement resulting from enterprise negotiations should be certified by the Australian Industrial Relations Commission under Division 3A of the Industrial Relations Act.
These criteria are:
“1(a) There must be no disadvantage to employees in terms of the agreement;
1(b) The agreement must include a dispute settling procedure;
1(c) Reasonable steps must have been taken to consult with employees regarding the agreement;
1(d) The Commission is advised of the outcome of such consultation;
1(e) The agreement has been negotiated by a union or a number of unions in a single bargaining unit,
2(3) The agreement specifies the period of operation of the agreement.”
This mechanism means the parties themselves are responsible for the types of agreements entered into. It is up to employers to ensure they incorporate the productivity and efficiency measures required and there is a protection for employees in terms of union involvement, the requirement for consultation and “no disadvantage” test.
The Accord also supports a number of arbitrated safety net adjustments to be available for workers unable to negotiate enterprise agreements.
Three award adjustments are envisaged over the coming three years:
- an $8.00 per week adjustment available after 1 July 1993;
- two further adjustments of between $5.00 and $10.00 per week, available from 1 July 1994 and 1 July 1995 respectively.
These safety-net claims are to be subject to certain provisos stipulated in the Accord, including the essential requirement that they be consistent with the central Accord objective of promoting sustainable employment growth and substantially reducing unemployment.
It is explicitly agreed that there will be no double counting. Arbitrated safety-net increases will not apply to employees receiving wage increases through workplace bargaining.
Claims for any safety net adjustments will be brought to the AIRC, which would apply its normal criteria in determining the timing and extent of such adjustments.
The Accord partners agree that the arbitrated safety net will initially be limited to claims in respect to individual workplaces, provided that in particular circumstances there will be scope to argue for an industry level adjustment.
It is a matter of priority for the Accord parties, that the decentralised arrangements proposed operate in an equitable manner and not so as to disadvantage particular groups in the community, and this concern is set out at section 6 of the agreement.
Para 6.2 states:
‘The award system, along with the no disadvantage test for certified agreements, provides an important safeguard for equity in the system. The no disadvantage test, part of the new Division 3A of the Industrial Relations Act, is intended to operate in a way that maximises flexibility, but protects well established and accepted standards which apply across the community such as maternity leave, standard hours of work, parental leave, minimum rates of pay, termination change and redundancy provisions and superannuation. Penalty rates should not be reduced or abolished, but may be incorporated into total rates of pay by agreement. These safeguards will be enhanced by Government legislative action to provide for equal pay as a basic minimum entitlement.”
Enterprise Bargains Under The Accord Model
So far under this model we have seen many innovative and progressive agreements which have provided substantial benefit to both employers and employees.
Of the 1,000 Federal workplace agreements in place at June of 1993, the predominant productivity measures relate to:
- work organisation, quality assurance, continuous improvement and best practice strategies, consultative arrangements and organisational restructuring;
- arrangements on leave, hours of work, contract of employment, pay and allowances;
- occupational health and safety, absenteeism, disputation and labour turnover;
- training strategies;
- continuous operation of machinery and new technology.
There are major issues at an enterprise level which have a direct bearing on efficiency and productivity and which can be achieved in the context of co-operative workplace change.
(a) Consultation and Co-Operation
These include measures aimed at creating a more harmonious working environment in order to avoid industrial disruption to the production line. For instance:
- The more effective operation of consultative committees including regular meeting times, attendance by senior management, agendas and minutes, and trade union training for union representatives.
- Development of an improved settlement of disputes procedure which ensures the status quo prevails while negotiation of any change takes place, thereby avoiding industrial disputation.
(b) Working Conditions
Workers compensation costs are a major cost on many industries in general and in respect to particular enterprises. A joint approach to identifying and remedying the problems causing most compensation claims can be a major efficiency measure.
Relevant occupational health and safety statistics need to be made available to the delegates and there needs to be a process involving employees directly in the strategies aimed at overcoming the problems.
A properly functioning occupational health and safety committee which is treated seriously be management will have major productivity benefits.
High levels of absenteeism and turnover impose a high cost burden on enterprises in terms of the cost of employee recruitment and downtime during a new employee’s learning period. Measures aimed at reducing absenteeism and turnover are also an important productivity issue.
Improvements in amenities and actual working conditions of employees will have an impact on both absenteeism and turnover, as will properly consultative “warning” systems.
The introduction of training schemes for all employees aimed at achieving multiskilling and full rotation will result in both greater flexibility to the employer in work allocation and improved job satisfaction for employees.
It will therefore have a dual impact on increased productivity.
Additional allowances should be sought in any agreement for employees who are trained in additional skills.
(d) Production Processes
Improved maintenance procedures, work layout, job design, etc.
More efficient work practices in terms of supervisory and management structures will affect productivity. There needs to be a single line of authority over individual employees, not instructions from a number of sources.
Measures to improve the communication skills of managerial staff, especially at line and departmental levels, will also improve productivity.
Other issues which may be addressed in the negotiations may include:
- job secutiry;
- quality of product;
- delivery processes, etc.
As I said, some extremely innovative enterprise agreements have been negotiated using this co-operative model.
I would just go through some of these agreements:
- Aerospace Technologies Of Australia (ASTA) Agreement Signed In February 1992
The ASTA Agreement includes:
- The introduction of cellular work groups
A team based organisation including the people, equipment, material and information needed to do the job with teams enjoying maximum self management.
- Effective total quality systems
- ie. Total quality management involving a continuous improvement process in which everyone participates (management leads, everyone owns and is accountable for the output of their process, improvement becomes a part of the job and there is team problem solving).
- Working parties on flexible working arrangements and annualised salaries.
- The development of performance measures and benchmarks, with the purpose, inter alia, of allowing comparison with international best practice.
- The Mission Energy Australian Services Union Agreement Signed In 1992
This is a 24 month agreement for employees at the Loy Yang B Power Station in the La Trobe Valley.
The joint aim of the parties, as expressed in the agreement, is to be leaders in the Australian electricity industry.
Their approach to achieving this objective involves combining the best of two worlds:
- to introduce to the power station the “international best practices” from the company’s existing overseas operations; and
- combine it with the expertise that already exists in the LaTrobe Valley.
This is to produce the highest quality management controls, advanced preventative maintenance techniques, operating performance standards and thorough employee selection and motivation programmes.
The underlying philosophy of the Agreement is employee empowerment.
A key feature of the Agreement is the establishment of works council, comprised of management and elected employee representatives, to be the principal advisory body to management, who consult on issues such as:
- business performance, targets and measures;
- new facilities, changes;
- provision of rewards and incentives;
- changes in posts and responsibilities;
- employee share acquisition;
- purchase of equipment;
- training and development;
- improvements to work procedures;
- utilisation of resources;
- use of contractors;
- Sheraton Towers Southgate Employee Relations Agreement
This Agreement also involves international best practice, but rather than drawing on established international best practice it seeks to create the highest quality accommodation standards and so become a benchmark in quality service standards for the Sheraton Pacific Hotels in the Pacific region.
It will do this via employee empowerment and adherence to total quality management principles with the parties seeking constant improvement.
The Agreement is a pace-setter for the hospitality industry because it builds penalty rates into an annualised salary which protects penalty rates but pays them at a uniform rate irrespective of the anti-social hours actually worked in any given period.
This is achieved by calculating for all employees the penalties that might be expected over a year and averaging the figure over a fortnightly payment.
This system of payment is seen as important in creating a service oriented culture.
Other key features include establishment of a career path, commitment to training and a reduced number of classification levels which allows multi-skilling and job rotation.
- A leading agreement in the building and construction industry Is The Joint Development Agreement Negotiated By Civil And Civic/Lend Lease Interiors With The CFMEU.
Included in the aims of the parties is the aim “to increase the domestic and international competitiveness of the companies by continuously improving the efficiency, productivity, safety and quality of production.
The Agreement acknowledges and accepts that the challenge exists to move the industry’s performance to be comparable with international best practice.
The objectives to achieve such international best practice include:
- develop learning based work organisation;
- develop more effective management practices;
- develop more adaptable management/work practices;
- provide a career structure based on skills and competencies;
- improve educational arrangements, skill formation and access to learning;
- promote wider range of skills in sub-contractors employees;
- improve job security and employability for employees;
- provide high standards of occupational health and safety;
- eliminate lost time;
- ensure strict adherence to agreement/award;
- introduce measures to develop a sustainable level of direct company employment, broadbanding of subcontractors and genuine supplementary labour;
- new classification structure based on skills acquired;
- new technology and associated change;
- improve quality of work;
- improved environment and environmental impact of projects.
The Agreement between the LHMU, AMEU, TWU and ETU on the one hand and BHP on the other in relation to their Groote Eylandt Manganese Mine in the Northern Territory recognises that increased levels of international competitiveness have required a review of all aspects of the operation.
In response, initiatives agreed to enhance the international competitiveness of the company include:
- introduction of revised flexible operating arrangements and a continuous 12 hour shift system;
- elimination of demarcation barriers and flexible utilisation of labour involving employees being required to apply skills within their employee development models;
- a revised pay system including an annualised aggregate wage;
- revise pay system including an annualised aggregate wage;
- revise and improve shift change and break procedures;
- extend the continuous improvement process through the efforts of the consultative mechanism.
For employees, the Agreement provides for;
(i) a commitment to employment security of the life of the agreement;
(ii) a new classification structure aimed at improving employees’ skills and career opportunities;
(iii) wage increases of 4.5% immediately, 2.5% from 1 June 1993, and 3.5% from 1 June 1994;
(iv) a company commitment to not seek to reduce any award or overaward conditions during the life of the Agreement; and
(v) consideration of any National Wage Case decisions in addition to the 10% productivity increases.
The Portland Aluminium Agreement which covers some 500 workers and three union, FIMEE, AMEU, ETU, provides for:
- a commitment to participative workplace practices which is expressed in the Agreement as follows:
- the parties recognise that to fully achieve these objectives it is necessary to develop a working environment in which all employees have a strong commitment to and common identity with the Company, its performance and profitability. In this environment, there should be a high level of trust, mutual understanding and team work between all employees;
- within the context of team structures, employees must be highly motivated, empowered and have the skills, knowledge and competence to achieve optimum control of the process and produce outputs of world class quality with appropriate support and encouragement from within and outside the team;
- career structures which are built into the three job streams of Operator (5 levels), Mechanical Tradesperson (4 levels), and Electrical Tradesperson (5 levels) and through which non-trades employees have access to training that takes them to a 115% relativity to the base trades rate.
- annualised salaries and provisions with respect to hours of work which provide greater flexibility in terms of continuous work requirements whilst at the same time incorporating overtime penalties.
- increased benefits to employees such as:
- annual leave loading to 25%;
- increased superannuation benefits.
These types of innovative agreements can be contrasted to the types of penny pinching and conflict based agreements that have been imposed on employees in Victoria without the protection of unions.
Examples taken from various contracts are:
(a) Employers being given complete discretion over issues such as hours, and even the place of work:
Bed, Bath N’ Table
(i) Hours of Work will be as per roster put out monthly approximately one week prior to beginning of next month
From time to time the specific hours may be varied by the employer in order to cover sickness, absence, busy periods or similar situations.
Permanent changes to the normal hours of work will be advised with reasonable notice by the employer.
(ii) Place of Work: The employee must be prepared to move to another store after fair notice has been given by the employer.
(i) Hours of Work: Hours of Work commence and finished as scheduled and directed by Manager or Area Supervisor. To be scheduled in accordance with Shopping Centre trading hours …..
Lunch and tea break to be taken as directed by Store Manager and Area Supervisor. From time to time meal breaks may be varied in order to cover sickness, absence, busy periods or similar situations.
Changes to hours of work will be advised to the employee with as much notice as is practical at the time of change.
Keemon Pty Ltd
(i) Hours of Work: From time to time the specific hours and meal breaks may be varied by the employer in order to cover sickness, absence, sudden busy periods or similar situation.
In cases of an emergency or unforeseen circumstances, the roster may be changed by the employer.
Hours of Work: That ……….. will work as and when required (this will depend on what jobs are booked in and when).
Extending the grounds for instant dismissal:
Bed, Bath N’ Table
- selling stock below retail price, that is bona fide/unauthorised discounts;
- smoking on the company’s premises;
- drinking alcohol on the company’s premises without prior permission;
- any breach of company policy;
- rudeness/unreasonable conduct towards customers;
- refusal to carry out any reasonable request.
Any act of misconduct and:
- immoral conduct or indecency;
- lottery or gambling of any description;
- possession or consumption of any intoxicating beverage on the premises or prohibited drugs;
- distributing written or printed matter without permission of management;
- leaving own department during working hours without permission;
- performing personal tasks in Company time.
be guilty of any great misconduct or wilful neglect in the discharge of its duties;
- be convicted of any criminal offecnce other than an offence which in the reasonable opinion of “Fancy Fingers” does not effect its position as an employee of “Fancy Fingers”.
Worth’s Pty Ltd
- commits any serious or persistent breach of this contract;
- is guilty of any serious misconduct in their discharge of duties;
- is negligent or incompetent in the discharge of his/her duties;
- is guilty of conduct which in the opinion of the employer brings the employers name into disrepute.
Keemon Pty Ltd
- Insubordination: making malicious or false statements about the Company, it’s services or other employees, that, in the opinion of the company brings the company into disrepute.
- Abandonment of Employment: An employee who is absent from work for a continuous period exceeding three consecutive days on which they would normally be employed, without the consent of the employer and/or without notification to the employer, shall be considered to have abandoned their employment and will be dismissed.
(c) Impinging on employees privacy:
- The company reserves the right to examine any package, container or bag when I am entering or leaving the store area. This rule is necessary for safeguarding of the Company’s and employees’ property.
(d) Requiring employees to purchase uniforms:
Fancy Fingers will supply the employee with one uniform per year. This uniform will remain the property of Fancy Fingers. Additional uniforms which may be required are at the employee’s expense.
The unilateral abolition or reduction in penalty rates:
That Hi-Care will pay no penalty rate for any night work or weekend work. ………….. will not work more than an average of 34 hour per week.
Wags are to paid at the rate of $10.00 per hour regardless of the time or day.
Overall, the wages and conditions contained in the “agreements” being imposed on workers are far worse than their existing conditions. For example, an individual contract sought by “Speeds Shoes” reduced employees award entitlements by $91.66 per week with far greater losses if meal money, excessive overtime or work on public holidays were included.
Overall, these types of contract reflect an autocratic management style which is the antithesis of modern management practice.
For example, the Westco contract of employment:
Allows the company:
- to dismiss any employee with 24 hours notice within a period of 150 days;
- roster the staff any hour of the day, any day of the week;
- roster the staff to work six days out of seven;
- demand a doctor’s certificate for any sick leave taken;
- transfer staff from one store to another with one day’s notice;
- to pay wages directly into staff’s accounts without compensating for Bank/Government charges.
- rostered days off;
- afternoon tea breaks;
- all overtime penalty rates;
- meal money for overtime;
- payment for training out of hours;
- payment for compassionate leave;
- payment for public holidays;
- payment for jury service;
- accident make-up pay;
- the right of the staff to lodge an unfair dismissal claim if they feel their termination is harsh or unjust;
- casual rates of pay.
- when meal money is paid: from $8.30 to $5.00;
- sick leave from 8 days per year to 5;
- entitlement to compassionate leave;
- penalty rates for public holidays from double time to time and a quarter;
- travel allowance from 48 cents/kilometre unlimited to a flat $5.00 per day.
Employees who resist signing contracts are placed under immense pressure from employers to do so. Any who take more positive steps, such as contacting a union or representing unions, are often sacked.
The ACTU supports enterprise bargaining in order to improve the quality of workers’ working lives and in order to improve the productivity and efficiency of Australia’s workplaces.
However, our support is contingent on the continued existence of a strong minimum award framework to provide protection for those workers who are not in a position to bargain for improved wages and working conditions.
Such minimum protections should be provided to all Australian workers including workers employed in States such as Victoria where awards have been abolished and access to independent conciliation and arbitration removed.
We, therefore, strongly support the Federal Government’s moves to ensure these protections are enshrined in Federal legislation.
We support enterprise bargains being negotiated over and above those minimum award requirements and it is our view that unions are essential in the bargaining process in order to properly protect the interests of employers.
The experience of the different models of enterprise bargaining to date shows that the most innovative and far reaching agreements have been negotiated by unions.
Agreements sought by employers and generally imposed by them, in the absence of unions and an effective safety net have been narrowly focussed, authoritarian documents which do not upgrade the skills, participation and involvement of employees in an enterprise.
The way forward for Australia is that of co-operative workplace change which includes benefits for and recognition of the skills of employees as a key means of improving the productive performance of Australian companies.
Such a system must be underpinned by a comprehensive safety net as provided by the award system and conciliation and arbitration framework.
It is also the way forward for unions who must go out into their members’ workplaces, engage in dialogue with those members about their needs and aspirations and effectively represent those members.
Speech by Martin Ferguson, 26 July 1993, Sydney.