Rediscovering Collective Bargaining

Australia's Fair Work Act in International Perspective

Breen Creighton, Anthony Forsyth

• Publisher: Routledge
• Year: 2012
• ISBN:
  9781136281358
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

This book examines countries that have tried, with varying degrees of success, to use legislative strategies to encourage and support collective bargaining, including Australia's Fair Work Act. It is the first major study of the operation and impact of the new collective bargaining framework introduced under the Fair Work Act, combining theoretical and practical perspectives. In addition, a number of comparative pieces provide rich insights into the Australian legislation's adaptation of concepts from overseas collective bargaining systems – including good faith bargaining, and majority employee support as the basis for establishing bargaining rights. Contributors to this volume are all leading labor law, industrial relations, and human resource management scholars from Australia, and from Britain, Canada, New Zealand and the United States.

1	Rediscovering Collective Bargaining
	Breen Creighton and Anthony Forsyth

Introduction and Overview of the Book

As Breen Creighton points out in Chapter 3 of this Collection, the International Labour Organisation (ILO) has been formally committed to the promotion of collective bargaining as a means of regulating terms and conditions of employment since the adoption of the Declaration of Philadelphia in 1944. Not only is this commitment enshrined in the Constitution of the ILO by virtue of the incorporation of the Declaration of Philadelphia, it also forms part of the principles of freedom of association which are binding upon all member-States by force of the fact of membership of the Organisation, and is a core element of the Right to Organise and Collective Bargaining Convention 1949 (No. 98). Not surprisingly, therefore, denial of access to, or interference with the outcomes of, collective bargaining have been a major focus of the work of the supervisory bodies of the ILO for more than 60 years.

This universal recognition of the role of collective bargaining in protecting and promoting the rights and interests of workers no doubt helps explain why so many countries—including all of those whose law and practice are examined in this Collection—have adopted statutory provisions which are, ostensibly at least, intended to promote the regulation of terms and conditions of employment by collective bargaining. However, even a cursory examination of law and practice in countries such as the United States (US), Canada and the United Kingdom (UK) suggests that these legislative initiatives have, at best, enjoyed only a very limited measure of success.

Traditionally, the situation in Australia and New Zealand was rather different. The adoption of statutory systems of conciliation and arbitration in both countries from the 1890s onwards was a response to the total repudiation of collective bargaining by employers in the course of a series of major industrial disputes in the first half of that decade. The early measures, especially in Australia, were premised on the assumption that collective bargaining ought to be the means by which terms and conditions were regulated, but also had the effect that if the parties to industrial disputes were unwilling or unable to reach negotiated outcomes then an independent ‘umpire’ could impose an arbitrated outcome upon them. Over time, both countries developed a curious hybrid whereby what were ostensibly arbitrated outcomes were to a significant extent the product of collective negotiation, frequently under the auspices of the industrial tribunal. Furthermore, those arbitrated outcomes were then commonly used (especially in Australia) as the basis for ‘over-award’ bargaining at the level of the enterprise or locality. By the 1970s, these systems helped to determine the terms and conditions of employment of the overwhelming majority of employees in both countries—for example, in Australia in 1974 the basic terms and conditions of no less than 87 percent of the workforce were regulated by the awards of either federal (39 percent) or State (48 percent) industrial tribunals (Creighton, Ford and Mitchell 1983: 502).¹

By the early 1980s there was increasing recognition that the traditional system of award regulation in Australia was in need of radical overhaul. As described by Peter Gahan and Andreas Pekarek in Chapter 2, this overhaul took the form of a shift away from the traditional hybrid in favour of formalised collective bargaining at the level of the enterprise—albeit with awards continuing to provide a safety net for bargaining through the application of the no-disadvantage test.² Initially, enterprise bargaining by definition involved negotiations between trade unions on one side and employers on the other. However, from 1993 onwards it was recognised that in certain circumstances employers could negotiate terms and conditions with their employees without the necessity for union involvement. Even more importantly, from 1996 onwards the legislation enabled employers and individual employees to negotiate agreements—Australian workplace agreements (AWAs)—which had the effect of entirely displacing any otherwise applicable collective instrument. These agreements had to be approved by a public functionary called the Employment Advocate before they could become operative, and still had to pass a no-disadvantage test relative to any otherwise applicable award. The further changes introduced by the ‘Work Choices’ legislation in 2005 meant that AWAs could become operative as soon as they were lodged with the Employment Advocate, and no longer needed to pass the no-disadvantage test.³

The reaction against the traditional approach in New Zealand was even more dramatic, as Pam Nuttall explains in Chapter 14. The Employment Contracts Act 1991 abolished the system of conciliation and arbitration at a stroke, and instead put in place a minimalist framework which enabled parties to negotiate terms and conditions at an individual or (to a limited extent) collective level, but which accorded no formal role whatsoever to trade unions, and made no express reference to collective bargaining. Subsequent attempts to re-collectivise the New Zealand system—most notably through the Employment Relations Act 2000—have proved almost entirely ineffectual, as reflected in the fact that in 2010 the terms and conditions of only 8 percent of the private sector, and 60 percent of the public sector, workforce were regulated through collective bargaining (Blumenfeld 2010b: 14).

The 2005 changes in Australia provoked a powerful electoral backlash, and played a major role in the defeat of the (conservative) Coalition Government at the 2007 Federal election. The Australian Labor Party fought that election on a platform which committed a future Labor Government to the creation of a new industrial relations system, at the heart of which would be ‘collective enterprise agreement making’ and in which ‘AWAs and statutory individual contracts’ would play no part (Rudd and Gillard 2007: 3). The Rudd Government gave effect to these commitments through the Fair Work Act 2009 (FW Act).

The principal focus of this Collection is upon the ‘rediscovery’ of collective bargaining through the provisions set out in Part 2–4 of the FW Act. In Chapter 3, Creighton examines these provisions by reference to ILO standards relating to the promotion of collective bargaining—taking particular account of the criticisms of the arrangements put in place by the 1996 and 2005 legislation by the Committee of Experts on the Application of Conventions and Recommendations. This is followed by three Chapters which examine some of the key features of the new legislation from a legal perspective.

The Work Choices legislation had almost entirely marginalised the Australian Industrial Relations Commission (AIRC) in the enterprise bargaining process. Instead, the legislation had encouraged parties to negotiate agreements without third party intervention, or with the involvement of other parties of their choice including, but not limited to, trade unions. These could include the AIRC, but the tribunal had no capacity to intervene of its own initiative, and could impose arbitrated outcomes on the parties in only very limited circumstances. In Chapter 4, Richard Naughton examines the rehabilitation of the AIRC in its new guise as Fair Work Australia (FWA). He suggests that whilst the role of FWA under the FW Act is not dissimilar to that of the AIRC under the Federal legislation post-1993 (when the major shift towards enterprise bargaining first occurred), the tribunal now has a more comprehensive range of powers available to it to facilitate the agreement making process than was the case in the past. These include powers to: make orders enforcing the good faith bargaining requirements that apply to all bargaining representatives; make determinations compelling an employer to bargain, if that is what a majority of employees want (majority support determinations (MSDs)); and make orders settling disputes over the coverage of agreements (scope orders). FWA also has general powers to assist negotiating parties to resolve bargaining disputes. The author further suggests that these powers have been framed so as to avoid some of the pitfalls which have compromised the efficacy of provisions intended to promote collective bargaining, in some of the other countries whose systems are considered in this Collection.

In Chapter 5, Amanda Coulthard looks at the mechanics of making enterprise agreements under the FW Act. She points out that the procedural requirements set out in Part 2–4—including rules dealing with the representational rights of employees in bargaining, the provision of information about proposed agreements, and the approval of agreements by employees and FWA—are both complex and confusing. As such, there is an obvious risk that the system could become excessively legalistic, as appears to have happened in the US, or that the parties would become so intimidated by the complexity of the system that they make little attempt to use it, as has happened in the UK. However, like Naughton, the author sees signs for cautious optimism: in her view, there has been an initial ‘settling in’ period during which the parties negotiating agreements—and FWA itself—have grappled with the complexities of the agreement making rules, but that a clearer approach to these rules is now emerging. Perhaps more importantly, the statutory requirements around agreement making are operating in such a way as to complement those relating to good faith bargaining.

Shae McCrystal in Chapter 6 examines the relationship between the provisions relating to good faith bargaining and the capacity to take protected industrial action. She notes that despite the views of the dissentient in the first Full Bench of FWA decision in JJ Richards and Sons Pty Ltd v. Transport Workers’ Union of Australia,⁴ and the protests of members of the business community, it is clear that in appropriate circumstances workers can take protected industrial action in order to try to compel their employer to negotiate with them.⁵ She also explores the practical implications of the requirement that a union that wishes to access a protected action ballot must be able to show that they have been genuinely trying to reach agreement with the other negotiating party. She notes that this requirement is theoretically separate from the good faith bargaining requirements set out in Division 8 of Part 2–4, and points out that FWA has insisted that the two requirements are conceptually separate. The author observes, however, that logically the two issues must be closely interrelated: the fact that a party has failed to engage in good faith bargaining must be strongly indicative of a failure genuinely to try to reach agreement, and vice versa. Finally, McCrystal notes that the complexity of the rules governing the interaction of good faith bargaining and taking protected industrial action is redolent of the rules governing good faith bargaining in the US and Canada, whilst the restrictive approach to taking protected industrial action evokes the approach that has been adopted in the UK. She sees hope, however, in the fact that the Australian system imposes good faith bargaining obligations upon all employers who agree to bargain.

In Chapter 7, Rae Cooper and Bradon Ellem provide a rather different perspective on the provisions in Part 2–4 of the FW Act that are discussed by Naughton, Coulthard and McCrystal. They examine the effect of the new legislation’s provisions on employer and union strategy, and the level and type of agreement making that is occurring in Australian workplaces. The authors find that the FW Act has already stimulated an increase in bargaining activity. They also detect a significant attitudinal shift on the part of several major Australian employers, who had previously been strong advocates of individualised employment relations but have now (to varying degrees) re-engaged with regulation of terms and conditions through collective bargaining. The authors look at the ways in which unions have made use of the enhanced powers of FWA to intervene in the bargaining process. They conclude that MSDs, good faith bargaining orders, and FWA’s oversight of negotiations in the low-paid bargaining stream are proving useful in getting reluctant employers to the bargaining table—although they also point out that much of this activity is occurring in sectors where unions were already well-established.

Like Cooper and Ellem, David Peetz in Chapter 8 is more concerned with the practical operation of the FW Act bargaining system than with its legal niceties. He starts by briefly summarising some of the economic literature on strike activity, and in doing so notes that none of the conventional models gives proper consideration to the role of ‘unconditional’ strikes in the sense of strikes which do not involve any negotiation between the parties or any outcome being agreed or conceded by the parties. The author goes on to posit a model of strike activity which attempts to integrate economic and institutional explanations of such activity, and to examine the changing patterns of industrial conflict in Australia by reference to that model. Peetz notes that under the traditional conciliation and arbitration system all forms of industrial action were theoretically unlawful, but that there were in fact large numbers of strikes, characteristically of short duration and involving small numbers of workers. He finds that the introduction of a limited right lawfully to take industrial action in 1993 led to a reduction in unlawful strike activity, and that that trend has continued under the FW Act. However, he also notes that the restrictive approach to collective bargaining that was adopted by Work Choices led to substantial reductions in all forms of strike activity, and that the subsequent adoption of a less restrictive approach in the FW Act has not yet had any significant impact upon strike activity. This leads Peetz to conclude that changes in strike patterns take a long time fully to manifest themselves due to the resilience of culture and tactical behaviours that develop under earlier legislative regimes. Nevertheless, he does see some indications that under the FW Act Australian strike patterns are gradually moving towards those in the other countries considered in this Collection, but suggests that full convergence is unlikely due to the persistence of existing cultural traditions and associated patterns of behaviour.

In Chapter 9, John Howe provides a timely reminder that legislative enactment is not the only, or necessarily the most effective, way of promoting collective bargaining. He does this by examining a number of non-legislative mechanisms which the Labor Government has adopted in order to prov...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright
• Contents
• List of Figures
• List of Tables
• Preface
• 1. Rediscovering Collective Bargaining
• 2. Collective Bargaining and Agreement Making in Australia: Evolution of the Legislative Framework and Practice
• 3. International Labour Standards and Collective Bargaining under the Fair Work Act 2009
• 4. The Role of Fair Work Australia in Facilitating Collective Bargaining
• 5. The Mechanics of Agreement Making under the Fair Work Act 2009: Promoting Good Faith Bargaining and Genuine Agreement
• 6. The Relationship between Protected Industrial Action, Recognition and Bargaining in Good Faith under the Fair Work Act 2009
• 7. Getting to the Table? Fair Work, Unions and Collective Bargaining
• 8. Industrial Conflict with Awards, Choices and Fairness
• 9. Government as Industrial Relations Role Model: Promotion of Collective Bargaining and Workplace Cooperation by Non-Legislative Mechanisms
• 10. Comparing Purposes and Concepts in United States and Australian Collective Bargaining Law
• 11. Recognition in Respect of Bargaining in the United Kingdom: Collective Autonomy and Political Neutrality in Context
• 12. The Canadian Conception of Collective Representation and Bargaining
• 13. After EFCA, What Next for Unions? The Future of Labour Law Reform and of Collective Bargaining in the United States
• 14. Collective Bargaining and Good Faith Obligations in New Zealand
• List of Contributors
• Bibliography
• Index