ROB DURBRIDGE President, SEARCH Foundation

The Fair Work Act needs reform so that labour legislation provides rights and fair processes for the prevention and settlement of industrial disputes, particularly around the new issues thrown up by the economic and environmental crises. Without reform the Act will cause greater inequality and will fail to provide the basis for economic recovery.
Corporate Relations: The Fair Work Act 2009 is a defining shift for the ALP

Recent conflict between unions and the Federal ALP over industrial relations laws is not just shadow boxing. The interrogation provisions which will be given to the Fair Work Inspectorate for parts of the building industry do have protections, but they are offensively undemocratic and could be extended to other workers as well. Unions say that if there are crimes being committed, use the extensive criminal law. The ALP leadership is chorusing the message to unions that they should pull their heads in and leave policy to the experts.

The issues go further than building industry rights. The union movement is being impelled by membership concerns to concentrate on job security and job creation. This will create further tension as the government resists encroachment on the managerial prerogative and policies of corporations as well as neo-liberal policies in areas such as trade and financial regulation. The problem for the ALP is that the new IR laws were conceived in the boom when enterprise bargaining worked in key sectors; now they will cause widening inequality and may well prove unsuited to economic recovery.

The shift which has occurred in Labor’s IR legislation is fundamental to the nature of the ALP itself; a defining shift which is impelling unions, including those on the Right, to take a more independent and public stance in defence of members and their families. The global crisis of the economy and politics is linking union strategies internationally as never before. For the major political parties, convergence never looked closer as corporate relations replace industrial relations as the bipartisan focus of policy.

What lies behind the Fair Work Act?

In August 2007 the incoming Rudd-Gillard ALP leadership developed a “Policy Implementation Plan” for the ALP Federal Conference policy adopted earlier that year. This modified ALP policy considerably in a plan developed with major employer groups. At the time the plan was announced ACTU Secretary Jeff Lawrence told unions there was “no agreement with the ACTU, public or private” behind it. At the time the entire union movement was flat-out campaigning in the community under the banner of the Your Rights at Work (YRAW) Campaign, led by the ACTU.

The YRAW campaign was decisive in the defeat of the Howard Government, but it is the rewrite of ALP policy for the 2007 election which has been translated into new Act and is the Minister’s well-practised “mandate” rationale for its content. Hence the significance of the recent ACTU Congress’ agenda for further IR reform which received a frosty hostile reception from Minister Gillard who opposes any further changes prior to the next Federal election.

Corporations at the Centre

The FWA represents a massive legislative exercise which, like Workchoices, is fearfully inaccessible. In essence it removes the primacy given to individual employment contracts over collective instruments. In its place it puts collective bargaining, union and non-union, with individual “flexibility” requirements underpinned by a set of minimum legislated National Employment Standards and Modern Awards made by the AIRC under Ministerial direction.

In doing so it brings the Australian system closer to that of the US by excluding the operation of the Labour (or “C&A”) Power of the Australian Constitution under which an independent tribunal dealt with industrial disputes since Federation. The mechanism was compulsory conciliation and arbitration (S.51 (xxxv)) in return for which unions accepted regulation and limits to industrial action rights. Instead of the Labour Power, the new Act is based (as was ‘Workchoices’) on the Corporations Power (S.51 (xx)).

Henceforth industrial regulation will focus on the rights and responsibilities of the corporation, the dominant institution at the core of capitalism, rather than the settlement of disputes between parties. The new tribunal Fair Work Australia will continue to be directed by Ministerial “Request” but not under the constitutional power to establish machinery to prevent and settle disputes on merit, according equal rights to the parties. Ministerial submissions have always been a feature of the IR Acts but as Justice Kirby warned in his dissenting High Court judgement in the Workchoices case, the Labour power was the basis on which Australia had built a degree of social equity which would be in peril if Corporations was employed exclusively to regulate employment.

Significant change

The way in which the creation of Modern Awards has proceeded on the basis of complying with the “requests” (which cannot be declined) without procedural fairness or evidence judged on merit has alarmed many in the union movement about the future independence of the new tribunal. Some of the requests have been to fix unfair decisions of the AIRC, others have been in response to employers’ concerns. The main point though is that this mechanism sets a dire precedent in the event of a future conservative government. All the Howard government appointees, some of them architects of Workchoices, are being reappointed to FWA, perpetuating the imbalance created by the previous government’s refusal to appoint from both sides of the employment fence.

The Fair Work Act is the most profound industrial relations policy shift by the Federal ALP since unions created the party to legislate an alternative to industrial action and lockouts in industry. It does less to balance the power of employers over employees than any previous Federal IR law except Workchoices. This has major consequences for unions and the future of the ALP itself. It registers the declining influence of unions in the ALP and the rise of a political caste dominating both major parties which shares a broad policy consensus.

That the FWA gives unions less of a role than did the legislation under the Fraser Government for example illustrates the shift which has occurred. The Government argues this is unions’ fault…that private sector unionisation density has fallen so non-union processes are necessary. But when the original IR Act was passed soon after Federation, based on the Labour Power, unionisation was only 6%, yet unions were given exclusive rights to represent employees so that membership was encouraged.

Strong Cop on the Beat

Under the FWA, union action and independence remain under tight legislative control but the capacity to initiate and to be parties to awards made by an independent tribunal exercising compulsory arbitration has not been restored. The right to strike, internationally the hallmark of a free society, is circumscribed by rules and regulations for balloting and approval and constraints on subject matter to give “protected action” rights from penalties and civil damages. In the case of the building and construction industry restrictions on union freedoms are draconian and discriminatory, but for the whole workforce they also arguably breach ILO provisions on Freedom of Association which have been adopted by Australia since 1949.

Limits to the Right of Entry to workplaces, the capacity of employers to use transmission of business arrangements to avoid liabilities and thresholds for the operation of unfair dismissal provisions also limit the effectiveness of the new laws.

Awards, Bargaining and Arbitration

Unions will not be parties to Modern Awards which are created and can be varied by Ministerial “Request,” a request which cannot be refused and thus is actually a direction. (The defeat of the Howard Government has not seen an end to Orwellian nomenclature.) No general access to arbitration exists, but in limited circumstances such as a threat to health and welfare or where low-paid workers cannot reach agreement with a multiplicity of employers, Fair Work Australia can make a once-off determination.

Despite this provision many workers will not benefit from Modern Awards and will not be able to bargain effectively as the recession tightens. This can be expected to cause greater inequity (‘wage dispersal’) in the workforce particularly in sectors where unskilled, women and migrant workers predominate.

The ALP policy originally promised a system which would allow unrestricted bargaining to replace the “allowable” list of the Howard years. Instead FWA incorporates the restriction requiring that matters for bargaining are those “pertaining to employment” which will limit bargaining around broader social questions. This piece of arcane legalism has survived the new broom. Thus employees may be unable to take protected industrial action over the environmental policies of a corporation (such as Green Bans) or the excessive remuneration packages of its executives.

The FWA also contains a prohibition against “pattern bargaining”…the capacity of unions to campaign for similar outcomes across an industry which characterised the major gains made in industries like manufacturing and mining in the past. Pattern bargaining continues behind the corporate veil but for unions public solidarity campaigns are prohibited. This prohibition is a direct product of employer hostility to manufacturing and building union campaigns in the 1990s, was contained in Workchoices and is now maintained by the FWA.

The Safety Net

A “safety net” of legislated National Employment Standards (NES) and Ministerial “Requests” in Modern Awards (MA) underpin the system. But how safe is the net? There are rules allowing the tribunal, Fair Work Australia, to maintain relevant standards in awards but they can only be varied on “work value” grounds prior to a review in 2014. The NES require agreement by Federal parliament to change minimum standards by legislation. In the US the requirement for Congress approval has led to the growth of the working poor as politicians fail to put fairness above the power of corporations.

The NES in some cases do not create real entitlements for the standards they purport to create. A number of the NES go no further than a right to request flexible working conditions or extended parental leave; worse, the NES codify how an employer can provide “reasonable business grounds” to decline the request. A Court must deal with allegations of breach of the NES.

The new system centres on enterprise bargaining with new requirements for “good faith” rather than to allow stonewalling which was legal under Howard. Just how well the provisions will deal with employers who just “go through the motions” will be instructive with Telstra as the test case. A system based on enterprise bargaining to defend or improve living standards at a time of economic crisis will prove to be fraught with problems.

Where to Now?

There is no doubt that when Minister Gillard describes the previous system as “arcane and archaic” that much of the jurisprudence and processes which developed through litigation over the past century were in need of reform. It was often a lawyers’ picnic in which the Minister was a willing participant. Much of this legal maze has been replaced in the Fair Work Act by another maze of provisions. Much will depend on the way test cases are taken and determined under the new Act. It is certain that lawyers will continue to prosper.

In essence the Fair Work Act 2009 is an expression of ascendant neo-liberal policy as it was at the time of the end of the boom. Industrial relations and the labour market were to be deregulated at the behest of global corporations so that business could operate and deal with labour across the world as with any other commodity. In order to guarantee the “free market” the unions, as third parties to the employment contract, had to be kept under tight restraint.

But this strategy behind the FWA now appears as anachronistic as market solutions, privatisation and deregulation which sponsored the crisis. Job security is evidently the highest priority in workers’ minds at present and unions are busy negotiating downtime and training arrangements to prevent sackings. Instead of economic rationalism, employers are calling for government spending and even temporary management of banks and firms as huge as General Motors. Massive government deficits are encouraged by the IMF in the name of stimulating economies sinking into recession.

The Fair Work Act needs reform so that labour legislation provides rights and fair processes for the prevention and settlement of industrial disputes, particularly around the new issues thrown up by the economic and environmental crises. Without reform the Act will cause greater inequality and will fail to provide the basis for economic recovery.

Rob Durbridge; President, SEARCH Foundation