Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

Not acceptable

The PC in its Issue Paper 5 asked the question “to what extent should workplace relations provisions vary with the public and private enterprise”. Sensible variance does not accommodate allowing a State sector employer to unilaterally impose wage outcomes and terms and conditions on its employees by abusing its power as an employer and legislator. This approach treats public sector employees in New South Wales as second class citizens and offends Australia’s international obligations in relations to freedom of association and collective bargaining⁵³¹. No public sector workers in Australia should be the subject of targeted legislation which specifically restricts their capacity of to bargain or seek awards for certain terms and conditions or prohibits the pay rises open to them through those avenues.

16	Collective Bargaining: (3) While an Agreement is in Operation

Collective agreements that are made under the FW Act do not permit the bargaining parties to have recourse to their bargaining rights in order to advance new claims, until the nominal expiry date of the existing agreement has passed. In other respects, agreements do enable workplaces to continue to evolve during their nominal term. The question of how much change is permitted and what checks and balances exist on the change process are of considerable importance in ensuring the “bargain” remains a fair one.

Dispute settlement under agreements

Before Work Choices, workers had a range of ways of ventilating disputes that arose during the life of an agreement. This included, for a time, a capacity to take protected industrial action in support of matters not dealt with in an existing agreement⁵³². This possibility was described by the Federal Court in the following terms:

“Assuming the policy behind s 170MN is to encourage parties to adhere to the bargain they have struck, then the policy would not, in my view, be defeated by permitting the parties to negotiate effectively in respect of matters that were not the subject of a relevant certified agreement. The policy is sufficiently protected if s 170MN(1) is construed as prohibiting parties to a certified agreement from resorting to industrial action to undo the matters they have agreed upon in the certified agreement, if its nominal expiry date has not passed. If the parties so desired, they could agree that a certified agreement made by them was intended to cover the whole field of relevant employment, thereby excluding the possibility of industrial action during the currency of the agreement.”⁵³³

In order to avoid this result, most employers took the advice of the Court and made agreements which purported to be “entire agreements”, included promises not to take industrial action, and provided for the parties submit their disputes to the AIRC for conciliation and/or arbitration in accordance with the compulsory requirement that certified agreements (as they were then known) contain dispute resolution terms. The outcome was an almost endless stream of cases in the AIRC concerning whether a particular dispute was “about the application of the agreement”, which was a jurisdictional perquisite under the law of the day that had to be met before the AIRC could perform the dispute resolution functions the aggrieved party was urging it to⁵³⁴. The effect had been that parties were left by the terms of their agreements with no right to take industrial action in respect of new matters and left by the terms of the legislation with no access to arbitration to resolve disputes about those new matters.

WorkChoices made it unlawful to strike during the life of an agreement under any circumstance, removing the incentive for employers to agree to submit disputes to arbitration. As a result, many Work Choices agreements referred disputes to the FWC for conciliation but not arbitration (which was the model clause provided by the statute); other agreements simply stated that the CEO’s decision was final.⁵³⁵

Under the FW Act, agreements must contain a term that allows the FWC (or an independent third party) to ‘settle’ disputes about matters arising under the agreement or the NES⁵³⁶. The new model clause provides for disputes to be referred to the FWC for conciliation and arbitration. Although the majority of agreements use the model clause,⁵³⁷ the ACTU remains concerned that a significant proportion of agreements may not provide workers with access to independent arbitration of workplace disputes.

Since the Full Bench of FWA decision in Woolworths⁵³⁸ it has become clear that the term “settle” does not import the necessary implication that a dispute settlement procedure must provide for the arbitration of unresolved disputes. Accordingly, the current minimum requirement for the inclusion of a dispute settlement procedure in enterprise agreements is that such provisions provide for conciliation or mediation of disputes by an independent third party, but not their arbitration, unless specifically provided for in the enterprise agreement.

There does not appear to be any rational policy basis for not requiring the compulsory arbitration of disputes that are properly raised in the context of a dispute settlement clause. After all, enterprise agreements made under the FW Act are legally enforceable statutory instruments, for which breaches are punishable by a civil penalty regime.⁵³⁹ Also, enterprise agreements are statutorily ‘closed’ for a nominal term not exceeding four years.⁵⁴⁰ The practical effect of this closed character is that employees are legally prevented from taking industrial action in pursuit of grievances or new claims for at least the nominal term of the agreement.

Accordingly, there is a strong public policy case to suggest that the interests of all the parties to an enterprise agreement are best served by providing for an effective, fair and final process for dealing with disputes or grievances arising under the agreement. However, the insistence of many large corporations⁵⁴¹ that dispute settlement provision in agreements not provide for arbitration as the last step in the dispute procedure, means that often the disputes or grievances raised by employees simply remain unresolved and fester, in the face of intransigence by an employer who knows that their application of the agreement is effectively legally unchallengeable unless a clear breach is established.

The issue of a compulsory arbitration clause in enterprise agreements may not appear a top order issue, but we contend it is an essential part of a properly functioning collective bargaining system. Arbitration as a final step process allows for employee grievances over the application of the agreement to be dealt with relatively quickly, cheaply and by persons who have an understanding of industrial issues. The refusal of certain employers to accept arbitration as a mandatory clause in enterprise agreements amounts to workers having to accept the proposition of ‘do as we say, not what you think the agreement means’. It is a remarkable position, given that recourse to arbitration of employee grievances once a collective agreement has been struck is regarded as a natural aspect of collective bargaining in Canada or the United States.⁵⁴² It is also a fundamentally unfair result in circumstances where legislation has eliminated recourse to bargaining rights.