Observation (CEACR) - adopted 2009, published 99th ILC session (2010)

Labour Inspection Convention, 1947 (No. 81) - Australia (Ratification: 1975)

The Committee notes the Government’s report and the information provided in reply to its previous comments. It also notes the comments made by the Australian Council of Trade Unions (ACTU) in a communication dated 1 September 2008, as well as the Government’s response to these comments. The Committee finally notes the adoption of the Fair Work Act 2009 (No. 28, 2009) (FWA) which establishes Fair Work Australia, a new statutory body with a wide range of functions including an inspectorate – the Fair Work Ombudsman and its Office – which has responsibility for monitoring and enforcing compliance with industrial laws.

Impact of legislative development on the functioning of labour inspection. In a previous direct request the Committee had noted comments communicated by the ACTU with regard to a change in orientation of the labour inspectorate which, instead of focusing on its traditional task of recovering wages owed to workers, had begun to use aggressive methods of investigation in order to determine whether trade unions and workers were in breach of the legislation which applied prior to the adoption of the FWA (i.e. the Workplace Relations Act 1996 (WR Act)) and which had itself been found by the Committee to be contrary to other international labour standards.

The Committee takes note of the Government’s reply which was communicated prior to the adoption of the FWA. The Government provides information on the activities of the Workplace Ombudsman who preceded the recently established Fair Work Ombudsman. The Workplace Ombudsman had commenced on 1 July 2007 on the basis of Part 5A of the WR Act. According to the Government, it had established itself as a strong, effective and independent regulator having finalized over 45,000 investigations, having recovered in excess of 52 million Australian dollars (AUD) on behalf of employees, and having commenced 123 court proceedings for breaches of the WR Act. The courts imposed over AUD2 million in penalties against employers as a result of the Workplace Ombudsman’s work. Furthermore, the Workplace Ombudsman performed targeted compliance and education campaigns, as a result of which it audited more than 9,500 businesses and recovered more than AUD14 million on behalf of over 15,000 employees.

The Committee also notes that in the meantime, the WR Act was replaced by the FWA and the Workplace Ombudsman ceased operations on 30 June 2009, all of its functions having been assumed by the Office of the Fair Work Ombudsman. It also takes note of the statement of the Chairperson of the ACTU to the 98th Session of the International Labour Conference (Geneva, June 2009) according to which “[i]n July [2009], the Fair Work Act will begin operation, re-establishing a decent safety net for all working Australians, restoring unfair dismissal rights, placing collective bargaining at the centre of industrial relations, and restoring the powers of the independent umpire with Fair Work Australia”. (Provisional Record No. 9, page 44)

The Committee takes note of this information with interest. It requests the Government to provide in its next report information on the activities of the Fair Work Ombudsman, with statistical information in particular on the number of violations found and prosecutions initiated.

The Committee also notes that in its comments, the ACTU raised the issue of provisions in the WR Act which restricted the right to access of trade unions to workplaces, effectively preventing them from performing inspection functions. The ACTU indicated that under the Australian industrial relations system, trade unions had historically played a key role in overseeing the enforcement of awards and agreements. In recent years, however, the WR Act, as amended by the Work Choices Act, had severely restricted the capacity of union officials to enter the workplace to investigate a suspected breach of industrial obligations and to hold discussions with employees. The ACTU strongly regretted that the new Government had indicated its intention to retain the existing restrictions.

The Committee notes that the WR Act has now been replaced by the FWA, Part 3–4 and in particular sections 481–483E which enable union representatives to enter premises and investigate suspected contraventions of the FWA or a term of a fair work instrument (i.e., a “modern award”, “workplace determination” or order issued by Fair Work Australia, or an enterprise agreement (section 12)) that relates to or affects a member of their organization. However, the exercise of this right is subject to certain conditions concerning the right of entry aimed at maintaining a balance between the right of organizations to investigate suspected contraventions and the right of occupiers of premises and employers to go about their business without undue inconvenience (as stipulated in section 480 of the FWA). Moreover, trade union representatives are not entitled to exercise general inspection functions under the FWA. According to section 152(b) of the FWA, a “modern award” must not include terms that require or authorize an official of an organization to enter premises to inspect any work, process or object. Moreover, the conditions under which trade union representatives have right of entry to carry out inspections of suspected contraventions, cannot be modified by enterprise agreement, as provided in section 194 of the FWA.

The Committee observes that these provisions place certain restrictions on the wide powers traditionally conferred upon trade unions to ensure enforcement of awards and agreements. The power to enforce legal entitlements has now been transferred to a public authority, namely, the Fair Work Ombudsman while trade unions maintain the power to investigate suspected contraventions which relate to or affect one of their members.

The Committee recalls that, according to Article 4 of the Convention, so far as is compatible with the administrative practice of the Member, labour inspection shall be placed under the supervision and control of a central authority. At the same time, the Committee notes that according to Article 5(b), the competent authority shall make appropriate arrangements to promote collaboration between officials of the labour inspectorate and employers and workers or their organizations. The Committee notes that in its report, which antedated the adoption of the FWA, the Government referred to the measures taken to ensure that the Workplace Ombudsman (now replaced by the Fair Work Ombudsman) was as accessible as possible to the Australian community: the agency investigated all complaints and allegations of breaches of workplace relations law from any source, including employer and employee industrial associations, individuals, Commonwealth and state territory agencies, state and federal members of Parliament, and the media. Members of the public could access the Workplace Ombudsman and information regarding compliance rights and obligations through the post, the telephone, in person or online. In addition to this, key stakeholders including union and employer associations were contacted prior to the commencement of compliance and education campaigns and provided with the opportunity to both comment on and participate in the educational phase of the campaigns. Furthermore, the Workplace Ombudsman had a good general working relationship with peak union and employer associations such as the ACTU and the Australian Chamber of Commerce and Industry (ACCI).

While taking due note of this information, the Committee emphasizes that possible arrangements for collaboration with the social partners normally go beyond the right to communicate complaints to the Ombudsman and can take various forms, ranging from tripartite bodies, to cooperation agreements at various levels (national, regional, sectoral and enterprise) (see General Survey of 2006 on labour inspection, paragraphs 163–71). The Committee also recalls that Recommendation No. 81 provides specific guidance on possible forms and methods of collaboration in the area of occupational safety and health. The Committee notes that it does not have recent information at its disposal to enable it to evaluate whether the collaboration with employers’ and workers’ organizations has been further developed after the creation of the Fair Work Ombudsman. The Committee requests the Government to provide further information in its next report on arrangements made or envisaged in order to promote collaboration between the Fair Work Ombudsman and employers’ and workers’ organizations.

Specific impact of new legislation on labour inspection in the building and construction sector. The Committee finally notes that in its comments dated 1 September 2008, the ACTU refers to the Australian Building and Construction Commission (ABCC), established on the basis of the Building and Construction Industry Improvement (BCII) Act, 2005. The ACTU raises serious concerns about the conduct of the ABCC, in particular, its unbalanced approach in favour of employers in relation to the selection of matters for prosecution, its refusal to prosecute employer breaches of industrial instruments and its failure to observe reasonable standards of prosecutorial fairness in the conduct of litigation against unions and workers. The ACTU emphasizes that according to the ABCC’s annual report for 2006–07, trade unions were the subject of 73 per cent of investigations and employees the subject of 11 per cent (a total of 84 per cent). At the same time, the total number of employers prosecuted by the ABCC since October 2005 for failure to pay minimum lawful entitlements was zero; the total number of employers referred to other statutory agencies for such breaches was four. This was the case although the Workplace Ombudsman had ranked the construction industry as having the fourth highest rate of non-compliance with minimum standards by employers. According to the ACTU, the ABCC had apparently adopted a policy position not to investigate or prosecute such matters.

The ACTU adds that the BCII Act contains provisions which give the ABCC wide-ranging coercive powers akin to an agency charged with investigating criminal matters and a harsh regime of financial penalties for acts which constitute regular trade union activity. Among other things, the BCII Act imposes the penalty of imprisonment for failing to appear and answer questions or provide documents to the ABCC. As of May 2008, the overwhelming majority of individuals who had been served with notices under section 52 of the BCII Act compelling them to attend and answer questions, were workers as opposed to management representatives. The total amount of financial penalties imposed from 1 October 2005 to May 2008 was AUD1.2 million, including AUD883,200 imposed on 107 individual employees in a single prosecution in Western Australia. Finally, on 2 June 2008, a trade union officer in Victoria was prosecuted and faced imprisonment simply for failing to attend and answer questions as required by a notice issued by the ABCC (section 52(6) BCII Act) without being the subject of any investigation.

According to the ACTU, since the election of the new Government in 2007, the BCII Act has continued to apply without amendment and the ABCC has continued to operate with the same powers, with undiminished resources and unaltered policy direction. Despite having the capacity to do so under section 11(1) of the BCII Act, the incoming minister has not issued any directions to the ABCC specifying the manner in which the ABCC should exercise or perform the powers or functions it has under the Act. The new Government announced that the ABCC would be retained until 31 January 2010, and after that date, responsibilities would transfer to a specialist division within Fair Work Australia. The ACTU objects to the creation of a specialist division on building and construction.

The Committee notes the Government’s reply to these comments, according to which the ABCC will be retained until 31 January 2010, after which time it will be replaced with a specialist building and construction division of the inspectorate of Fair Work Australia. The Government has engaged a former judge of the Australian Federal Court to consult and report on matters related to the creation of the specialist division and to report to the Government in 2009. A report will be provided to the Committee of Experts once the Government has had the opportunity to consider the recommendations of this inquiry.

The Committee recalls that under Article 3 of the Convention, the functions of the system of labour inspection shall be to secure the enforcement of legal provisions relating to conditions of work and the protection of workers while engaged in their work; any further duties which may be entrusted to labour inspectors shall not be such as to interfere with the effective discharge of their primary duties or to prejudice in any way the authority and impartiality which are necessary to inspectors in their relations with employers and workers. The Committee considers that the prosecution of workers does not constitute part of the primary duties of inspectors and may not only seriously interfere with the effective discharge of their primary duties – which should be centred on the protection of workers under Article 3 of the Convention – but also prejudice the authority and impartiality necessary in the relations between inspectors and employers and workers. This is even more so when the laws on the basis of which the workers are prosecuted have been repeatedly found by this Committee to be contrary to other international labour standards, notably Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), and Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

The Committee hopes that the above issues will be fully resolved in the framework of the formal inquiry into the regulatory arrangements to replace the ABCC and the establishment of a specialist building and construction division in Fair Work Australia. The Committee requests the Government to communicate the results of this inquiry and to indicate in its next report the measures taken or envisaged to ensure that labour inspectors in the building and construction division of Fair Work Australia focus on enforcement of legal provisions relating to conditions of work and the protection of workers while engaged in their work and that any further duties which may be entrusted to them are not such as to interfere with the effective discharge of their primary duties or to prejudice in any way the authority and impartiality which are necessary to inspectors in their relations with employers and workers.

The Committee is raising other points in a request addressed directly to the Government.