Unions in the Fair Work Act Decade – and the Aftermath of ‘Change the Rules’

This post includes some edited extracts from my recent article: ‘Ten Years of the Fair Work Act: (More) Testing Times for Australia’s Unions’ (2020) 33:1 Australian Journal of Labour Law 122-138. It is part of a Special Issue of the AJLL on the operation and impact of the Fair Work Act in its first decade.

Summary

The decade in which the Fair Work Act 2009 (Cth) has been in operation has continued to present challenges for the Australian union movement. Despite high hopes that the 2009 legislation’s support for collective bargaining would deliver positive outcomes, enterprise agreement coverage and union membership levels have declined further. The Australian Council of Trade Unions’ Change the Rules campaign highlighted the Fair Work Act’s deficiencies, exacerbated by employer ‘gaming’ and judicial interpretation. The campaign proposed reforms to give unions a realistic prospect of countering capital’s ability to constantly reinvent itself through new business models. This article analyses the experience of Australia’s union movement in the Fair Work Act era, exploring how key features of the 2009 statute have operated, and assessing the Change the Rules campaign in light of the 2019 federal election outcome. This discussion is situated in the context of the Coalition Government’s attempts to restrict union power and influence since 2013. Overall, the article argues that while legislative change will no doubt assist unions to represent and bargain for workers, innovative approaches to membership structures and activism are also required to rebuild union strength.

Introduction

Australia’s unions approached 1 July 2009 with high hopes. In 2007, a conservative government had been removed from office after imposing legislation[1] which was widely regarded as eroding Australia’s tradition of fair treatment in the workplace.[2] The Labor Government had already taken some steps to repeal Work Choices, including abolition of Australian Workplace Agreements (AWAs) and restoring the no disadvantage test for collective agreements.[3] Then it had consulted widely on more substantive reform legislation, passed by Parliament in March 2009.[4]

The Fair Work Act 2009 (FW Act) was seen by many union leaders as the answer to the problem of declining union membership which commenced in the 1970s, reaching crisis levels by the late-2000s.[5] The Australian Council of Trade Unions (ACTU) and several unions had extensive input into formulating the FW Act. The goal was to provide unions with greater opportunities to bargain collectively on behalf of employees, particularly in the large numbers of private sector workplaces with no union presence. The unstated intrinsic logic seemed to be that if unions could bargain successfully for employees, increased union membership would follow.

Therefore, how is it that enterprise agreement coverage and union membership density have declined further in the last 10 years? First, the legislation was a compromise which only partially reinstated a collectivist orientation. Secondly, employers have successfully utilised various strategies to avoid collective bargaining and enterprise agreements. Thirdly, capital has evolved through the adoption of new business models that transcend the FW Act’s conception of the ‘enterprise’ as a focus for bargaining.

These concerns about the legislation’s operation were highlighted in the ‘Change The Rules’ campaign run by the ACTU from early 2017. The campaign focused on the ‘broken rules’ for collective bargaining and industrial action under the FW Act, and mounted an agenda for legislative change.[6] Many of these proposals were adopted in the ALP’s 2019 election policies. Yet Change the Rules always wrestled with an uncomfortable contradiction – it was a campaign against legislation introduced by a Labor Government, with considerable union input.

This article explores how unions have fared under the FW Act, in the context of a shifting regulatory terrain. State support from a Labor Government evaporated after just two terms. The Coalition Governments from 2013 focused their attention not on winding back the moderate pro-union provisions of the FW Act. Rather, they sought to contest other expressions of union power and abuse of power, through the Royal Commission into Trade Union Governance and Corruption and resulting legislation.

Labor’s unexpected federal election loss on 18 May 2019 left the union movement reconsidering its strategy, the ACTU having devoted considerable resources to campaigning for the Australian Labor Party (ALP) in marginal and Liberal-held seats. Unions also placed considerable store (as they did in 2007) in the capacity of favourable legislation emanating from a Labor Government to reverse their ailing fortunes. This article scrutinises that proposition, arguing that while legislative change will no doubt assist unions to represent workers, there is much that unions can do themselves to address membership decline. The article examines the innovative approaches of several Australian unions to membership and fee structures, community-based organising and other initiatives to rebuild union strength.

Changing the Rules to Revive the Unions: Is Legislation the Answer?

Prior to the 2007 election, the Australian union movement ran an effective campaign tapping into community sentiment about the unfairness of Work Choices.[7] Much hope was placed in legislation to be implemented by a Labor Government to help reverse falling union density. A decade later, the ACTU again banked heavily on the prospect of legal change under Labor, but with a different electoral outcome. The wisdom of that strategy was questioned at the time.[8] In light of the FW Act’s failures and limitations, the capacity of legislation to deliver the outcomes unions seek must be interrogated. These issues are considered after the following account and assessment of Change The Rules.

From taking over as ACTU Secretary in March 2017, Sally McManus began to talk about reforming the rules governing workplace relations. Drawing attention to growing inequality, the casualisation of jobs, and companies making ‘a business model out of paying less than even the minimum wage’, she asked:

 … what do we need to do about it?

Well, we need to change the rules …

We need to focus on working people having more power at work.[9]

By late June 2017, delegates at the ACTU’s NexGen organising conference were chanting ‘change the rules’.[10] McManus outlined how the campaign would be run, urging delegates to illustrate the impact of inequality using personalised stories and push for workplace law reform.[11] The ACTU and unions then used each new example of adverse outcomes for workers and employer ‘gaming’ of the FW Act to highlight the legislation’s broken rules and the need for change. These worker stories and case examples attracted much media attention.[12] Key campaign phrases were repeated in speeches and widespread advertising. Proposed changes were outlined, but only in very general terms.[13] The campaign pitch was clearer about what was ‘broken’, than what should be ‘changed’. Digital technology and social media (e.g. Facebook ‘live sessions’) were heavily utilised to promote the main messages,[14] along with large national rallies.[15]

Change The Rules was formally launched at a meeting of union activists in Perth in late September 2017.[16] Over time, the list of concerns about the current system grew very large. It included: the FWC’s 2017 penalty rate reductions in the café/restaurant/hospitality sectors; the criteria used by the FWC to set minimum wages (to be replaced by a ‘living wage’); underpayments and other forms of wage theft; and the growth of labour hire, casual work, (sham) independent contracting, the gig economy and other types of insecure work. The campaign’s main proposals on collective bargaining, industrial action and the ability of unions to organise and represent workers were as follows:[17]

• Rather than the enterprise focus for collective bargaining under the FW Act, workers should have the ability to determine their preferred level of bargaining – whether that be across industries, supply chains, franchises or wherever the locus of employer power is.
• Shutting down the strategies through which employers have exploited the FW Act bargaining rules (e.g. small voting cohorts, outsourcing/labour hire, termination of agreements).
• Imposing stronger good faith bargaining requirements and removing limits on the content of agreements so unions can bargain freely on issues like job security.
• Reforming the rules for taking protected industrial action, which impose complex requirements and enable the FWC to suspend or terminate action that is merely inconvenient.
• Removing the detailed and complex FW Act restrictions on union rights of entry.

Throughout 2018 and into 2019, McManus was gaining a significant national profile with her combative communication style and the apparent momentum of the campaign.[18] The ACTU’s messages dominated the workplace reform debate, almost unchallenged by the Coalition Government and the business community.[19] Change The Rules was also having an impact on ALP policy.[20] The Opposition accepted much of the ACTU’s critique and adopted some of the peak body’s proposals on collective bargaining. The ALP also developed quite bold policies on ending long-term casual employment and the pay differential between labour hire and directly-employed workers. In other areas, such as allowing industry bargaining and removing constraints on strikes, Labor was more cautious.[21]

However the 2019 election did not go the unions’ way, leading to criticism that the ACTU had been too focused on electoral campaigning.[22] Change the Rules assumed that, as in 2007, community concern about workplace issues would translate into votes for Labor. An external review commissioned by the ACTU found that while the campaign was effective in shifting public debate on inequality and insecure work, the policy reforms it advocated were not well understood in the electorate and were overridden by the Coalition’s simpler election messaging.[23] Despite this, the ACTU defended the campaign as ‘ambitious and necessary’.[24] McManus also indicated that the ACTU does not accept all of the review’s criticisms, and that the campaign for more favourable workplace laws for workers and unions will continue (although possibly under a different name).[25]

On the broader question whether legislation can in any event deliver what unions want, McManus has ‘observed that turning around union membership decline is “like a jigsaw” and changing the rules to enable the movement’s growth is a big part of it’.[26] As noted earlier in this article, various factors have contributed to union decline. However, it is often contended that this is largely a product of attacks by hostile governments and the passing of anti-union legislation. For example, McAlpine and Roberts argued in 2017 that the law has imposed ‘systemic hurdles which prevent union revival’ and further:

… the legal framework in which unions operate is the central determinant of their limited success in recent years. …

… Our argument is that restoring the right of unions to do what unions are supposed to do is a necessary pre-requisite for sustained union growth, and that much discussion within unions and academia ignores or avoids this central but obvious conclusion.[27]

They further contended that the organising approach adopted by the ACTU from the mid-1990s (modelled on United States unions like the Service Employees International Union) ‘will not succeed, except at the margins, until the basic rules of the game are changed’.[28]

Stanford has used a comparison of Australian and overseas labour relations systems to make a compelling case about the importance of the legal environment in determining the success of trade unions:

International evidence is clear that there is a strong, positive correlation between a country’s protection of labour freedoms, and the organising success and economic influence of unions. …

… [T]here are no countries where union membership is strong (above 20% of employment) without the presence of strong protections for workers’ rights … .[29]

Drawing upon OECD and World Economic Forum data, Stanford asserts that: ‘International experience confirms, with no exceptions, that trade unions need an amenable legal and regulatory climate to do their job effectively.’[30] He concludes that in the wake of the federal election outcome, the union movement should not give up on campaigning for law reform; rather, this ‘must remain a central priority, complementing the ongoing effort to organise workers and rebuild the union movement.’[31]

It is difficult to precisely measure the effect that legal rules have in determining particular outcomes, and therefore whether changes to the law will have intended (or other) consequences. There is an extensive debate in academic literature internationally about the need for legal provisions which demonstrate more than ‘state neutrality’ in respect of union representation and collective bargaining (e.g. through rules such as those found in the UK which merely enable or facilitate bargaining, or those of the US which seek to address the default position of non-union contracting).[32] Bogg analysed the UK’s statutory union recognition procedure in terms of the ‘liberal neutrality’ of the ‘cultural marketplace’, where: ‘The State’s role is confined to aggregating workers’ preferences either through measuring the level of union membership or through the ballot procedure’.[33]  

In contrast to these kinds of weak legal frameworks, a more emphatic statement of state support is considered necessary to maximise the chances that collective bargaining laws will be effective in practice.[34] The FW Act could clearly have provided a much stronger, unambiguous basis for union-based collective bargaining than it does. That said, the labour movement has placed too much emphasis on law reform at the expense of what unions need to do for themselves. As former ACTU Assistant Secretary Tim Lyons has argued, given the transformations that have occurred in the structure of businesses: ‘new models of what it means to be union and to bargain collectively must be worked out’.[35]

These issues are examined more closely in the full published version of this article, and in this recent post: Jelle Visser’s ‘revitalisation’ option is a viable way forward for unions: here’s how. That post includes a Postscript outlining the legislative fixes required to give workers and unions a fair chance in bargaining for better wages and employment conditions under Australian law. 

[1] Workplace Relations Amendment (Work Choices) Act 2005 (Work Choices).

[2] See eg D Peetz, Assessing the Impact of ‘Work Choices’ One Year On, Industrial Relations Victoria, Department of Innovation, Industry and Regional Development, Victoria, 2007.

[3] Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008.

[4] Fair Work Act 2009.

[5] See D Peetz, Unions in a Contrary World: The Future of the Australian Trade Union Movement, Cambridge University Press, Cambridge, 1998; M Crosby, Power at Work: Rebuilding the Australian Union Movement, The Federation Press, Annandale, 2005; T Bramble, Trade Unionism in Australia: a History from Flood to Ebb Tide, Cambridge University Press, 2008.

[6] ACTU, Congress 2018 Draft Policies and Resolutions (ACTU D No 153/2018), pp 30-52.

[7] K Muir, Worth Fighting For: Inside the Your Rights at Work Campaign, UNSW Press, Sydney, 2008.

[8] B Norington, ‘Last stand for a once mighty institution’, The Weekend Australian, 25-26 March 2017.

[9] Quoted in ‘New ACTU leader to push for major overhaul of IR laws’, Workplace Express, 15 March 2017.

[10] ‘Life membership might help unions turn corner: McManus’, Workplace Express, 26 June 2017.

[11] S McManus, Address to Nexgen 2017, Sydney, 26 June 2017.

[12] For example, M McGowan, ‘Sydney train strike stopped: Fair Work Commission blocks union action’, The Guardian, 25 January 2018.

[13] ACTU, Change The Rules – Campaign Kit, undated (including key campaign themes and examples, a ‘stump speech’ and a pro forma for submitting ‘your story online’).

[14] ‘Unions mount push for IR re-regulation’, Workplace Express, 21 September 2017.

[15] J Small, ‘The Melbourne March’, Jacobin, May 2018; ‘ACTU rallies aim to supercharge campaign to change government’, Workplace Express, 10 April 2019.

[16] ‘Unions mount push for IR re-regulation’, Workplace Express, 21 September 2017.

[17] ACTU, above n 6.

[18] D Marin-Guzman, ‘ACTU chief Sally McManus parlays online support into power’, Australian Financial Review, 4 October 2017; E Hannan, ‘Straight talker’, The Weekend Australian Magazine, 16 November 2018.

[19] See however ‘BCA urges unions to pursue more “legitimate” agenda’, Workplace Express, 1 November 2018.

[20] E Hannan, ‘Crunch time for the ACTU, The Australian, 24 October 2018; P Coorey, ‘Labor’s boost to union power alarms business’, Australian Financial Review, 19 December 2018.

[21] B O’Connor, Wages, Fairness and Inclusive Prosperity, National Press Club Speech, 12 December 2018.

[22] P Karp, ‘“Vanity project”: critics round on ACTU’s $25m campaign after Labor’s election loss’, The Guardian, 23 May 2019.

[23] ‘Coalition “swamped” Change the Rules message: Review’, Workplace Express, 8 August 2019.

[24] Ibid.

[25] ABC Radio National, ‘ACTU’s Sally McManus on Fair Work Act review and GDP figures’, RN Drive, 4 September 2019.

[26] ‘Life membership might help unions turn corner: McManus’, Workplace Express, 26 June 2017.

[27] K McAlpine and S Roberts, ‘The Future of Trade Unions in Australia’, Paper delivered at AIRAANZ Conference, Canberra, 9 February 2017, 1.

[28] Ibid, 5.

[29] J Stanford, Union Organising and Labour Market Rules: Two Sides of the Same Coin, Briefing Note, Centre for Future Work, The Australia Institute, 13 June 2019, 1.

[30] Ibid, 3; see also the data analysis at 4-9.

[31] Ibid, 9. See also J Stanford, ‘A Turning Point for Labour Market Policy in Australia’ (2019) 30 Economic and Labour Relations Review (forthcoming).

[32] See R Dukes ‘The Statutory Recognition Procedure 1999: No Bias in Favour of Recognition?’ (2008) 37 Industrial Law Journal 236; A Bogg The Democratic Aspects of Trade Union Recognition, Hart Publishing, Oxford, 2009; B Sachs ‘Enabling Employee Choice: A Structural Approach to the Rules of Union Organising’ (2010) 123 Harvard Law Review 655; G Gall ‘Statutory Union Recognition Provisions as Stimulants to Employer Anti-Unionism in Three Anglo-Saxon Countries’ (2010) 31 Economic and Industrial Democracy 7; G Anderson, Reconstructing New Zealand’s Labour Law: Consensus or Divergence?, Victoria University Press, Wellington, 2001, p 141.

[33] Bogg, above n 32, pp 93-94.

[34] B Creighton and A Forsyth, ‘Rediscovering Collective Bargaining’, in B Creighton and A Forsyth (eds), Rediscovering Collective Bargaining: Australia’s Fair Work Act in International Perspective, Routledge, New York, 2012, p 1 at 17.

[35] T Lyons, ‘The Labour Movement: My Part in its Downfall’, Meanjin, Spring 2016, 87 at 94.