In the world view of the federal Government the union movement is an obstruction, an anachronistic relic of former times argues Linda Rubinstein, ACTU Senior Industrial Officer.

The Workplace Relations and Other Legislation Act 1996 (the WR Act) was designed to achieve two goals.

First, to weaken the powers of the Industrial Relations Commission in relation to awards and agreements, so as to, over time, reduce employee entitlements in the interests of ‘flexibility’, particular as regards penalty rates and loadings. The Government seemed to recognise that a significant factor in the relevance of the union movement was its ability to obtain award coverage for employees, and establish improvements in wages and conditions, whether or not those employees were union members, and so reduction in union involvement was a key element of the legislation. Another string in the bow was the introduction of individual Australian Workplace Agreements (AWAs) to further tip the bargaining power balance further towards employers.

Second, to break the power of unions in traditionally strong areas, such as the wharves, the coal industry, the building industry and the meat processing industry. This was to be done by supplying employers with a formidable array of legal avenues to deal with industrial action, together with limiting the arbitral powers of the Commission, and providing for individual agreements through which employees could be induced away from collective bargaining.

While the Government’s primary objective is no doubt economically based, there is an underlying ideological dislike, even hatred, of unions and a desire for revenge for wrongs of the past. No doubt, in the hearts of some influential Government members, such as Treasurer Peter Costello, there burns a romantic hankering to relive and expand the glory days of their purported victories over unions at Mudginberri and Dollar Sweets (although it is worth noting that the relevant unions are in better shape today than those employers).

In addition to the initiatives described above, the anti-union thrust can be seen in legislative restrictions on unions’ right to enter workplaces to speak to employees and to organise, in the prohibition of award provisions giving preference to trade union members in employment and in alterations to the rules governing union registration and coverage, including the ability for parts of unions to “disamalagamate”, designed to encourage unions into in-fighting and costly litigation.

The first flies in the Government’s ointment took the form of the Democrat Senators, whose support was required to pass the legislation. Following protracted negotiations, a number of significant amendments were made to enable the Bill’s passage with Democrat support. Some of these amendments have clearly impacted upon the Government’s ability to achieve its objectives through the legislation. The changes negotiated with the Democrats included:

 

  • increased emphasis in the objects of the Act on the safety net role of awards;

 

 

  • retention of the Commission’s jurisdiction over issues such as rostering, skill-based classification structures, outworkers and superannuation;

 

 

  • including as an object assisting in giving effect to Australia’s international obligations in relation to labour standards;

 

 

  • providing for third party scrutiny of individual AWAs;

 

 

  • enabling the Commission to make an order for a non-allowable, but ‘exceptional’ matter, which could not otherwise be included in an award;

 

 

  • providing some protection for employment conditions of workers employed under paid rates awards, generally in the public sector;

 

 

  • a requirement that agreements be measured against a “no disadvantage” test to ensure employees are not worse off than under the award.

 

The Democrats’ deal was greeted with accusations of treachery by the Labor Party, which predicted wholesale stripping back of awards and vicious restrictions on workers’ rights.

The ACTU’s response was more muted; the changes initiated by the Democrats were welcomed while the legislation itself was condemned. Nevertheless, the ACTU maintained that the union movement was not a legislative creation, and that although the legislation would make life harder for workers and unions, the movement would face the new challenges without being weakened or destroyed.

More than a year after the legislation came into operation, the dust has had time to settle and the Act is beginning to be tested. A number of large disputes have occurred in major industries, and the Commission has commenced its task of reviewing awards.

So far, it does not seem that the Act has been an outstanding success for the Government measured against its own objectives.

The Award System

While the Act does not require radical reductions in entitlements or removal of conditions, great hope was held by some employer groups and the Government that the ‘award simplification’ process would significantly reduce award entitlements.

The review process involves two elements:

First, removal of provisions which are neither allowable matters under the Act, nor incidental to such matters and necessary for the effective operation on the award; and

Second, review against a set of criteria aimed at making awards less detailed and concerned with process, more focussed on achieving efficiency and productivity at the workplace and containing facilitative provisions allowing the method of implementation of award entitlements to be determined by agreement between the employer and employees at the workplace.

The first decision in relation to this process concerned the Hospitality Award and was handed down late last year by a Commission Full Bench headed by Justice Geoff Guidice, recently appointed as Commission President by the Government to replace Labor’s appointment, Deirdre O’Connor. Prior to his appointment, the new President was a conservative barrister, whose clients had included such violently anti-union companies as Rio Tinto (CRA); some in the union movement feared that he was the Government’s hatchet man, sent in to demolish the award system and the Commission itself.

The reality of the decision was very different. Certainly, the Hospitality Award was modified in the ways required under the Act, but the Commission took a position on two issues which must have gravely disappointed many employer groups. Thee first of these was to make it clear that award entitlements which were allowable would not be reduced unless a proper case had been made out for doing so. The second was to determine that the Act did not preclude a role for unions under awards.

In particular, the Commission determined that workers had the right to be represented by their union as part of the disputes settlement procedure and that unions with members at a workplace were entitled to be notified of an employer intention to make use of a facilitative provision, with the unions to be given a reasonable opportunity to participate in negotiations about use of the provision.

Facilitative provisions are seen by some employer groups as a crucial means of varying working conditions without union involvement or the need for Commission scrutiny. In the important area of working hours, for instance, employers in the metal industry sought to provide for ordinary time to be worked on the weekend (that is, not at overtime rates as currently applies) and outside the prescribed spread of hours, by agreement at the workplace between the employer and either a majority of employees or individual employees.

This proposition would allow employers to make significant changes to working conditions, including to workers’ incomes through reduced penalty rates, with union involvement only at the specific request of the employee involved.

In the Hospitality Award decision, the Commission made it clear that care needed to be taken in relation to facilitative provisions, precisely because of the lack of Commission scrutiny, and that the bargaining capacity of employees was a factor to be taken into account in determining the degree of flexibility which should be available at the workplace level.

The Government and most employer groups formally welcomed the decision. Their real response, however, was to be found in the announcement only days later by Workplace Relations and Small Business Minister Peter Reith that the Government would be seeking a mandate at the next election for more substantial deregulation of the industrial relations system, with a further reduction in the role of the Commission.

From the point of view of unions and their members, although some provisions have been removed from awards, primarily issues such as consultation, termination of employment, part-time work, preference to unionists, amenities and some discrimination issues, in the main these make up only a small proportion of overall award provisions, and in some cases are covered by other legislation.

It is clear, at this point, that under the current legislation, awards will remain as comprehensively regulating terms and conditions of employment and maintaining for unions a continuing role in the processes occurring under those awards.

Agreements

The legislation made two substantial changes to agreement-making provisions which have the potential to substantially change the role of unions. The first was to make it easier to certify collective agreements made directly with employees, without union involvement. The second was to introduce a system of individual AWAs, where unions could be involved only if authorised as bargaining agent by the individual worker.

The new non-union collective agreement stream was promoted by Minister Reith as a vast improvement over its equivalent under the former legislation, the Enterprise Flexibility Agreements (EFAs), primarily because it put at end to allegedly uninvited and unwanted union intervention.

This was a response to a number of cases under the former legislation, such as that concerning the Tweed Valley EFA, where unions were successful in persuading the Commission that non-union agreements should not be approved because they disadvantaged workers or because other procedural or substantive requirements of the Act had not been met.

The Government’s belief was that employers were discouraged from pursuing non-union agreements because of a fear that this could bring unwanted union attention. Consequently, an important change under the WR Act was to remove the automatic right of a union with rules and award coverage of the employees to intervene in the approval proceedings before the Commission. The current position is that a union may only intervene if it has been requested by a member to represent him or her in meeting and conferring with the employer about the agreement.

If the expectation was that this change would increase the number of non-union agreements, the reality has been quite different. The number of these agreements is relatively small, and the proportion of non-union to union agreements is similar to that which applied to the old EFAs.

Higher hopes, perhaps, were placed by the Government on the new system of individual AWAs. Previously, although common law contracts exist between employers and each employee, individual arrangements could not be inconsistent with awards or certified collective agreements.

In his Second Reading Speech on the original Bill, Minister Reith described AWAs as having an emphasis on “flexibility and self-regulation”, unvetted by an third party and confidential. These objectives were partly overturned as a result of the agreement with the Democrats, which instituted a degree of regulation and scrutiny by the Employment Advocate (EA) and, in some circumstances, the Commission.

In spite of a number of exhortations to employers to make use of the new provisions, and a clear level of frustration by the Government that this has not been the case, the take-up rate for AWAs has not been great. As of XXX, XXX AWAs have been approved, covering XXX employers.

From the union movement’s point of view, the experience has been mixed; although experience has been limited, a number of different types of scenarios can be identified:

 

  • A number of employers, particularly in newly-opened establishments, have used AWAs to by pass award provisions in relation to loadings and penalty rates. While on the face of the documents it would appear employees were severely disadvantaged, which would be a breach of the Act, the EA maintains that in all such cases undertakings are sought from the employer about implementation of the agreements so as to ensure that this is not the case. In the absence of publicly available information, it is impossible to ascertain whether or not this is correct.

 

 

  • In one case in the meat industry, AWAs were used to avoid union involvement and the application of previous agreements on the re-opening of a plant under new management. It was made clear to prospective employees, most of them union members, that employment was contingent on signing an AWA which provided terms and conditions substantially less than those under the agreement which had applied previously to the plant. Given the lack of employment opportunities in the region, the workers signed, and although later attempts were made by some to involve the union and overturn the AWA, these were not successful.

 

 

  • In some other cases, employer attempts to introduce AWAs to an existing workforce have led to employees contacting the union and asking for representation, with the subsequent achievement of either better AWAs negotiated by the union as bargaining agent, or substitution by a collective agreement.

 

 

  • A few employers have used AWAs, or the threat of them, to deunionise or to achieve changes in working conditions. Again, the results have been mixed. In some cases, employers have succeeded in obtaining employee agreement to the AWA; in others, the issue has operated to strengthen resistance and increase support for the union.

 

In summary, it cannot be said that the changes in agreement-making under the Act have been markedly successful in altering employment conditions, or relationships between employees and unions. It is clear that the primary avenue for agreement-making remains collective certified agreements with unions; in the first nine months of 1997 (since the commencement of the new Act) 1859 agreements with union have been certified, compared with 63 non-union agreements.

This is hardly surprising. In the non-union sector of the economy, awards either don’t apply, are ignored, are surpassed by over-award conditions or supplemented with informal agreements.

In the unionised sector, workers are unlikely to be attracted to non-union deals, when the evidence shows that non-union agreements involve longer working hours and low pay rises.[1]

Overall, employers have made it clear that they are not interested in disrupting productive, co-operative relationships with unions in order to advance the Government’s ideological campaign. Some evidence to union demands in late 1996, for commitments to maintain collective bargaining irrespective of changes to the legislation.

Industrial Action

The second key plank in the Government’s armoury was to be a set of new legal avenues for employers to deal with industrial action. In particular, the involved:

 

  • Transfer of the prohibitions on secondary boycotts from the Workplace Relations Act to the Trade Practices Act, in effect of re-enactment of the old 45D provisions; and

 

 

  • A new provision, in section 127 of the Act, empowering the Commission to make orders requiring industrial action to stop, or not to occur, with these orders capable of enforcement through Federal Court injunctions.

 

In its original draft legislation, the Government had proposed deleting the restrictions in the Act on taking action in tort in relation to industrial action unless the Commission had been notified, and either issued a certificate stating that it was not likely to be able to stop the action or 72 hours had passed.

As part of the agreement with the Democrats, however, these provisions have been retained in the Act.

The expectation was that easier avenues to the courts would enable employers to force through work practice and employment changes in key industries, and break the perceived union stranglehold in areas such as the waterfront and the coal industry.

Once again, the reality has been somewhat different.

First, the Government has not found it all that easy to recruit employers prepared to go to war with their employees in these industries. Most employers take the view that it is better to negotiate incremental change with unions, then go for a risky “big bang” strategy, in which they are likely to be the losers, at least in the medium term. This is most obviously the case in relation to the waterfront, where a lengthy dispute would damage not only the employers themselves, but all those whose business or employment is connected with our import and export trade. It has been made very clear to the Government that employers in general are not interested in a long waterfront dispute.

The failure of the attempt to employ non-union labour on the Cairns waterfront, strongly backed, if not initiated, by the Minister’s office, indicates how out of step the Government is with the economic realities, and how badly it underestimated the union’s strength and international connections. These were seen again, of course, in relation to the Dubai debacle.

Second, where employers have gone to the Commission and the courts, armed with the new legislative provisions, the results have been mixed. It needs to be understood, at this point, that virtually all industrial action has traditionally been illegal at common law, in addition to the various statutory restrictions and prohibitions which applied. It was only with the passage of the Industrial Relations Reform Act 1993 that a limited form of legal protection was introduced for industrial action connected with enterprise bargaining.

Legal proceedings against unions and their members for engaging in industrial action has always been part of Australian industrial relations, as a glance at the law reports will confirm.

Legal action is occasionally associated with resolution of a dispute, generally as a circuit breaker. In others, it exacerbates the dispute, obscuring the original issues. In most cases, the dispute is resolved independent of any recourse to the courts. Most industrial disputes are resolved on the basis of compromise, and legal sanctions play little part in this process, except as a bit of a sideshow. There is no simple link that can be made between the use of legal sanctions and the incidence of industrial disputes. The introduction of “protected” industrial action, together with restrictions on employer use of common law and on action against secondary boycotts, did not lead to an increase in disputes. In the year to May 1995, the first year of operation of the Industrial Relations Act average days lost per 1000 employees due to industrial action was 83, compared to an average of 230 between 1982/3 and 1992/3.[2]

No doubt the Government will claim that its legislation has prevented or shortened various episodes of industrial action, and give as examples disputes which have been resolved coincident on the initiation of proceedings. Given that disputes are generally resolved, it is not possible to show any casual relationship.

In a greater number of disputes, the institution of legal proceedings has not been used or proved ineffective. The Victorian transport stoppage on the Grand Prix weekend is a hight profile example.

The Government’s strategy is clearly not working in its target industries. In the Hunter Valley No 1 coal dispute, the Commission decided to exercise its power to arbitrate in circumstances where the industrial action in question is causing significant economic damage. That decision had the effect of causing the action to stop with the issues to be determined by the “umpire”. The Government’s vehement support of the employ, Rio Tinto, one of the few willing volunteers in the fight against the unions, in opposing the Commission’s action, demonstrates its preference for a show-down in the coal industry, rather than a settlement based on compromise.

Union Organisation And Rights

Unions have adapted themselves to the new right of entry provisions, which involve requirements to obtain a permit, and give employers 24 hours notice of their intention to enter the premises. It would appear that most employers are not taking advantage of the overriding of award provisions giving union officials access to meal rooms or otherwise restricting the ability to talk to employees. In general, previous practice is being adhered to.

The Act now contains a prohibition on the awarding of preference clauses; that is, provisions requiring employers to give preference to union members in hiring. The Act does not, however, prevent employers from reaching agreement with unions to deduct union dues and to encourage employees to become and remain members of the union, a common provision of enterprise agreements. Although union membership has been declining for some years, there is no evidence that the so-called end of the closed shop has contributed to any acceleration of that process.

Conclusion

Unions are operating in a more challenging environment than was the case prior to the last election. Paradoxically, the new situation overcomes some of the problems during the Accord period, when here was a perception that unions were too close to Government and not focussed sufficiently on members.

The new legislation has pressured unions to speed up developments already taking place in shifting emphasis to the workplace and in adopting a commitment to an organising culture.

The Government’s legislative changes to the industrial relations system have not, so far, succeeded in achieving either of its key goals – destroying the award system and weakening union influence in key industries.

Whether that remains the case is something of an unknown, particularly if the Liberal/National coalition is returned at the next election and is in a position to obtain Senate support for more drastic reductions in the power of the Commission and the ability of unions to function.

Nevertheless, Australian unions have demonstrated a capacity to adapt and survive which should stand them in good stead regardless of the legal system.

Linda Rubinstein, ACTU Senior Industrial Officer.

[1] Australian Centre for Industrial Relations Research and Training (ACCIRT) survey of agreements, reported in The Australian 18 December 1997

[2] Australian Bureau of Statistics Cat No 1350.0