Valuing work and the Fair Work Act

jill-murray Dr Jill Murray:
Anothony O'Donnell:



Academics in the labour law field are bracing themselves for the flood of words, opinions, decisions and policies which will flow from the passing into law of Labor’s new workplace law, the Fair Work Act. The Fair Work Act replaced Work Choices, the controversial and politically disastrous legislation of the former Coalition government.

The Act creates a multi-tiered regulatory system. The contract of employment is the first level of regulation. What’s more, only workers who are parties to such a contract are covered by the Act. All employees have the benefit of the second level, a national set of minimum standards included in the legislation. On the third level, modern awards will cover just about all eligible employees except those earning more than $100,000 a year. The awards elaborate on and supplement the legislated standards. Finally, the system of enterprise bargaining adds a fourth tier. This has been revamped (with a duty to bargain in good faith and a right of union recognition where a majority of workers wants it) but otherwise continues in much the same form as before.

A new institution will replace the alphabet soup of bodies created by the Howard government: Fair Work Australia commenced operation last week, and the entire new system (with modern awards taking effect) comes on stream on 1 January 2010.

With the Fair Pay Commission handing down its last decision this month, Fair Work Australia will now be responsible for an annual wage adjustment round, to take effect from 1 July each year. These decisions determine the rates of pay in modern awards, thus altering the actual entitlements of those workers who rely on awards for their minimum wage. Other workers have the benefit of higher wages negotiated through a collective agreements. But even here, many collective agreements set their pay rates with reference to award structures.

One small but significant aspect of the Fair Work Australia’s wage fixing function deserves comments. Every four years, Fair Work Australia will review every single modern award. At this time, or even more frequently in certain circumstances, Fair Work Australia may adjust award rates where it finds there are significant ‘work value’ grounds to do so. Work value is defined as an assessment of the nature of the work, the skills and responsibilities exercised by the workers and the conditions under which work is performed.

The concept of work value has been integral to the operation of conciliation and arbitration since the early years of the twentieth century. It has had two key effects. First, the federal tribunal did not limit its minimum wage fixation to a single rate of pay as in the US or British minimum wage. Instead, it recognised ‘margins of skill’ over and above the basic wage, and created hierarchies of work based upon a quasi-rational and seemingly objective assessment of the relative value of particular jobs. These job hierarchies remain central to the regulation of Australian working life, even for the lucky ones on enterprise agreements providing higher wages and better conditions than the award. The academic job hierarchy at our place of work, which ranges from tutor up to professor, is one example. We might earn less money than people doing the same job at the University of Melbourne, but we still share in the industry-wide definitions of work.

The second impact has been to give the tribunal a mechanism to alter to the relative standing of particular grades of work when it was warranted or where a completely new form of work emerged. This dynamism has been retained in the Fair Work Act.

Australian federal labour law has not embraced a concept of ‘comparable worth’ – a mechanism used in other countries to re-assess the value of work undertaken primarily by women. Nor do we have the kind of strong anti-discrimination laws such as those of the European Union which can provide a proxy means for tackling pay discrimination. What we do have is a technical process for calling into question the valuation of work, albeit one hedged around with restraints.

So, for all the talk we hear from opponents of Labor’s new policy, this aspect of Act means that we are not stuck with rigid, inflexible and unproductive work structures. The system can adjust to new demands, new industries, new kinds of worker.

Let’s hope that Fair Work Australia will exercise its powers in the four yearly reviews to ensure that the Australian system maintains its ability to deal with the economic realities of the modern workplace as well as the demands of wage justice.

A copy of the Act, which is drafted in easy and coherent style when compared to its predecessor, can be found at