Senate Employment, Workplace Relations, Small Business and Education Legislation Committee

ACTU Supplementary Submission. Senate Employment, Workplace Relations, Small Business and Education Legislation Committee Inquiry Into Workplace Relations Legislation Amendment Bill 1999

November 1999

Introduction

1. The ACTU has welcomed the opportunity to put its submission to the Committee, and notes the wide range of submissions from trade unions, churches, women’s groups, lawyers, academics and other community groups, all expressing concern about all or some aspects of the Workplace Relations Legislation Amendment Bill 1999 (the Bill).

2. The ACTU also notes that employer organisations have opposed some key elements of the Bill.

3. Many of the Bill’s provisions are proposals contained in the original 1996 Bill, which were rejected by the Democrats at that time. A number of others are responses by the Government to decisions of the Commission or the Federal Court with which it disagrees, invariably because they protect employees’ rights and entitlements.

4. The ACTU submits that the following conclusions could fairly be drawn from these submissions.

4.1 Deregulation of the labour market, of which the 1996 amendments to the Workplace Relations Act 1996 form a part, has led to increased job insecurity, a rise in the incidence of precarious employment and greater inequity in wages distribution.

4.2 No case has been made out that further de-regulation (let alone through a Bill which would add considerable length and complexity to the current regulatory regime) would assist in job creation or reducing current levels of unemployment.

4.3 As less than three years have passed since the 1996 amendments, it is too early to assess the complete impact of the current legislation, although on the basis of available information, it is very disturbing. In particular, the award simplification process is not completed, and there has not been sufficient time to assess the effects on industries where awards have been simplified.

4.4 The Bill, if enacted, would significantly affect the level of award entitlements, the powers of the Commission to resolve disputes and determine wages and conditions of employment, and the ability of employees and their unions to bargain collectively and take industrial action.

4.5 Passage of the Bill would also place Australia even further in breach of core ILO standards in respect of freedom of association, collective bargaining and the right to organise.

5. In this supplementary submission, the ACTU seeks to respond to a number of issues which have been either taken on notice or which have arisen as a result of other submissions and questioning by Senators.

6. This supplementary submission should be read in conjunction with the ACTU’s primary submission to the Inquiry.

Should The Bill Be Rejected By The Senate At The Second Reading Stage?

7. A significant number of submissions to the Inquiry have responded to the terms of reference by proposing amendments to the Act. In particular, the ACTU and some unions have recommended amendments which would have the effect of improving the operation of the current Act. The ACTU and the unions have all recommended that the Bill should be rejected in its entirety.

8. Senator Murray has asked a number of the organisations appearing before the Committee, including the ACTU, whether they prefer one of two alternatives:

8.1. That the Bill be rejected at the Second Reading, thus losing the opportunity to amend it in line with the recommendations put forward by the organisation; or

8.2. That the Bill go to the Third Reading, thus allowing for amendments to the Act which might be thought to be desirable.

9. While the ACTU would be pleased to see the Act amended in line with its recommendations, it is extremely conscious of the need for any such legislation to be passed by the House of Representatives. It is unlikely, to say the least, that the Government would be interested in amendments which significantly increased the powers of the Commission, strengthened the award safety net or promoted collective bargaining rights.

10. It is, however, possible that the Government might be prepared to support some small measures, for example to strengthen enforcement of some provisions, in exchange for achieving more of the Bill than might otherwise be the case. It is also possible that the Government will seek to introduce its inadequate model for protection of employee entitlements in conjunction with the Bill.

11. Given the clear intention of the Bill to reduce the content and effectiveness of the award safety net, remove powers of the Commission and weaken collective bargaining and the role of unions, the ACTU believes that there is no realistic chance that legislation resulting from “trading” some purported improvements for some proposals in the Bill is likely to be of overall benefit to employees. For example, the Victorian branch of the CPSU-SPSF has given evidence in relation to the inadequacy of the current legislation in ensuring that relevant employees have access to arbitration as intended by subsection 170MW(7). It is difficult to see how the Government would agree to amend the Act to ensure that arbitration became a realistic option when the Bill proposes to repeal the current subsection 170MW(7). It should also be noted that the subsection 170MW(7) represents the Government’s compromise with the Democrats which resulted in the removal of the scheme in the former Act for arbitration of paid rates awards.

12. In light of this, the ACTU believes that the Bill ought to be rejected at the Second Reading. As we understand the parliamentary process, this would not preclude introducing other amendments to the current legislation as a Private Member’s Bill, or to move a Second Reading amendment to the effect that an alternative Bill in line with a number of principles be prepared and introduced.

13. In the event that the Bill does proceed to the Third Reading, the ACTU urges that only amendments which could be seen to strengthen the award system, the role of the Commission and collective bargaining should be considered.

Pattern Bargaining

14. The issue of so-called “pattern bargaining” is one which has elicited more heat than light in the Inquiry, not least because of the difficulties in defining the concept, and then distinguishing the various circumstances in which it could be said to apply.

15. It is notable that no employer organisation has totally supported the Government’s proposals in relation to this issue.

16. The most detailed consideration of the issue has come from the Australian Industry Group, whose position can be summarised as follows:

(a) The ability to make common agreements covering all employers on large project or construction sites should be maintained.

(b) Subcontractors on project and construction sites should have the terms of the site agreement available to them at the tender stage, so that they are aware of the employment conditions which will apply. There should also be provision for exemption from a sub-contractor’s existing certified agreement in respect of work carried out on a project or construction site.

(c) In general industry protected action should be prohibited in relation to “pattern bargaining”, which should be defined as:

‘…..a course of conduct, or bargaining, or the making of claims involving the seeking of common wages or other employment entitlements which is found by the Commission to form part of a general campaign:

(i) that extends beyond a particular site of work; and

(ii) is in respect of both employees employed by, and not employed by, the employer who employs employees at the site of work referred to in (i) above or by a related corporate body of that employer as defined in the Corporations Law; and

(iii) is contrary to the objective of encouraging agreements to be genuinely negotiated between parties at the workplace or enterprise level.”

17. The ACTU strongly opposes this proposal, as well as the restrictions on multi-employer bargaining proposed in the Bill.

The reality of enterprise bargaining

18. No case has been made out for this restriction on pattern bargaining. The AIG case seems solely based on what it fears may occur in Victoria next year as a result of the recent campaign for common expiry dates for agreements in manufacturing industry. In effect, AIG says that it is worried that its members will face economic pressure in relation to enterprise bargaining, and the law should be changed to weaken the union’s ability to pursue these claims.

19. As the current law requires that each enterprise normally must enter into a separate agreement (there is limited provision for multi-enterprise agreements) and that any protected industrial action must be taken pursuant to a bargaining period with that employer by its employees, it is difficult to see how the pursuit of common claims disadvantages employers. The issue of whether or not an employer agrees to some or all of the common claims is an issue to be determined at each enterprise.

20. The problem seems to be that employers fear that their employees will be prepared to take action in support of common claims which they believe might be higher than they wish to accept, and they want the ability to prevent this from happening.

21. In fact, it is less the commonality of the claims than their substance which seems to underlie the AIG’s concerns. If the unions, for example, were to determine an industry-wide claim of one per cent per annum for the next ten years, the ACTU suspects that the Committee would not be seeing this submission from the AIG.

22. The reality of enterprise bargaining, however, is that parties make claims which other parties may not wish to accept, and they bargain on the basis that industrial action should be available without threat of legal sanction.

23. In the recent Full Bench decision in CFMEU – and – Coal and Allied (Print R9735) the Commission stated in relation to a union claim to restore, through an arbitrated award, employment conditions which had been unilaterally removed by the company:

“What the unions seek is an award that would place them in, or close to, the position in which they would have been had they won the industrial war. We are not prepared to do this.”

Multi-employer or industry-wide bargaining is integral to collective bargaining rights

24. The ILO’s Committee of Experts has criticised Australian legislation for restricting the ability of employees and unions to bargain collectively on a multi-employer or industry-wide basis, holding that they should have a right to determine the level of bargaining.

25. The proposed changes to laws governing industrial action, including lack of access to protected action for so-called “pattern bargaining” would represent blatant defiance of the ILO’s call for Australia to amend its legislation to strengthen the right to strike, including in relation to multi-employer bargaining. It is simply not right to describe the “dialogue” which the Government claims to be having with the ILO as anything other than a continued, and almost certainly doomed, attempt to have the ILO go against its long-established jurisprudence on this issue and change its mind.

26. The Government should accept the Committee of Experts’ findings or challenge them in the International Court of Justice, which is the final arbiter under the ILO Constitution.

27. Neither the United Kingdom nor the United States prohibits the taking of legal or official industrial action on a multi-employer basis or in support of common claims. In most European countries, industry-wide collective bargaining is the norm.

Specific cases lead to bad law

28. It is clear that AIG is seeking this comprehensive change in the law to deal with a particular industrial situation in which it fears that its members may not emerge as the winners. As such, the proposal lacks elementary logic.

29. It was argued by AIG before the Committee that project and construction sites could be distinguished from general industry because the various contractors and subcontractors were commercially connected as a result of their participation in the project. It was also argued that Email, where a common framework agreement was adopted in respect of all its enterprises, could be distinguished because of the commercial link created by the common Email ownership.

30. Arguably, the commercial link between competitors, or between various companies providing different components to the automative industry could be just as relevant to the question as to whether similar agreements were relevant.

31. The AIG submission is clearly directed towards Campaign 2000, with little consideration of the effect of such a change in legislation. While not necessarily intended, the effect would be to prevent protected action being taken in relation to any issue for which a union was campaigning; for example, paid maternity leave, improved redundancy pay or restrictions on excessive hours of work.

32. Australia has a system of multi-employer unions, covering employees in one or more industries and/or occupations. It is unlikely, in anything like the foreseeable future, that this will be replaced with significant coverage by single enterprise unions, even though this is clearly on the Minister’s agenda. For union members, the ability to campaign across an industry is one of the major benefits of membership. The ability to make multi-employer agreements is already unreasonably restricted; there is simply no case for preventing employees campaigning in a coordinated way, especially given that it is open to each individual employer to refuse to accept the claims and insist on negotiating alternative terms and conditions.

Employers engage in pattern bargaining

33. The fact that employers engage in pattern bargaining; that is, that they seek common claims with other employers in a particular industry, is well known. One of the most frequent arguments by employers for particular claims in enterprise bargaining is that something similar was negotiated by another employer. The notion of the “level playing field” has been supported by employers, such as in the road transport industry. Similarly, the reluctance of employers in some labour intensive industries, such as hospitality, to take up the option of agreement-making, reflects a desire to maintain common award-based employment conditions. In these cases, employers do not want to be forced into competition on the price of labour, whether through forcing it down as low as possible, or engaging in leapfrogging increases, either to attract and retain labour or in response to union claims.

34. Many employers have also come to the view that the transaction costs in continuous enterprise bargaining is not worth the benefit, particularly once substantial change has been achieved.

35. As put to the Committee by Professor Isaac, pattern bargaining (or multi-employer agreements) can be justified both on equity and economic grounds, and employer support for it is economically rational. Labour is not a commodity, the price of which should be pushed down to the lowest possible level. Many, if not most, employers prefer a level playing field for employment conditions; this is why there is little opposition to the award system amongst small business.

36. Another form of pattern bargaining is employers coming together to work out a common strategy for opposing union claims. A negative response to a claim is as much pattern bargaining as a common positive claim.

37. The experience of AWAs is another clear example of pattern bargaining, where employers provide identical agreements for employees to sign, on a “take it or leave it” basis. This is encouraged by the Office of the Employment Advocate, which has prepared “template” agreements which require the addition of a few details and the signatures of the employer and employee.

38. As stated above, it is not the prospect of common outcomes which is worrying the AIG; it is the prospect of outcomes which are higher than they wish.

Existing remedies

39. Employers already have access to at least two provisions of the existing Act where they believe that claims are not in accordance with the legislation. Subsection 170MW(2) of the Act provides the Commission with a discretion to suspend or terminate a bargaining period in the event that a party is not genuinely trying to reach agreement with other parties. Section 170MM of the Act provides that industrial action is not protected if it is engaged in or organised in concert with other than “protected persons”; that is, with persons other than union members employed by the particular employer.

40. The ACTU is totally opposed to use of these provisions to restrict the right of employees and their unions to determine freely the appropriate scope of bargaining; that is, whether on an individual enterprise, multi-employer or industry level.

41. However, it cannot be argued that employers do not have access to legal avenues. Adoption of the Government’s proposals in relation to industrial action would amount to virtual abolition of the right to strike, whether on a single or multi employer basis, while the AIG proposal in relation to pattern bargaining would simply provide additional avenues for complex litigation, and make the prospect of resolution through conciliation more remote.

Conclusion

42. In commenting on the Government’s proposal, Dr David Peetz said in his submission:

“The proposal offends the principles of the bargaining model. It takes away from the parties the opportunity to decide how they conduct their bargaining. It further takes away the opportunity to decide the level at which they bargain. It involves the Commission in determining what terms and conditions of employment are appropriate to be included in an agreement for a single employer, in direct contravention of the principle that this is precisely what the Commission should not be doing. It appears to permit ‘pattern bargaining’ by employers (which can occur extensively) but not by unions. It fails to define what pattern bargaining is. Its sole purpose seems to be to shift power away from employees to employers, but in doing so it distorts the bargaining model severely.” (Vol 13, No 386, p2927)

43. The intention of the Government and its employer supporters in relation to pattern bargaining is perfectly clear. They want the best of both worlds; that is, restricting the right of workers to bargain effectively, while removing the ability of the Commission to arbitrate on the basis of fairness to all parties. To legislate as proposed would be totally inconsistent with a fair and balanced industrial relations system.Industrial Action

44. The main complaint by employers seems to be that the Commission does not stop industrial action, whether protected or unprotected, quickly enough. Employer attitudes have simply not caught up with the shift in the Act from the exercise of conciliation and arbitration powers by the Commission to an enterprise bargaining model. Under the old system, all industrial action was unlawful under the common law, and was seen as illegitimate by the Commission. The first response to any industrial action was to stop it, and replace the battle on the ground with conciliation and arbitration.