How do things look after almost a decade of collective bargaining under the Fair Work Act?
1st November, 2018
(Picture: former Prime Minister and architect of the Fair Work Act, Julia Gillard, shows President Obama how to handball an Aussie rules football in The Oval.)
Last night I spoke at a seminar for Melbourne University’s Centre for Employment and Labour Relations Law (hosted by law firm Lander & Rogers). Professor Shae McCrystal of Sydney Law School and I were there to talk about our new co-edited book (with Professor Breen Creighton): Collective Bargaining under the Fair Work Act, published by Federation Press (http://www.federationpress.com.au/bookstore/book.asp?isbn=9781760021849).
On the same day, the Business Council of Australia had entered the workplace reform debate – essentially chastising the ACTU for pursuing a divisive agenda through its #changetherules campaign, including a return to industry-wide bargaining (see BCA Chief Executive, Jennifer Westacott’s speech here: http://www.bca.com.au/media/australia-at-work-managing-adjustment-and-change). It’s interesting because the BCA drove the shift to enterprise-based bargaining in the late 1980s/early 90s, with the support of the ACTU under Bill Kelty.
Earlier this week, federal Labor’s Shadow IR Minister Brendan O’Connor indicated that any move towards multi-employer bargaining would be focused on improving outcomes for low-paid workers (‘those who are not getting a fair share’). It seems Labor does not want to make sectoral bargaining generally available, or do anything that might lead to ‘industrial chaos’ (see the transcript of O’Connor’s interview on Sky News here: https://www.brendanoconnor.com.au/news/latest-news/eoe-transcript-tv-interview-sky-news-speers-on-sunday-sunday-28-october-2018/).
Anyway back to our book: most of its content pre-dates the debate triggered by #changetherules, but it does provide an evidence base for some of the concerns that the ACTU has raised about the Fair Work Act bargaining scheme.
Essentially, the chapters in our edited collection seek to address different aspects of this fundamental question: given that the Fair Work Act (at least on paper) provides reasonably strong support for bargaining, how is it that collective agreement coverage has gone backwards in the last 10 years?
Initially coverage rose from just under 40%, to 43.4% of the workforce in 2010 – but then dropped back to 36.4% by 2016. A figure I found quite astonishing is that in 2017, only 13% of all private sector employees were covered by an enterprise agreement – down from 19% in 2013 (based on research by Alison Pennington, Economist at the Centre for Future Work). Although on another view it’s not that surprising, with private sector union membership now sitting at just below 10%.
The book identifies several inter-connected explanations for the legislation’s failure to fulfil its objective of encouraging collective bargaining. They include:
- design flaws and limitations in the statutory provisions – e.g. the horrible complexity of the low-paid bargaining rules (as a result these have barely been used), and the limited grounds for arbitration of intractable disputes;
- the tactics and strategies some employers have adopted to avoid entering into an enterprise agreement – or to limit the impact of agreements on their workforce;
- judicial interpretations which have facilitated employers achieving those goals, such as the Full Federal Court’s 2015 decision in CFMEU v John Holland that gave rise to the ‘small cohort’ agreement strategy (making an agreement with a handful of workers, but with a wide scope so it can later apply to larger groups in others parts of the employer’s business) – and the FWC Full Bench decision (also in 2015) in Aurizon Operations Limited which has led to more employers successfully applying to terminate expired agreements.
We didn’t really set out, in the book, to argue for any particular reforms to address these issues (although some contributors do so in relation to discrete aspects of the system).
In my next post, I’ll use the chapter I wrote with Professor Bradon Ellem of Sydney University’s Business School to start exploring the ‘where next’ question. We did case studies of two long-running disputes – Cochlear and ResMed – which highlight further limitations of the Fair Work Act bargaining system.
These case studies also prompt another question: how much is the recent decline of agreement-making down to the legislation, compared with other factors such as limited union strength ‘on the ground’ in many workplaces?