Hawke Government: Fairness Industrial Relations Policies

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The introduction of Work Choices in 2006 had a huge impact on the nature of work and employment in Australia. It created a new body, the Australian Fair Pay Commission to oversee federal minimum wages and similar matters (Wooden, 2006). However, when the Labor Government came to power in 2007, they introduced the Forward with fairness Act to offset the dramatic changes set in motion through the Work Choices and reversed many of the measures and introduced new reforms as well. They created a new body Fair Work Australia to be entrusted with fixing minimum wages.

Gradual evolution

In the late 1980s and early 1990s, the Hawke Government along with the ACTU and major employer groups worked for wage fixation and award regulation. The aim was to restructure awards in order to modernize work practices and encourage cross-training of workers, especially in manufacturing. But soon the reforms expanded to include productivity bargaining where wage increases were based on productivity. This new emphasis was reflected in the laws passed in 1992 and 1993 at the federal level, where the focus was on workplace level negotiation. Parties were encouraged to have their agreements registered with the Australian Industrial Relations Commission (AIRC). Awards were relegated to a secondary role and stipulated to act as a safety net and were applicable for workers who were not successful in negotiating an agreement. They would also serve as a benchmark for bargaining through the ‘no-disadvantage test” – according to which registration of agreements would not be possible if it worsened the condition of the workers in comparison to their condition under the relevant award (Peetz, 2006). In 1996, laws were introduced that allowed the option of having individual workplace agreements along with certified collective agreements. The individual agreement system underwent change during the rule of the Labor Party in 2002 and many employers switched to AWAs instead of their previously used agreements once the Work Choices Act was in place. However, every state was permitted to have a mix of workplace bargaining along with old arbitration methods though priority was on workplace agreements. Thus, the Work Choices Act of 2005 was one that gradually evolved over time since the mid 1980s. The Forward with Fairness Act of 2007 was one that was passed within a short period of time, to reverse some of the measures introduced by the Work Choices Act 2005 and to introduce new measures.

Main characteristics

The main characteristic of the Work choices reforms is that “they expanded the federal system of regulation at the expense of the State regimes” (Stewart and Williams, 2007, p. 33). In the words of Jill Murray Work Choices 2005 advocated “private employer power, augmented where necessary with direct intervention by Executive government to ensure that the old system does not re-emerge” (Murray, 2006). The key changes ushered in by the Work Choices 2005 include removal of the no-disadvantage test with ensured that many award and statutory entitlements could be bargained away; simplification of the registration process for workplace agreements; reduction in the scope of awards compared to workplace agreements; reduction in the powers of the AIRC in areas such as wage fixing, approval of agreements and dispute resolution; ensuring that union ballots are held prior to legal industrial action and making it easy for companies to counter such actions; exemption for small organizations from unfair dismissal claims. The reforms permitted employers to offer agreements that include terms of penalty imposition, overtime rates, leave options, working hours, etc.

Forward with Fairness Act aimed at providing employees with 10 minimum standards of employment abolish AWAs, bring back abolished unfair dismissal rights, increase the scope of collective bargaining, create Fair Work Australia as a mediatory agency between employers and employees. The bill bans AWAs and phases out existing ones by 2010. Moreover, there is a new awards review process with a period of award modernization and the AIRC is allowed to create new industry specific awards with 10 statutory minimum standards. Labor wishes all employees in the private sector to be placed under the Forward with Fairness though state employees will have to stay under state industrial relations system. (Jones, 2009). This policy supports the idea of a single national system based on the agreement of the states rather than autocratic destruction of their systems. Forward with Fairness supports common law contracts within the framework of awards and collective agreements and this new system will allow common law contracts of monetary value to override award conditions. Moreover, the Forward with fairness ensured that there are a set of minimum conditions retained for individual and collective bargaining. Compared to the Work Choices 2005, the ALP policy adds to the Work choices minimum conditions, the hours provisions looks less deregulatory, flexible work is supported and real protection is provided for public holidays

Agreements

WC chose to stick by the AWAs whereas FF is focused on abolishing the same. The effect of this will be that according to the Forward with Fairness Act, only highly paid employees can negotiate individual agreements to exclude award conditions. Abolition of AWAs is likely to weaken choice, flexibility and productivity (ACCI, 2007, p.1). This is in contradiction to Julia Gillard’s Press Club speech where she pointed out that WC was the one that crippled flexibility and productivity and introduced FF as the solution (Philips, 2008).

Standards

Work Choice 2005 was accompanied by amendments to the Workplace Relations Act and through these amendments AWAs were made compulsory for jobs. It was also made mandatory that five basic standards must be present in any workplace agreement: “payment based on hours worked and award rate of pay for that work; not more than 38 working hours per week, plus reasonable additional hours; four weeks annual leave; 10 days personal leave a year and 12 months unpaid parental leave” (Stewart and Williams, 2007, 33). Apart from these five issues, and a set of provisions in collective agreements, all other matters were negotiable. The FF initiative retained some of “the minimum employment standards outlined in Work Choices such as work hours, public holidays, parental leave, annual leave and personal and compassionate leave” (Khalilizadeh, 2008, p. 1). However the initiative includes additional rights such as “community services leave, employment terms in writing; redundancy pay; nationally consistent long service leave; and flexible work arrangements for parents” (Khalilizadeh, 2008, p. 1).

Payment terms and power-sharing

WC ensures that the minimum wages are set by the new body Australian Fair Pay Commission. FF, on the other hand, gets the same done by the arbitration body, the Fair Works Australia and abolished the AFPC (Philips, 2008). This means, the minimum wage comes under former award system of arbitration rather than a process of inquiry by an expert group.

With Work Choices agreement, employees could offer high rates for exceptional employees or those belonging to effective unions and offer less to those in competitive industries. This would not be possible in Forward with Fairness as the focus is on equal treatment of employees through collective bargaining. The Work Choices act changed the constitutional basis for federal labor regulation. The law is no longer based on the industrial arbitration power but by corporations’ power. Work Choices ensured that an employer must be either a federal system employer or excluded employer and cannot be covered by both federal and state awards.

Collective Enterprise bargaining

The Forward with Fairness emphasizes more on collective enterprise bargaining. It empowers employees who wish to bargain in a group. Collective agreements need not necessarily comply with every condition of a relevant award as long as employees are given better overall conditions. Work Choices 2005 allowed collective bargaining or non union bargaining to exist along with individual bargaining with the condition that AWAs will dominate over collective agreements. Forward to Fairness, on the other had permits only collective union or non union bargaining provided it will improve the situation of the employees relative to the award. As a result of this difference, unions are likely to get more power and employers will have to deal with trade unions. Moreover, the ALP policy forces any change to wages, conditions or work practice to be determined in a collective manner and suppress the choice of individuals. Collective bargaining is likely to lead to increased overall wages and conditions compared to award requirements increasing labor costs.

Pattern Bargaining

Work Choices did not permit pattern bargaining or bargaining for common claims against multiple employers in the same industry and did not permit compulsory bargaining as well. FF policy allowed pattern and industry bargaining in some cases though it does not support strikes. It also supported unions to engage in forced bargaining if supported by a majority of employees. This means employers will have the additional burden of dealing with trade unions. While WC allowed strikes only on employment matters and that too after a secret ballot, FF allows strikes over legal union demands. Such leniency can expand the scope for strike action (Philips, 2008).

Unique aspects of FF

It creates a new no-disadvantage test and allows the AIRC to undertake the award modernization process. It also introduced new employment standards and established “new unfair dismissal laws” (Jones, 2009, 28). It also created the Fair Work Australia that will eventually absorb AIRC and other federal industrial bodies and take over the duties of the AIRC including award setting. Fair Work Australia will also help low paid employees who do not have the benefits of collective bargaining through multiemployer collective bargaining.

AIRC and protection from unfair dismissals

In the case of WC, AIRC is retained with limited powers whereas FF abolishes it to replace it with a new super agency. Power will rest with Fair Work Australia. One of the major reforms of FF is that it gave employees of all businesses, protection from unfair dismissals. Earlier, according to the WC, employees of small businesses were exposed to unfair dismissals and did not have protection.

Impact

According to David Peetz, after the introduction of WC, union agreements continued to dominate along with increasing use of AWAs. He also observed a higher level of anxiety in workplaces with less than 100 employees, due to exemption from unfair dismissal protection. He also says there has been a loss of employment conditions in the context of overtime pay and penalty rates, through AWAs and EGAs (Peetz, 2007). The impact of Forward with fairness is yet to be seen.

Conclusion

FF has adopted a large percentage of WC reforms and except for unfair dismissals, the reforms remain the same. Generally, the federal government is considered supreme compared to the states on workplace matters and pattern bargaining is mostly banned. FF replaces the IRC with FWA. Important differences lie in the area of additional minimum employment rights set by FF. As FF is based on the ethical principle of fairness, the act has individual “flexibility clauses” that can override awards and agreements effectively. The FF scores over WC for the process of simplifying and modernizing awards. Thus, one can safely conclude that FF is an evolution of WC, with a shift towards the concept of ‘fairness.

References

ACCI (Australian Chamber of Commerce and industry) (2007). ALP AND COALITION INDUSTRIAL RELATIONS POLICY SNAPSHOT. Issues Paper.

Jones, Roger (2009). International Trade and Business Law Review. Taylor & Francis, 2009

Khalilizadeh, Azadeh (2008). Industrial lawyers beware: Forward with Fairness set to overhaul Work Choices. FindLaw. Web.

Murray, Jill. Work Choices and the Radical Revision of the Public Realm of Australian Statutory Labour Law. Industrial Law Journal 2006 35(4):343-366;

Peetz, David. Brave New Work Choices: What s the Story so far?Divergent Employment Relations in Australia and New Zealand?, 24th Conference of the Association of Industrial Relations Academics of Australia and New Zealand. 2007.

Philips, Ken (2008). Work Choices v Forward with Fairness: a photo finish. Web.

Stewart, Andrew and Williams, George (2007). Work choices: what the High Court said. Federation Press, 2007

Wooden, Mark (2006). Implications of Work Choices Legislation. Agenda, Volume 13, Number 2, 2006, pages 99-116

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