The Umpire Strikes Back

The Umpire Strikes Back

18 Jul 2008

Australian Industrial Relations Commission back in charge of industrial relations?

Dr Jill Murray
Director, Honours, Research and Graduate Studies
School of Law
Email: jill.murray@latrobe.edu.au

Australia's unique system of labour regulation gave rise to an extraordinary institution, the Australian Industrial Relations Commission. This body has been at the centre of the maelstrom of controversy over what kind of industrial relations system Australia should have. Under the former Coalition Government's Work Choices reforms, the AIRC was largely eviscerated. Its century-old powers to prevent and settle industrial disputes by conciliation and arbitration were largely gutted. The AIRC's awards could be avoided (and the protections and entitlements therein lost to employees) by the simple expedient of making a new agreement under the Act. This included the controversial individual statutory agreements known as AWAs. The Commission's capacity to devise national employment conditions to deal with changing economic and social needs was abolished.

What would be lost under Work Choices was the multi-faceted ability of the Commission to deal with matters quickly, cheaply and with creative attention to many different voices. The AIRC had been required to act having regard to the public interest, another important facet of its role lost in the new institutional arrangements under Work Choices.

The Rudd Government was swept to power with a mandate (as the Prime Minister says) to 'tear up' Work Choices. But what does this mean for the venerable AIRC?

Labor is implementing its agenda in two phases. The first phase has already led to legislation, which essentially abolishes the individual contracts known as Australian Workplace Agreements (or AWAs). Under Work Choices, these individual agreements could be used to remove entitlements to overtime payments, shift penalties, weekend penalties, public holiday rates and most other award conditions, provided a meagre set of minimum standards were met.

Labor has a new model of the safety net: ten conditions will be set in legislation (up from five under Work Choices) and awards will continue to exist and can supplement these ten standards with industry-specific conditions.

The second phase is still in progress. This will involve a new substantive federal labour law. It is proposed that a new institution will replace the AIRC. This body, Fair Work Australia, will perform a range of functions but the extent to which it will pick up the former functions of the AIRC is as yet unknown.

In the meantime, the Rudd Government has been moving on an issue which the former Government promised to deal with, but failed to tackle. The Government has requested that the AIRC commence a massive 'award modernisation' project. This involves the AIRC examining and rationalising the number of awards (there are currently hundreds) with a view to creating a smaller number or a single industry award. The content of industry awards will also be aligned and reviewed. Where necessary, the AIRC is empowered to create new minimum conditions to supplement the legislated standards. For example, Labor proposes that there will be a 38 hour week plus reasonable additional overtime. This may be averaged over a period of time, so that some weeks workers may work more than 38, provided there is a counterbalancing week with lower hours within the reference period. It is the AIRC who will determine what the reference period should be for each industry it covers. Eventually, this decision will shape the working lives of hundreds of thousands of workers.

It is hard to over-estimate the importance of the award modernisation process for the regulation of labour in Australia. Awards of the AIRC have shaped our working lives in ways rarely understood or even recognised. This is because of the automatic way the system traditionally applied. Although now we are used to enterprise bargaining, and some in the University sector will be aware of current attempts to increase wages and improve conditions, many of the landmark features of our entitlements at work still reflect decisions reached by the AIRC or under its auspices during conciliation proceedings. The major revision of these instruments will inevitably lead to changes in these fundamental working conditions – we are yet to see whether there will be levelling up, or levelling down, or some combination of the two. The new omnibus industry awards will also alter the face of industrial relations in this country in ways not yet understood.

But this is not all. The AIRC has yet again stamped its authority on Australian labour law in another remarkable decision as part of the award modernisation process. Last month, the AIRC handed down a decision on a model 'award flexibility' clause. The AIRC heard submissions from a wide range of parties, but settled on its own position which differs from the suggestions put to it.

The AIRC has decided that the award flexibility clause will permit individual workers to agree with their employer that certain provisions of the award will not apply to them. These include overtime, penalty rates, allowances, and leave loadings. The employee must not be disadvantaged overall in relation to their terms and conditions of employment, and must not be placed under duress to sign the flexibility agreement.

In one stroke of the pen, it looks as if the AIRC has brought back the very elements of the AWA under Work Choices which the Government said it was ripping up – the capacity of employers to bargain with employees to remove significant monetary entitlements – leavened by a version of the pre Work Choices 'no disadvantage test'. The Commission has noted that the model clause may not in fact provide sufficient protection to employees (and experience with judicial interpretation of duress in the context of AWAs shows that very little protection is afforded to employees), and has asked that the matter be monitored under whatever institutional arrangements are brought in from 2010.

The AIRC is slated for oblivion, to be replaced by Fair Work Australia. The Commission's history is one of adaptation to change and resilience in the face of political onslaught. It's most recent efforts show that it has emerged from the Work Choices experiment at centre-stage of Australian industrial relations and its last decisions – on award modernisation and the flexibility of work – may be amongst its most significant.

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