Legislating to Rebuild Worker Power: The Industrial Relations Reforms We Need from the Albanese Labor Government

Industrial relations reform has been a highly contested area of Australian public policy for the last 30 years.

But let’s focus on the period since the last Labor Government brought in legislation repealing the Howard Coalition Government’s Work Choices laws.

In the mid-2000s, Work Choices ripped up the assumption of fairness at work that had underpinned labour regulation in Australia for a century.

With our comprehensive system of minimum wages and conditions through awards, determined by an independent tribunal through collective dialogue between representatives of workers and businesses – we were known internationally as the land of the ‘fair go’. (In what other country would you find the concept of a ‘fair go all round’ written into legislation on unfair dismissal?)

Instead, Work Choices premised labour regulation on the individual employment relationship – enabling employers to bypass unions, employment tribunals, or anything that got in the way of reducing the cost of labour.

‘Kevin07’ and Julia Gillard replaced this with the Fair Work Act 2009, through which some of the harsher edges were knocked off Work Choices – but with a close eye also to the needs of business.

This resulted in a statute replete with unsatisfactory compromises – for example, its provisions intended to stimulate collective bargaining, lifting low-paid workers above minimum award levels, have been thwarted by the inclusion of business goals such as ‘efficiency’ and ‘productivity’.

In this and other ways that I will explain, the Fair Work Act has failed to provide a basis for workers to exercise power at work.

UK industrial relations academic Professor Jane Holgate, in her wonderful recent book analysing union decline and how to reverse it, describes ‘power’ as ‘the essential factor needed for workers to effect change to improve their terms and conditions of employment’.[1] This power takes three forms:

• ‘associational power’ (the ability of union members and their leaders to act collectively and alter the power relationship between workers and employers);
• ‘structural power’ (arising from workers’ position in the economic system – ‘their ability to bargain in the labour market and workplace’); and
• ‘institutional power’ (‘the capacity to hold employers to account through laws and regulations’, which might also provide support for workers to organise and take collective action).[2]

Holgate contrasts this with the financial and other forms of power wielded by global capital,[3] which have grown enormously in the neoliberal area. This, and the concomitant weakening of workers’ power, have arisen from the following array of factors we have seen in the last 30 years:

• Deregulation, globalisation and wave after wave of economic restructuring.
• Falling union membership – in Australia, we went from over 50% union density in the mid-1980s to 14.3% in 2020.
• Sharp increases in insecure and precarious forms of work – including casual and fixed-term jobs, independent contracting and now, of course, gig work.
• Employers evolving their operations through new business models – franchising, labour hire, supply chains, platforms – all aimed at distancing them from responsibility for minimum employment standards, and having to deal with unions.
• And the gradual erosion of traditional labour law supports, which used to enable workers to engage in collective bargaining from a position of strength – including through industrial action.

After almost a decade of Coalition governments, the election of the Albanese Labor Government offers the promise of IR reforms that will (as the title of my lecture suggests) rebuild worker power in this country.

What have we seen so far?

For a start, there is a huge shift in tone and emphasis. We now have a Prime Minister and Ministers who say they want to put workers first – and talk about unions in positive terms, rather than as some toxic force that must be obliterated.

Immediately after he was sworn in as Minister for Employment and Workplace Relations, Tony Burke outlined the Government’s IR reform priorities – including closing the gender pay gap – and then said that Labor’s policy implementation:

“only matters if the laws are respected and enforced in workplaces … that means good employers who respect their workers and unions who represent their members.

To that end I encourage workers to join their union“.[4]

You will recall that the rising cost of living and boosting workers’ wages were central issues in the election campaign.

The then Opposition Leader was lambasted by the Coalition, business groups and the media for daring to suggest Labor would support a 5.1% rise in the minimum wage – to ensure wages at least kept pace with inflation.[5]

Straight after the election, the new Government followed through on this commitment in its submission to the Fair Work Commission’s Annual Wage Review. In mid-June, the Commission decided to award a 5.2% increase to workers on the National Minimum Wage; and 4.6% for award-covered workers.[6]

The Government has also indicated it will fully fund any pay increases ordered by the FWC in the current Aged Care Work Value Case, overcoming the significant gender-based assumptions which have led to the historical undervaluing of the work of these 365,000 workers.[7]

In the first sitting week of the new Parliament, the Government introduced legislation providing for 10 days’ paid family and domestic violence leave as part of the National Employment Standards in the Fair Work Act – ensuring this vital form of leave is available to all employees (including casuals) from 1 February next year.[8]

The Government also took the first step towards abolishing the separate scheme of regulation in the construction industry – by winding back the Australian Building and Construction Commission’s role in enforcing the federal Building Code[9] (a procurement policy through which the Coalition had tried to remove overt displays of union affiliation on building sites such as the Eureka flag).

There is much more on Labor’s IR reform agenda – with many of these issues to be thrashed out between business, union and civil society representatives at the Jobs and Skills Summit to be held in Canberra on 1-2 September.

I will now highlight 3 key areas – explaining why I think the new Government needs to ‘go bold’ on IR reform, and outlining some options for how these reforms could be implemented.

1) From Enterprise Bargaining to Genuine Collective Bargaining

We don’t have support for genuine collective bargaining in the Fair Work Act – we have a framework of enterprise bargaining, in which employers make agreements with employees (and unions play a role where they are strong enough).

The current system of enterprise bargaining is broken. Enterprise agreement coverage has plummeted – from 27% of employees working under a current agreement in 2012, to just 15% last year.[10]

That matters because enterprise bargaining is the main avenue for most workers to obtain above-award wage increases. If bargaining is not happening, then workers are stuck on low wages – a major cause of the wage stagnation we have seen in the last decade.

The bargaining reforms to implement Labor’s campaign commitment to get wages rising again are found in the ALP National Platform. These proposals include:

• Ending the ability of employers to have enterprise agreements terminated during negotiations for a new agreement – a tactic deployed by Qantas in bargaining with cabin crew in March (resulting in a 2-year pay freeze and more rostering flexibility for the airline).
• Improving the legislation’s good faith bargaining provisions, with greater access to resolve intractable negotiations through arbitration.

However, more is needed to fundamentally transform bargaining so workers can use it effectively to build and exercise power. This can only be done through a system of industry-wide or multi-employer bargaining.

The problem here is that enterprise bargaining was designed 30 years ago, for an economy that no longer exists. Employees and unions can only bargain, and take industrial action, for an agreement with a single business that directly employs the workforce.

That worked fine when we still had many large worksites, like factories, where thousands of employees worked for the same employer.

But businesses in key economic sectors like food production, logistics, building management and ‘big box’ retail have hived off large parts of their operations to other entities – whether that be a labour hire company, or some other outsourced service provider.

Because bargaining is limited to the direct employer of a group of workers, a union representing cleaners and security guards working out of the same CBD building can only get separate agreements for the different contracting firms employing those workers.

In that example, we need to reconfigure bargaining so that the building owner/operator – which has considerable influence over the wages ultimately paid to those workers, and benefits from their labour – is brought into the equation. 

And if we are going to lift wages, workers will need the boost to bargaining power that comes from being able to negotiate – and strike – across entire industries.

International evidence emphatically shows that countries with sectoral or other forms of multi-employer bargaining have much higher rates of agreement coverage (50-90% of the workforce) – than countries like ours, the USA and UK, with single-employer bargaining at enterprise or company level.[11]

Industry or multi-employer bargaining must be based on the principle that the workers decide the level on which they want to bargain.[12] 

This inevitably raises the question – how do you determine the workers’ preferences? The answer: through achievable thresholds of employee support.[13]

This requires a fundamental shift away from the concept of majoritarianism as the determinant of whether collective bargaining occurs. In the US, UK and Australia, employers have been allowed to pervert ‘democratic’ notions (translated as a requirement for the union to show majority support) as a way of avoiding bargaining altogether.

This has occurred because, to varying degrees, the labour laws in each country allow employers to engage in anti-union tactics during the period when majority support is tested – to prevent the required majority being obtained.

Access to multi-employer bargaining should be based instead on a concept of legitimacy[14] – i.e. what level of employee support does a union need, to demonstrate that it is the legitimate representative of a group of workers within the proposed multi-employer bargaining configuration that they have chosen?

Across an entire industry, that might only need to be 1,000 employees or 10% of the workforce – the threshold proposed to kick-start New Zealand’s new system of industry-level Fair Pay Agreements.[15]

Further, for these purposes, the extent of required support should decrease as the bargaining unit extends. For example:

• for bargaining across all the KFC stores in a franchise chain: the threshold could be at least 2,000 employees;
• and to bargain across the whole fast-food sector nationally: at least 1,000 employees.

These sample thresholds recognise the barriers to organising workers across disparate locations in multi-employer structures and the certainty of continued employer resistance. They would also level the playing field, which has been tilted in favour of employers for too long.

In addition to worker preferences, there should be a residual gateway to multi-employer bargaining based on its necessity to improve the wages and conditions of particular workers.[16]

Labor’s National Platform states that it will improve access to collective bargaining, including where appropriate through multi-employer bargaining.[17] The Government is not saying much publicly about industry bargaining. I expect there is fear of a ferocious employer backlash.

However, this is the main area where I argue that Labor has to go bolder on IR reform – and not repeat the mistake of 2009 by letting business interests stand in the way of much-needed, worker-focused changes.

Fixes are also needed for the current system of making enterprise-level agreements. In particular, employers are able to indefinitely delay the start of negotiations for a new agreement after the current one expires – a problem staff are facing here at RMIT at present, and at Deakin University.

Labor’s reforms should include an obligation on employer and union parties to commence bargaining within three months of expiry of an agreement – or, a return to the legal position prior to a 2015 amendment by the Coalition Government, so that workers can force employers to renegotiate by taking industrial action.[18]

2) A Meaningful Right to Strike

Reforming the bargaining system along the lines I have outlined will have little effect without also freeing up the right to strike.

Returning to Jane Holgate’s power analysis, she argues that: ‘the withdrawal of labour remains the most effective weapon for unions [and workers] to win power. A strike exerts power in two ways: first, it rebalances power in the (explicit or implicit) negotiations about the rate of exploitation, and secondly, it disrupts the “circuit of capital”.’[19]

That’s the theory – but in practice, we do not have anything even close to a proper right to strike in Australia.

There is only one context in which industrial action is lawful (or ‘protected’) under the Fair Work Act – when employees are bargaining for a new enterprise agreement.

However, as my colleague Professor Shae McCrystal at Sydney Law School has clearly articulated,[20] that confined window has been narrowed even further – through the complex technical requirements for protected action, and the willingness of the Fair Work Commission to put an end to strikes when there is the slightest hint of inconvenience to the public:

(1) The technical rules include the pre-condition that bans on normal work or overtime, or work stoppages of any duration, must be approved by employees in a secret ballot. Yet again we see the imposition of a requirement posited on ‘democratic’ grounds – but which actually serves the interests of employers. The legislation provides them with many opportunities to prevent the tribunal from ordering that an industrial action ballot occur, thus slowing down strike activity or blocking it altogether.

Workers and unions do not need the state telling them how to decide whether to go out on strike. In my time at the Transport Workers Union in the late 1990s, the members voted for – and sometimes against – strike action, through the union’s own democratic processes. The ballot rules in the Fair Work Act should be replaced with a simple requirement that the union provide the employer three days’ written notice of proposed industrial action.

(2) Even where industrial action is being taken lawfully, employers can ask the Fair Work Commission to end it on ‘public interest’ grounds: i.e. where it is a threat to the life, safety, health or welfare of the population, or threatens to cause significant economic damage. The bar for activating these provisions has become incredibly low.

In 2018, the tribunal suspended a strike on the Sydney rail network because it threatened the welfare of ‘a large number of people … who rely on [these] services to get to work [or] attend school … as well as those who will suffer from the increased congestion on the roads’.[21]

More recently, the FWC allowed an aged care provider to delay scheduled 5-hour stoppages organised by the United Workers Union, because it was judged to threaten the lives or welfare of nursing home residents.[22] The ruling was made despite the union’s undertaking that members would not walk off at COVID-impacted sites with reduced staffing.

These and other decisions show that under our current laws, the already minimal legal right to strike is too readily extinguished. The test for suspension or termination must be confined to genuine situations where the protection of public safety or welfare justifies insulation from industrial action.

You might be worrying that I am suggesting we should have more industrial disputes, with detrimental consequences for the economy.

I would present the argument another way: as a society, we need to become more tolerant of some disruption to the provision of goods and services, if that means workers are asserting their right (their power) to claim a fairer share of overall economic growth.

So the Labor Government should enable industrial action to be taken – free of the current restrictions – in support of enterprise bargaining and an extended system of multi-employer bargaining.[23] Let’s also stop allowing employers to use replacement labour during protected industrial action.

3) Insecure Work and the Gig Economy

As well as having no job security and missing out on leave entitlements – casuals and others in precarious forms of work are in a much weaker position when it comes to bargaining.

Therefore, combating insecure work is an important aspect of rebuilding worker power.

At the start of the election campaign, the Coalition and employers were denying (yet again) that insecure work even exists.

They argued that unions and Labor have exaggerated claims about the increasing number of casuals in the workforce.[24]

Whether the rate of casualisation has gone up or not, casuals make up 23% of the workforce – that is about 2.4 million workers.[25]

Many of them are ‘permanent casuals’ – working regular hours each week for the same employer, sometimes for several years on end.[26]

I know (from the Inquiry I chaired for the Victorian Government) that insecure work is not a union construct. It is the reality of many workers’ lives.

Labor has made clear commitments to tackle insecure work by:[27]

• Enshrining job security as an objective of the Fair Work Act.
• Legislating ‘a fair objective test to determine when a worker can be classified as casual, so people have [a] clearer pathway to permanent work’. This is necessary to reverse the Coalition’s recent legislative amendment,[28] enabling employers to lock in an employee’s casual status at the start of the employment – regardless of whether they end up working a regular pattern of hours, or how long they work for the business.
• And legislating the concept of ‘same job, same pay’ for labour hire workers – a vital step to return labour hire to its original purpose of meeting necessary, short-term demands for outside labour to supplement a permanent workforce.

I want to spend the remaining part of this lecture focusing on the newest form of insecure work – the more than 250,000 people working in the gig economy[29] (out of an estimated total independent contractor workforce of around 1 million[30]).

Many people listening will have already heard my views on the need to crack down on the exploitative model of gig work that has taken hold in the last decade.

I will restate the problem briefly again – so we are clear on what needs to be addressed in Labor’s reform process.

Rideshare platforms like Uber, food delivery apps like Deliveroo, and now platforms in the care sector such as Mable, have upended the normal assumption: that workers providing their labour should be covered by the protective framework of awards, the minimum wage, unfair dismissal laws and so on – unless they are running their own separate business.

Instead, gig workers are automatically assumed to be entrepreneurial ‘independent contractors’. To establish employment rights, they have to challenge this (mis)categorisation in the courts. Only a handful have been able to do so in recent years.

And earlier this year, the High Court of Australia handed down two decisions which have effectively extinguished any chance of gig workers being able to contest their ‘contractor’ status through litigation (I will come back to this shortly).

The effects of this business model have been devastating, including widespread underpayment of gig workers; exposure to abuse and sexual harassment by customers; and elevated safety risks.[31]

Six food delivery riders died while working in Sydney and Melbourne in late 2020-early 2021. This is what happens when businesses are able to blur the lines of responsibility under work health and safety laws.

One of the riders (Xiaojun Chen) was killed when his motorbike was hit by a bus, while delivering food for Hungry Panda. His family had to fight to obtain a payout under the NSW workers’ compensation scheme, by establishing that he was really an employee (rather than a contractor as assumed by the platform).

In my book, I describe the audacity of platforms in bypassing the labour laws of almost every country around the world – by selling (to investors, policy-makers, and workers) ‘a narrative of glamorised, freelance-style work’.

They have ‘latched onto technology and innovation and the (supposed) attraction of flexibility and entrepreneurship to the putative self-employed worker, as ruses for exploitation.’ This is what I call ‘the mirage of liberating work in the gig economy’.

So what is the new federal Government’s proposed solution?

Labor’s policy states that it will extend the powers of the Fair Work Commission to set minimum standards for those in ‘employee-like’ forms of work including gig workers.

The Commission would be able to ‘intervene or inquire into all forms of work and determine what rights and obligations may or may not apply’ – ensuring that ‘a greater number of Australian workers have access to entitlements and protections currently denied to them by existing laws’.[32]

In practice, this could mean a Door Dash delivery rider (or the TWU on their behalf) might ask the FWC to examine their working arrangements – including the fact that, like most gig workers, they are subject to the extensive level of control that is typical of employment (through the algorithms these platforms use to monitor, performance manage, and discipline their workers) – and determine that they should:

• have certain rights under the Road Transport and Distribution Award; or
• have the right to minimum wages, regulation of working hours, etc under a new award tailored to gig work; or
• that they can challenge Door Dash’s decision to cut them off from the app.

In my view, on its own, this is a limited solution to the problems thrown up by the gig economy. It leaves intact the recent High Court rulings on how to differentiate between employees and independent contractors.[33]

In essence, the Court set out an approach to determining work status that focuses predominantly on the relationship between the parties, by reference to the rights and duties set out in any written agreement which comprehensively regulates that relationship. The Court rejected prior tests which had also considered the substance and reality of the work relationship as it has evolved, and any inequality of bargaining power that may exist between the parties.[34]

This ‘contract formalism’ approach should be overridden by Parliament, as part of a new statutory definition of ‘employee’ in the Fair Work Act – which will counter gig work, and sham independent contracting in other work contexts.

Under this broader definition, an ‘employee’ could be considered to be someone who is engaged by another to provide their labour – unless the person providing labour really is operating a business of their own. This borrows from the definition proposed in Lord John Hendy QC’s Status of Workers Bill in the UK – which also proposes that an ‘employer’ is a person or entity who engages a worker (or in our case, an employee), and who substantially determines the terms of that engagement at any material time.[35]

Importantly, this would be the starting presumption – so that platforms (or other businesses) are the ones who have to bring costly litigation to rebut the assumption of an employment relationship, rather than this burden falling upon workers as it does now.

This is a more comprehensive policy response than Labor’s proposal – because it automatically deals all workers back into the protection of minimum employment standards, and importantly, the right to engage in collective bargaining and the right to strike (apart from legitimate independent contractors such as construction industry ‘tradies’, truck owner drivers or IT consultants).

We may differ on the precise way to get there – but my proposal and Labor’s both have the same objective: ensuring that gig economy platforms can no longer shield themselves from accountability for the rights of those from whose work they derive economic benefit.[36]

Conclusion

Jane Holgate concludes her book by urging that: ‘What is required is [a] rethinking of the current structures of power in society … . Power, though, is not usually conceded voluntarily to workers; it generally has to be captured through struggle.’[37]

Labour law has an essential role to play in shaping the terms on which that contest occurs. In this lecture, I have outlined several options for reforming Australian labour law, with the primary objective of enhancing the ability of workers to build and exercise collective power in the workplace.

There is no opportunity like the first year of the first term of a new Labor Government to do just that.

References

[1] Jane Holgate, Arise: Power, Strategy & Union Resurgence (Pluto Press, London, 2021), page 19.

[2] Ibid, pages 30-33. See also David Madland, Re-Union: How Bold Labor Reforms Can Repair, Revitalize, and Reunite the United States (Cornell University Press, Ithaca N.Y., 2021).

[3] Holgate (2021), pages 28-29.

[4] Quoted in ‘“Women should not be paid less than men – it’s that simple”: Burke’, Workplace Express, 1 June 2022.

[5] David Crowe and Angus Thompson, ‘Albanese sparks political storm by backing wage rise to match inflation’, Sydney Morning Herald, 10 May 2022.

[6] Annual Wage Review 2021-22 [2022] FWCFB 3500 (15 June 2022).

[7] Hon Tony Burke MP, Minister for Employment and Workplace Relations, Speech – Australian Industry Group (Canberra, 8 August 2022); Federal Government Submission to Aged Care Work Value Case (8 August 2022).

[8] Fair Work Amendment (Paid Family and Domestic Violence Leave) Bill 2022.

[9] Code for the Tendering and Performance of Building Work Amendment Instrument 2022.

[10] Andrew Stewart, Jim Stanford and Tess Hardy, The Wages Crisis Revisited (Centre for Future Work/Australia Institute, May 2022), page 39.

[11] Claus Schnabel, Union Membership and Collective Bargaining: Trends and Determinants (LASER Discussion Papers – Paper No. 121, Labor and Socio-Economic Research Center, University of Erlangen-Nuremberg, 2020).

[12] Tim Kennedy, Ben Redford, Renee Burns and Anthony Forsyth, ‘Rebuilding Worker Power in Australia through Multi-Employer Bargaining’ (2021) 31:3 Labour and Industry 225, 230 …

[13] Anthony Forsyth, The Future of Unions and Worker Representation: The Digital Picket Line (Hart Publishing, Oxford, 2022), pages 212-214.

[14] See eg Alan Bogg and Tonia Novitz, ‘The Politics and Law of Trade Union Recognition: Democracy, Human Rights and Pragmatism in the New Zealand and British Context’ (2019) 50:2 Victoria University of Wellington Law Review 259, 278-279.

[15] Fair Pay Agreements Bill 2022 (NZ), clause 29(1).

[16] Fair Pay Agreements Bill 2022 (NZ), clause 29(4)-(5).

[17] The Greens’ 2022 election policy states that: ‘Workers should be free to collectively bargain at whatever level they consider appropriate and with whoever has real control over their work, whether at a workplace, industry, sector or other level.’

[18] The mechanism currently available under the Fair Work Act to compel renegotiation (a majority support determination) imposes a hurdle that is difficult to overcome in larger workplaces, and lacking justification when employees have previously been covered by an agreement.

[19] Holgate (2021), page 57.

[20] Shae McCrystal ‘Why is it so hard to take lawful strike action in Australia?’ (2019) 61(1) Journal of Industrial Relations 53.

[21] Sydney Trains; NSW Trains; The Hon. Dominic Perrottet, Minister for Industrial Relations (NSW) [2018] FWC 519.

[22] Southern Cross Care Inc (SA, NT & Vic) v UWU [2022] FWC 1080.

[23] Labor’s National Platform commits it to recognising a right to take industrial action consistent with international labour treaties and conventions. The Greens’ 2022 election policy states that: ‘Workers should have the right to engage in industrial action, including the right to strike, consistent with international law and not limited to artificially restricted bargaining periods. Legislation banning secondary boycotts and strike action should be repealed.’

[24] See also the Australian Financial Review’s editorial, ‘Albanese’s “insecure” work scare just doesn’t add up’, 12 April 2022.

[25] ABS, Characteristics of Employment, Australia, August 2021.  

[26] See eg Andrew Stewart, Anthony Forsyth, Mark Irving, Richard Johnstone and Shae McCrystal, Creighton and Stewart’s Labour Law (6^th edition, The Federation Press, Sydney, 2016), 249.

[27] ALP, Labor’s Secure Australian Jobs Plan (2022).

[28] Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Act 2021.

[29] Institute of Actuaries of Australia, The Rise of the Gig Economy and its Impact on the Australian Workforce (2020) 5, 9-11.

[30] ABS (2021).

[31] Victorian Government, Report of the Inquiry into the Victorian On-Demand Workforce (Melbourne, 2020).

[32] ALP (2022). As examples, Minister Burke has explained that ‘he wants gig workers to have an entitlement to superannuation, worker’s compensation and sick leave, alongside minimum rates of pay’: see ‘Redefine “employment” to protect gig workers: Academic’, Workplace Express, 1 July 2022, referring to the Minister’s interview on Radio National Breakfast, 30 June 2022.

[33] ZG Operations v Jamsek [2022] HCA 1 and Construction, Forestry, Maritime, Mining and Energy Union v Personnel Contracting Pty Ltd [2022] HCA 2, both handed down on 9 February 2022.

[34] The traditionally-applied multi-factor test for distinguishing between employees and independent contractors would still have relevance, but (in the High Court’s view) through the prism of the written contractual terms.

[35] See Lord Hendy’s Second Reading Speech at: https://www.ier.org.uk/comments/the-status-of-workers-bill-lord-hendys-speech/ 

[36] The Greens’ 2022 election policy indicates that many employers are misusing contractors (and labour hire) to avoid paying minimum wages/providing basic work rights, therefore gig economy (and labour hire) workers ‘must receive the same minimum pay, conditions and protections as other employees’. This forms part of a broader commitment ‘to outlaw insecure work and establish a legislated presumption in favour of ongoing employment’. See also ‘Greens to flex muscle to expand secure work protections’, Workplace Express, 9 August 2022.

[37] Holgate (2021), pages 216-217.