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Australia, in common with many other industrialized countries in the 1990s, has experienced a shift towards individualism in labor law and labor market regulation. This has been part of a wider change as governments have opened up domestic markets to international competition, while rethinking the protections provided by the welfare state. Business has demanded deregulation of all kinds but particularly in the labor market, with the aim of achieving greater flexibility and efficiency in the utilization of labor.
The original aims of the Federal arbitration legislation were to prevent strikes and lockouts, to provide for conciliation ‘with a view to amicable agreement between the parties’ or, in default of that, to settle disputes by an ‘equitable award’ after compulsory arbitration. 2 The original framers of compulsory arbitration believed that collective groups of employers and employees would naturally tend to settle their differences by conciliation and agreement, and most likely on an industry- wide basis. The very existence of formal and compulsory mechanisms for conciliation and arbitration would induce parties ‘to make as between themselves agreements in regard to the conduct of the particular trade or business in which they are engaged. Then this Act will bind them.
The adoption of this system meant that unions did not need to gain recognition from employers. Under compulsory arbitration, unions were recognized by the state. As long as they were registered under the arbitration system they could notify a dispute with an employer (or employer association) and thereby invoke the compulsory processes of conciliation and arbitration. Ultimately a union could seek to have the tribunal impose an award on the employer which gave the union and its members both substantive and procedural rights. Registered unions were also able to make enforceable collective agreements with employers.
The method chosen for making agreements legally enforceable was different from that used in many other systems. Rather than treating collective agreements as contracts, the arbitration system gave unions a special though limited legal status, enabling them to enter into particular kinds of agreements regulated by statute and supervised by tribunals separate from the ordinary courts. Thus awards and agreements were not fully integrated into the legal system as occurred in many European countries.
Breach of an industrial agreement was not a breach of contract entitling the innocent party to compensatory damages but, like breach of an award, a contravention of a statutory obligation resulting in a penalty similar in nature to a fine. In practice, though, it has also been common for parties to obtain an injunctive order compelling the other party to observe the award or agreement
The upshot of the particular historical circumstances in which the compulsory arbitration system was developed, which determined the particular legal form for bargaining and regulation, is that individual and collective labor agreements have been quite different in their juridical nature and form. Collective agreements registered under the arbitration system are part of the public law since they are regulated by statute and (especially in recent times) their contents subject to approval by a tribunal with responsibility to act in the public interest. Those collective agreements not registered under this system remain unrecognized by the legal system and are only enforceable by industrial action.
Different forms of regulation have accommodated periods of decentralized collective bargaining across the twentieth century. Enterprise specific awards and registered industrial agreements have been common means of recognizing bargaining within a centralized system controlled to varying degrees by the Federal arbitration tribunal (now known as the Australian Industrial Relations Commission). After the abandonment of the universal needs-based ‘basic wage’ concept in 1967 the Federal industrial relations system has in practice operated a three-tier structure for wage fixation, involving national wage cases, industry
Although industrial relations legislation in Australia allows for legal recognition of collective agreements through certification or registration under the arbitration system, unregistered greements remain common in practice. A survey in 1995 reported that unregistered agreements occurred in 40 percent of workplaces which had a written collective agreement. Subsequent studies indicate that unregistered agreements are more likely to exist at either small or very large.
While there has been frequent debate concerning the need for a bill of rights in Australia, the written constitutions of the Commonwealth of Australia and of the constituent States are machinery documents which contain few recognized individual rights. The Industrial Relations Reform Act of 1993 increased the impact of international standards on Australian labor law in the Federal jurisdiction. One of the Act’s specific objects was ‘ensuring that labor standards meet Australia’s international obligations.’ 12 Although international labor norms were not directly enacted by the legislation, notions of collective bargaining (including a limited right to strike) were introduced.
Many of these reforms were dismantled with the introduction of the Workplace Relations Act in 1996, which does not rely on international labor standards. This Act is designed to give equal weight to individual and collective bargaining, and to reduce the rights of unions in negotiation and agreement-making. Since then several attempts have been made by the current Federal government to pass.
Under the traditional compulsory arbitration system, collective agreements were formalized in a number of ways. An agreement could be submitted to the industrial tribunal for certification, in which case it became binding on the parties to it by statutory force. Until recently, certified agreements had the same legal status as awards. Alternatively, an agreement could be presented to the tribunal for adoption as a consent award. In both cases, the agreement or award had to be approved by the tribunal, which was required to act in the public interest.
There is no mandatory process for bargaining under the Federal system. A certified agreement must be approved by a valid majority of employees subject to it (ie a simple majority of those actually voting). While the legislation contemplates that approval may be by ballot, this is not mandatory. There are several provisions designed to achieve informed consent in the approval process. The employees must be given access to a copy of the agreement, and it must be explained to the employees who will be subject to it.
This must be done in a way which takes account of their particular circumstances and needs. The legislation specifically mentions women, persons from a non-English speaking background, and young people as having special needs. Ultimately, the employees must have ‘genuinely approved’ the agreement. This requirement has been interpreted as requiring genuine consent which was ‘informed and un-coerced.’ The agreement cannot be certified unless the Commission is satisfied that it was genuinely approved.
Australian Workplace Agreements are subject to few legislative restrictions concerning their contents. Before coming into effect, they must be approved by an independent official, rather than by the industrial relations tribunal, as is the case with collective agreements. Similar individual agreements exist under the Queensland and Western Australian State systems. In both States, however, recent amendments now require individual statutory agreements to be approved by the industrial relations tribunal, and only after it has satisfied a series of statutory safeguards to protect freedom of choice.
The establishment of compulsory arbitration was closely associated with protection of domestic industries from international competition by the use of tariffs and bounties. The Federal Labor government (1983-96) dramatically reversed this situation by opening up the Australian economy to greater international competition in the mid-1980s, floating the Australian dollar, deregulating the financial sector, winding back industry protection, restructuring (and subsequently privatizing) government monopolies and relaxing many government controls. These changes were made in response to a perceived economic crisis.
By the mid-1980s Australia was facing a host of economic problems: a declining balance of payments, depreciating currency, low productive investment, persistently high inflation, and a worsening public deficit. An unemployment rate of around 10 percent seemed to have become entrenched. International market forces were seen to be demanding major structural reforms to the economy, not least of which were fundamental changes to the labor market and the regulation of industrial relations.
The demand for labor market reform was championed by proponents of individualist neo-liberalism (in Australia described, often disparagingly, as economic rationalists). They advanced a deregulations approach as a means of solving Australia’s economic problems by abolishing the ‘rigidities’ which were thought to be impeding greater efficiency. The term ‘enterprise bargaining’ was Industrial Relations.
The notions of freedom of association and the right to bargain collectively have been present implicitly in the compulsory arbitration system’s prohibition of victimization against union members and the recognition of the right of unions to participate in the making of agreements and awards. Yet the explicit recognition of the principle of the right to bargain has only occurred with the adoption of enterprise bargaining in the last decade.
The introduction of individual statutory agreements, such as Australian Workplace Agreements, has complicated the picture. While such agreements are statutory in their origin and effect, they differ from the hitherto existing forms of industrial instrument, awards and certified agreements, which are collective in nature. As agreements between determinate individuals, AWAs are like contracts. A number of legal questions about such agreements are likely to arise in future, questions which are not resolved by the legislation creating them and which are difficult to answer by resort to traditional contract principles.
When making a union-based agreement, the employer is not bound to include all relevant unions as parties. The Federal Workplace Relations Act 1996 says that when negotiating an agreement, employers must not discriminate between employees because some of them are members of a particular union, or are members of a different union than other employees. It has been thought that an employer’s refusal to negotiate with a particular union does not contravene either this requirement or the freedom of association provisions. One judge, while not precluding the possibility that the Act could be contravened by selective negotiation, said that ‘it is the rights of employees rather than unions themselves that the Act principally sets out in the relevant provisions to protect.
In common with other industrialized countries, Australia has shown a shift in the centre of gravity of collective bargaining, away from a national and industry basis towards the company level, and a growth in the flexibility of bargaining processes. Associated with this has been a reduced acceptance of collective bargaining among many employers. The existing systems of industrial relations legislation in Australia display a strong trend towards individualism in agreement-making, while facilitating the means for employers to exclude unions from bargaining. In several disputes in the mining sector, employers have been able to forestall union attempts to obtain a certified agreement while pursuing a policy of individualization by placing as many employees on either individual workplace agreements or on ‘staff’ employment contracts.
References
See Stellar Call Centres Pty Ltd v Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia [2001] FCA 106; 103 IR 220.
Richard Mitchell, Richard Naughton and Rolf Sorensen, ‘The Law and Employee Participation – Evidence from the Federal Enterprise Agreements Process’, Journal of Industrial Relations, vol. 39, 1997, pp. 196-217;
Raymond Markey and Rosemary Reglar, ‘Consultative Commitees in the Australian Steel Balnav, Brown, Machonachie, Stone (2007). Employment Relations In Australia, W. John & Sons Australia Ltd.
Morgan, D., Zeffane, R., (2003) “Employment Relations.” Individualism in organisation: Does Employment Contract innovation make a difference 25(6): 536-557.
Nils, T. (1997). “Employment Relations.” The Management of individualism in an Australia Mining Company 19(4): 337
Ramamoorthy, A., Carroll, S., (1998). “Human Relations.”Individualism/collectivism orientation and reactions towards alternative human resources management practices 51(5): 571-589.
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