Observation (CEACR) - adopted 2006, published 96th ILC session (2007)

Right to Organise and Collective Bargaining Convention, 1949 (No. 98) - Australia (Ratification: 1973)

The Committee takes note of the discussion that took place at the Conference Committee on the Application of Standards in June 2006 and notes that, in its conclusions, the Conference Committee requested the Government to provide a detailed report to this Committee for examination this year on the provisions of the Work Choices Act and its impact, both in law and in practice, on the Government’s obligation to ensure respect for freedom of association. It further notes the Conference Committee’s request to the Government to engage in full and frank consultations with the representative employers’ and workers’ organizations with respect to all the matters raised during the debate and to report back to this Committee in this regard.

The Committee observes that the report requested from the Government has not been received, nor has the Government replied to the extensive comments made by the Australian Council of Trade Unions (ACTU) in a communication dated 17 May 2006 with regard to the passage of the Work Choices Act and the National Tertiary Education Industry Union (NTEU) in a communication dated 19 April 2006, as well as the comments made by the International Confederation of Free Trade Unions (ICFTU) in a communication dated 12 July 2006. In a communication dated 29 November 2006, the Government of Australia explains the range of factors that significantly impeded its efforts to provide a report to the Committee. In particular, the Government refers to the constitutional challenge to the Work Choices Act, which was only concluded on 14 November 2006, when the High Court dismissed the challenge in its entirety. The Committee further notes the Government’s indication that, in dismissing the challenge, the High Court made no findings concerning the merit of the Work Choices Act, but merely held that the Australian Government had the legal authority to enact the legislation.

The Committee notes the extensive legislative changes introduced at the federal and state levels pursuant to the amendment of the Workplace Relations Act, 1996 (the WR Act), by the Workplace Relations Amendment (Work Choices) Act, 2005 (the Work Choices Act). These amendments concern, in particular, collective bargaining and Australian workplace agreements (AWAs). The Committee recalls from previous comments that AWAs are agreements on the relationship between an employer and an employee, which are essentially individual in nature and put emphasis on direct employee-employer relations over collective negotiations with trade unions aimed at concluding collective agreements.

Federal jurisdiction. Articles 1 and 4 of the Convention. Protection against anti-union discrimination in the framework of collective bargaining. 1. Exclusion from protection. The Committee recalls that, in its previous comments, it had noted that section 170CC of the WR Act (now section 639 of the WR Act, as amended by the Work Choices Act) effectively excludes from protection against anti-union dismissals under section 170CK of the WR Act (now section 659 of the WR Act, as amended by the Work Choices Act), employees “in relation to whom the operation of the provisions causes or would cause substantial problems because of: (i) their particular conditions of employment; or (ii) the size or nature of the undertakings in which they are employed”. Recalling that the Convention requires that all workers be protected from anti-union dismissals, the Committee once again requests the Government to provide information as to the particular classes of employees covered by this exclusion and to provide detailed information as to the manner in which this provision has been applied in practice.

2. Protection at the time of recruitment. The Committee recalls that, in its previous comments, it had also addressed the need to amend sections 298L and 170WG(1) of the WR Act (now sections 793 and 400(5) respectively of the WR Act, as amended). These sections did not seem to afford adequate guarantees against anti-union discrimination to the extent that they allowed offers of employment to be conditional on the signing of an AWA (“AWA or nothing”) without this being considered as duress by the courts. The Committee observes that section 400(6) of the WR Act, as amended by the Work Choices Act, now further strengthens the previous provisions by explicitly specifying that offering an “AWA or nothing” does not amount to duress. The Committee once again emphasizes that workers who might refuse to negotiate an AWA at the time of recruitment should be afforded legal protection against acts of anti-union discrimination relative to such refusal and emphasizes that the right of workers to join the organization of their own choosing, combined with the legitimate objective of determining their conditions of employment through collective bargaining, should be fully protected. It therefore requests the Government to indicate in its next report the measures taken or contemplated to repeal section 400(6) of the WR Act and to amend sections 793 and 400(5) so as to ensure that workers are adequately protected against any discrimination at the time of recruitment related to their refusal to sign an AWA.

3. Protection in the context of negotiations of multiple business agreements. The Committee further recalls that its previous comments concerned the need to amend section 170LC(6) of the WR Act, which excluded workers who negotiated multiple business agreements from protection against anti-union dismissals if they undertook industrial action. The Committee notes that this section is not reproduced in the WR Act, as amended by the Work Choices Act. However, section 423(1)(b)(i) provides that a “bargaining period” cannot be initiated with regard to a multiple business agreement unless an employer – not a trade union – obtains authorization from the Employment Advocate in relation to making or varying such an agreement (section 332 of the WR Act, as amended). The Employment Advocate must not grant the authorization unless he or she is satisfied that it is in the public interest to do so (section 332(3)). The Committee notes that, in the absence of a bargaining period, industrial action is not protected (section 437 of the WR Act, as amended) and therefore workers continue not to be protected under the WR Act against acts of anti-union discrimination, in particular, dismissals, if they organize or participate in industrial action in support of multiple business agreements.

The Committee also takes note of the ACTU’s comments, according to which the Work Choices Act introduces further restrictions concerning “pattern bargaining” (i.e. negotiations seeking common wages or conditions of employment for two or more proposed collective agreements with different employers or even different subsidiaries of the same parent company) by prohibiting industrial action in relation to this type of bargaining (section 439 of the WR Act, as amended) and requiring the Australian Industrial Relations Commission (AIRC) to suspend or terminate the bargaining period where pattern bargaining is occurring, thereby preventing the taking of lawful, protected industrial action (sections 431(1)(b) and 437 of the WR Act, as amended).

The Committee once again recalls that action related to the negotiation of multiple business agreements and “pattern bargaining” represents legitimate trade union activity for which adequate protection should be afforded by the law. The Committee further emphasizes that the choice of the bargaining level should normally be made by the parties themselves who are in the best position to decide this matter (see 1994 General Survey on freedom of association and collective bargaining, paragraph 249). The Committee therefore requests the Government to indicate in its next report any measures taken or contemplated to amend sections 423 and 431 of the WR Act, as amended by the Work Choices Act, so as to ensure that workers are adequately protected against acts of anti-union discrimination, in particular, dismissal, for negotiating collective agreements at whatever level deemed appropriate by the parties.

Articles 2 and 4. Protection against acts of interference in the framework of collective bargaining. In its previous comments, the Committee, recalling that section 170LJ(1)(a) of the WR Act (now section 328(a) of the WR Act, as amended) gave employers wide discretion in selecting a bargaining partner (as it enabled an employer to make an agreement with one or more organizations of employees where each organization had “at least one member” in the enterprise), had suggested the establishment of a mechanism to undertake the rapid and impartial examination of allegations of acts of interference in the context of the selection of a bargaining partner. The Committee once again requests the Government to provide information in its next report on whether such a mechanism exists or, if not, the measures taken or contemplated with a view to setting one up.

Article 4. Measures to promote free and voluntary collective bargaining. 1. Relationship between AWAs and collective agreements. The Committee’s previous comments concerned the need to amend section 170VQ(6) of the WR Act, which gave prevalence to AWAs over collective agreements. The Committee recalls from its previous comments (prior to the adoption of the Work Choices Act) that an AWA did not operate to the exclusion of a collective agreement if the latter was already in operation and until its expiry unless the collective agreement expressly allowed a subsequent AWA to operate to its exclusion. At that time, the Committee had criticized the fact that a collective agreement that was subsequent to an AWA did not prevail over the AWA until the expiration of the AWA; in the Committee’s view, this prevented workers who wished to join a union later in their employment from profiting from any favourable provisions in a subsequently negotiated collective agreement. It also raised a special problem with regard to the possibility provided by the WR Act to offer an “AWA or nothing” to new employees who were thereby unable to benefit from the provisions of the collective agreement until the expiry of their AWA.

The Committee takes note of the ACTU’s comments, according to which the amendments introduced by the Work Choices Act give further primacy to AWAs over collective agreements. In particular: (i) section 348(2) of the WR Act now provides that a collective agreement has no effect while an AWA operates in relation to an employee, irrespective of whether the AWA was made before or after the collective agreement and irrespective of the period of operation of the collective agreement; (ii) the incentive for employers to use AWAs in order to reduce wages and conditions of employment has been substantially increased by the repeal of the requirement that an AWA should not disadvantage employees in comparison to the terms of an applicable award; the previously applicable “no disadvantage test” has been replaced with a requirement only that the agreement not exclude the Australian Fair Pay and Conditions Standard setting forth key minimum entitlements relating to pay, hours of work, annual and other types of leave (sections 171-173 of the WR Act); (iii) moreover, the award conditions which apply to existing (not new) employees can be displaced by specific provision in the AWA (section 354), so that acquired rights are not protected; (iv) in the case of new employees, an AWA substantially inferior to the collective agreement can be required as a condition of employment (“AWA or nothing”). According to the ACTU, the primacy given to AWAs under the Work Choices Act makes the purported ability of unions to bargain collectively on behalf of their members nugatory in any practical sense, given that individual AWAs are likely to expire on different dates and their permitted period of operation has been extended from three to five years (section 352 of the WR Act – this provision also concerns the permitted period of operation of collective agreements), meaning that there is never a time when all employees are in a position to bargain collectively.

The Committee considers that giving primacy to AWAs, which are individual agreements, over collective agreements, is contrary to Article 4 of the Convention which calls for the encouragement and promotion of voluntary negotiations with a view to the adoption of collective agreements. The Committee further recalls that, according to the Collective Agreements Recommendation, 1951 (No. 91), employers and workers bound by a collective agreement should not be able to include in contracts of employment stipulations contrary to those contained in the collective agreement; such stipulations should be regarded as null and void and automatically replaced by the corresponding stipulation of the collective agreement, unless they are more favourable to the workers (Paragraph 3). The Committee therefore requests the Government to indicate in its next report the measures taken or contemplated to amend section 348(2) of the WR Act so as to ensure that AWAs may prevail over collective agreements only to the extent that they are more favourable to the workers.

2. Negotiations with non-unionized workers. The Committee’s previous comments concerned the need to amend section 170LK(6)(b) of the WR Act, which allowed for negotiations to take place directly with non-unionized workers instead of representative trade unions in the enterprise. The Committee notes that Part 8, Division 2, of the WR Act, as amended by the Work Choices Act, places on an equal footing various types of agreements, such as union collective agreements (section 328), AWAs (section 326) and “employee collective agreements” (section 327), the latter being agreements in writing with employees whose employment will be subject to the agreement in a single business. Furthermore, section 4 of the WR Act defines a “collective agreement” as either an “employee collective agreement” or a “union collective agreement”.

The Committee once again recalls that Article 4 of the Convention requires the encouragement and promotion of voluntary negotiations between employers or employers’ organizations and workers’ organizations. It therefore once again requests the Government to take measures to ensure that employee collective agreements do not undermine workers’ organizations and their ability to conclude collective agreements, and to indicate in its next report the measures taken or contemplated with a view to ensuring that negotiations with non-unionized workers take place only where there is no representative trade union in the enterprise.

3. Authorization of multiple business agreements. The Committee’s previous comments concerned the need to amend section 170LC(4) of the WR Act, which required the AIRC to refuse the certification of multiple business agreements unless certification was in the public interest. The Committee notes that, pursuant to its amendment by the Work Choices Act, the WR Act now enables the Employment Advocate – and no longer the AIRC – to authorize the making or varying of multiple business agreements as a condition for their entry into operation (sections 151(1)(h) and 347(3) of the WR Act). Whereas the AIRC is a quasi-judicial body, the Employment Advocate is part of the administration, appointed by the Governor-General, and subject to the directions of the Minister for Employment and Workplace Relations (the Minister) with which he or she “must” comply (section 152 of the WR Act). The Employment Advocate must not grant authorization to make or vary a multiple business agreement unless satisfied that it is in the public interest to do so, having regard to whether the matters could be dealt with more appropriately in a collective agreement other than a multiple business agreement and to any other matter specified in regulations (section 332(3) of the WR Act). Authorization can be granted only at the request of the employer (section 332); trade unions do not appear to be able to request authorization. Any employer who lodges an unauthorized agreement with the Employment Advocate incurs a heavy penalty (sections 343 and 407 of the WR Act). Moreover, regulations may set a procedure for applying for authorization to the Employment Advocate and the Employment Advocate “need not consider an application if it is not made in accordance with the procedure” (section 332(2) of the WR Act). Finally, multiple business agreements are identified not only as agreements relating to one or more single businesses, but also relating to one or more parts of a single business (section 331(1)(a)(ii) of the WR Act), thus obliging the parties to carry out fragmented negotiations within single businesses. Similar authorization requirements are set in relation to variations of multiple business agreements (section 376).

Furthermore, the Committee notes that, according to the ACTU, the additional exclusion of “pattern bargaining” from protected action introduced in the WR Act by the Work Choices Act (see above) prevents parallel bargaining on a multi-employer basis, or even on the basis of several subsidiaries of the same parent company, thereby forcing an even greater focus on the single business, even in cases where the business might be part of a larger group of enterprises with common ownership and management.

The Committee recalls that the level of collective bargaining should be decided by the parties themselves and not be imposed by law (see General Survey, op. cit., paragraph 249). It further observes that legislation, which makes the entry into force of collective agreements subject to prior approval by the administrative authority, at the latter’s discretion, is incompatible with the Convention and a violation of the principle of autonomy of the parties (see General Survey, op. cit., paragraph 251). The Committee therefore once again requests the Government to indicate in its next report the measures taken or contemplated to repeal or amend sections 151(1)(h), 152, 331(1)(a)(ii) and 332(3) of the WR Act so as to ensure that multiple business agreements are not subject to the requirement of prior authorization at the discretion of the Employment Advocate and that the determination of the bargaining level is left to the discretion of the parties and is not imposed by law or by decision of the administrative authority. The Committee also requests the Government to keep it informed of any regulations adopted in relation to this matter.

4. Restrictions on the content of collective bargaining. The Committee’s previous comments concerned the need to amend section 187AA of the WR Act, which excluded negotiations over strike pay from the scope of collective bargaining. The Committee observes that section 507 of the WR Act, as amended by the Work Choices Act, prohibits payments for days off work due to industrial action. It also notes that, according to the ACTU, the WR Act now extends the list of subjects over which negotiations are excluded, by forbidding negotiations and the reaching of an agreement over “prohibited content”. The range of matters constituting “prohibited content” are to be specified in regulations (sections 436 and 356 of the WR Act). The Workplace Relations Regulations, 2006, specify in a non-exhaustive manner what is prohibited content: matters that do not pertain to the employment relationship; objectionable provisions, including provisions which require a person to encourage trade union membership or indicating support for such membership, or requiring or permitting payment of a bargaining services fee; payroll deduction systems for union dues; leave to attend training provided by a trade union; paid leave to attend union meetings; process for renegotiating the agreement on its expiry; right of entry to the premises for union officials; union representation rights in disputes procedures, unless specifically requested by the employee; restrictions on the use of contractors and labour hire; forgoing of annual leave other than in accordance with the Act; encouragement or discouragement of trade union membership; allowing of industrial action; remedies for unfair dismissal; direct or indirect restrictions on AWAs; and discriminatory terms. In addition to prohibiting these matters from being negotiated, the WR Act, as amended by the Work Choices Act, also introduces a substantial financial penalty for a person who seeks to include prohibited content in an agreement, or who is reckless as to whether a term contains prohibited content (sections 365 and 407 of the WR Act). Moreover, by allowing for the identification of prohibited content to be carried out through regulations in a non-exhaustive manner, the law allows for the exclusion from bargaining in the future of an unlimited number of matters as determined by the Minister. Finally, according to the ACTU, the prohibition of pattern bargaining noted above constitutes an additional restriction on the content of collective bargaining (common claims pursued against more than one business).

The Committee observes that the issues listed above as constituting “prohibited content” represent to a large extent the type of matters that have traditionally been subjects for collective bargaining. As a general rule, negotiation over such matters should be left to the discretion of the parties. In this respect, the Committee draws the Government’s attention to its General Survey on freedom of association, 1994, where it has indicated that measures taken unilaterally by the authorities to restrict the scope of negotiable issues are often incompatible with the Convention and the free and voluntary nature of collective bargaining. In the event of doubt as to the matters falling within the purview of collective bargaining, tripartite discussions for the preparation, on a voluntary basis, of guidelines for collective bargaining could be a particularly appropriate method for resolving such difficulties (see General Survey, op. cit., paragraph 250). The Committee requests the Government to consider tripartite discussions for the preparation of collective bargaining guidelines and to indicate in its next report any measures taken or contemplated to amend the Workplace Relations Regulations, 2006, and to ensure that any “prohibited content” of collective agreements is in conformity with the principle of the free and voluntary nature of collective bargaining enshrined in Article 4 of the Convention.

5. Greenfields agreements. The Committee’s previous comments concerned the need to amend section 170LT(10) of the WR Act, which excessively restricted the opportunity for workers in a new business to choose their bargaining agent by enabling the employer to pre-select a bargaining partner prior to the employment of any persons in the new business. The Committee now notes that section 352(1)(a) of the WR Act, as amended by the Work Choices Act, reduces the period of operation of greenfields agreements from three years to one.

The Committee also notes however that, according to the ACTU, pursuant to its amendment, the WR Act has removed the requirement for an agreement to be made with a trade union, thus enabling the employer to unilaterally determine the terms and conditions of employment through an “employer greenfields agreement” (see section 330 of the WR Act). Moreover, the WR Act has also extended the scope of “greenfields agreements” beyond the establishment of a new business, project or undertaking to cover any new activity proposed to be carried out by a government authority, a body in which a government has a controlling interest or which has been established by law for a public purpose. The law has also been clarified to specify that the reference to a new project which is of the same nature as the employer’s existing business activities is included in the definition of “greenfield” (section 323 of the WR Act; Explanatory Memorandum, paragraphs 798-801). The effect of these changes, according to the ACTU, is that employees on each of an employer’s construction sites, for example, could be employed under a unilateral employer agreement for 12 months, during which time AWAs could be introduced to ensure that collective bargaining never became a practical reality.

The Committee observes that the inclusion of employer greenfields agreements, to the total exclusion of any attempts at good-faith bargaining, within the context of a much enlarged definition of new business to further include the very broad concept of “new activity”, coupled with the greater primacy of AWAs, would appear to seriously hinder the possibilities of workers in such circumstances from negotiating their terms and conditions of employment. The Committee therefore requests the Government once again to indicate in its next report any measures taken or contemplated to amend the relevant provisions of the WR Act so as to ensure that the choice of bargaining agent, even in new businesses, may be made by the workers themselves and that they will not be prohibited from negotiating their terms and conditions of employment in the first year of their service for the employer even if an employer greenfields agreement has been registered.

6. Building industry. The Committee recalls that in its previous comments it took note of the conclusions and recommendations of the Committee on Freedom of Association in Case No. 2326 (338th Report, paragraphs 409-457) concerning several discrepancies between the Building and Construction Industry Improvement Act, 2005, and the Convention. These discrepancies concern similar issues to those noted above with regard to the WR Act.

The Committee once again requests the Government to indicate in its next report the measures taken or contemplated so as to bring the Building and Construction Industry Improvement Act, 2005, into conformity with the Convention, in particular with regard to the following points: (i) the revision of section 64 of the Act so as to ensure that the determination of the bargaining level is left to the discretion of the parties and is not imposed by law, by decision of the administrative authority; (ii) the promotion of collective bargaining, especially by ensuring that there are no financial penalties or incentives linked to undue restrictions of collective bargaining (sections 27 and 28 of the Act authorize the Minister to deny Commonwealth funding to contractors bound by a collective agreement that, although lawful, does not meet the requirements of a building code; the latter: (i) excludes a wide range of matters from the scope of collective bargaining; and (ii) contains financial incentives to ensure that AWAs may override collective agreements).

7. Higher education sector. In a previous direct request, the Committee addressed the need to amend section 33-5 of the Higher Education Support Act, 2003, and the Higher Education Workplace Relations Requirements (HEWRRs) which raise obstacles to collective bargaining similar to those raised by the Workplace Relations Act, 1996 (the WR Act), by: (1) providing economic incentives to ensure that collective agreements contain exceptions in favour of AWAs; and (2) allowing for negotiations with non-unionized workers even where representative trade unions exist in the unit.

The Committee notes the detailed comments raised by the NTEU in this regard. In particular, the NTEU indicates that the Higher Education Support Act was amended in November 2005 to give effect to the HEWRRs, which are linked to valuable additional government funding. According to the NTEU, the HEWRRs now mandate that all university institutions must offer AWAs to all staff. In addition, the Government has insisted that all institutions insert the following clause into university collective agreements: “the present agreement expressly allows for AWAs to operate to the exclusion of the certified agreement or prevail over the certified agreement to the extent of any inconsistency”. The NTEU provides examples of the impact the recent legislative changes have had on collective bargaining in higher education, including significant delays in being able to even enter into negotiations upon the expiration of a collective agreement. The NTEU concludes that the Government has been seriously hindering collective bargaining as a process for determining terms and conditions of employment.

The Committee regrets that the Government has not replied to the comments made by the NTEU in respect of the application of the Convention, and in particular Article 4, to those in higher education. It requests the Government to provide a detailed reply in this respect in its next report. It further requests once again the Government to indicate the measures taken or contemplated so as to bring the above instruments relating to higher education into conformity with the provisions of the Convention and to ensure that AWAs are not used to impede the collective bargaining process.

8. Discussion at the Conference Committee. The Committee notes the comments made by the Government representative before the Conference Committee according to which:

The Committee of Experts had chosen not to respond to the argument presented by the Government to the Committee at its 2005 session, concerning the appropriate interpretation of Convention No. 98. The point at issue was the view of the Committee of Experts that Article 4 of the Convention imposed an unqualified obligation to promote collective bargaining, and excluded the possibility of any other form of bargaining. Australia facilitated collective bargaining, but believed that parties should be permitted to pursue other forms of bargaining if they freely chose to do so. … Article 4 required measures for the encouragement and promotion of collective bargaining to be taken “where necessary”, and that such measures were to be “appropriate to national conditions”. … collective bargaining had been the norm in Australia for more than a century … as collective bargaining had been the historical norm in Australia, the availability of individual agreements as a choice among several industrial instruments could not be reasonably considered to contravene Convention No. 98. It was not appropriate to prohibit the availability of other forms of bargaining. Accordingly, in the language of Article 4, the legislation that was the subject of the Committee’s comments was consistent with Australian “national conditions” and Australia was not in breach of that provision.

The Committee observes, as it has already done on numerous occasions in the past, that a large number of provisions of the WR Act have the effect of preventing the negotiating parties from exercising a free choice between different forms of bargaining. The Committee is particularly concerned by the primacy accorded to individual contracts (AWAs) over collective agreements in the WR Act, the obstacles contained in this Act with regard to bargaining at any level above that of the workplace, and the express prohibition of bargaining over a very wide range of matters which normally constitute common topics in free and voluntary negotiations, as well as the heavy penalties incurred in case the parties try to negotiate such subjects. The Committee observes that the above measures can in no way be seen as measures to encourage and promote collective bargaining as they deny the parties any choice and restrict their bargaining autonomy and free will. In the Committee’s view, although the expressions “where necessary” and subject to “national conditions” found in Article 4 of the Convention allow for a wide range of different national practices in the implementation of measures for the encouragement and promotion of collective bargaining, they do not authorize in any way the introduction of disincentives, obstacles to and downright prohibitions of negotiations which amount to a negation of the free and voluntary nature of collective bargaining enshrined in Article 4 of the Convention. Recalling, as it has above, that tripartite discussions for the preparation, on a voluntary basis, of guidelines for collective bargaining are a particularly appropriate method to resolve any difficulties in the implementation of the Convention, the Committee requests the Government to indicate in its next report any measures taken or contemplated so as to give effect to the request of the Conference Committee for full and frank consultations with the representative employers’ and workers’ organizations with respect to all the matters raised above.

The Committee further requests the Government to provide, in its next report, its comments or observations in respect of the May and October 2006 communications of the ACTU, the NTEU communication of April 2006 and the ICFTU communication of July 2006.

Statistical data. The Committee requests the Government to provide with its next report detailed statistical data on the impact of the Workplace Relations Act, and its most recent amendments, upon the number and coverage of collective agreements in the country.

A request on another point is being addressed directly to the Government.