Report in which the committee requests to be kept informed of development - Report No 338, November 2005

Case No 2326 (Australia) - Complaint date: 10-MAR-04 - Closed

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INTRODUCTION
A. The complainants’ allegations
C. The Committee’s conclusions
The Committee's recommendations

Allegations: The complainant organization alleges that the Building and Construction Industry Improvement Bill 2003 would affect: the right to strike of workers in that industry by extending the scope of unprotected industrial action and introducing significant penalties; and their right to bargain collectively by restricting the scope of bargaining, preventing “pattern bargaining”, and making “project agreements” unenforceable

409. The complaint is contained in communications from the Australian Council of Trade Unions (ACTU) dated 10 March 2004 and 3 October 2005. The Trade Unions International of Workers of the Building, Wood and Building Materials Industries (UITBB) associated itself to the complaint in a communication dated 29 April 2004.

410. The Government replied in communications dated 14 February, 16 March and 28 September 2005.
411. Australia has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainants’ allegations

412. In its communication dated 10 March 2004, the ACTU stated that the Building and Construction Industry Improvement Bill 2003 is likely to have a detrimental effect on the right to strike and the right to bargain collectively. Although the Bill passed the House of Representatives on 4 December 2003, it should also be passed by the Senate in order to become law. At the time of the complaint, the Bill was the subject of an inquiry by a Senate Committee which was due to report by May 2004.
413. The complainant added in its main communication as well as the annexes attached thereto, that the content of the Bill was based on the recommendations of the Royal Commission into the Building and Construction Industry which issued its report to the Government on 24 February 2004. The Commission was established by the Government following a number of unsubstantiated allegations by the Office of the Employment Advocate of improper and unlawful conduct by building and construction industry unions. Although the Commission spent AU$60 million in its inquiry, it was widely seen as having been biased and unfair in its processes and in its findings and recommendations. Efforts were made by the Commission’s investigators to actively seek evidence against unions, while no interest was shown in bringing forward evidence which might exonerate unions. The latter were given very restricted opportunities to appear in the Commission’s proceedings in order to present contrary evidence or to cross-examine witnesses. The process used by the Commission was such that wide media publicity was given to sensational allegations before the unions had an opportunity to produce contrary evidence or to cross-examine witnesses, so that damage to their reputation was maximized. Sometimes, evidence given by unions was allegedly downplayed in favour of evidence given by anti-union or employer witnesses. 90 per cent of hearing time involved allegations against unions, although employer misconduct in relation to tax avoidance, occupational health and safety and failure to meet legal obligations to employees has been a feature of the industry.
414. The complainant also stated that the Commission’s recommendations were similarly unbalanced, focusing on relatively minor breaches of industrial relations legislation by unions and virtually ignoring evidence of tax avoidance and non-payment of employee entitlements by employers. Thus, 91.2 per cent of the findings were against unions and 8.8 per cent against employers. Moreover, the Commission adopted a broad view of the term “unlawful” as including non-criminal behaviour such as minor or technical breaches of the Workplace Relations Act 1996 (the WRA) or awards, as well as breaches of contract and so-called economic torts. Thus, 52.7 per cent of the so-called incidents of unlawful conduct related to breaches of dispute resolution clauses in awards or agreements, the tort of “interference with contractual relations”, breaches of the strike pay provisions of the WRA and breach of federal right to entry provisions. Finally, the complainant states that the concept of the “rule of law” in industrial relations on which the Royal Commission relied heavily, was envisaged in the sense that every citizen and organization had an absolute duty to obey the law as it stood, irrespective of its content or the consequences that flew from obedience (generally answering to non-observance by harsher penalties). This concept was shifting away from the original concept of the rule of law as a protection of the citizen against the use of arbitrary force by the state.
415. With regard to the provisions in the Bill concerning the right to strike, the complainant claimed that the Bill sought to restrict even further than current Australian law (the WRA) the ability of building and construction workers to take protected industrial action free from the possibility of legal sanction. The law currently provided that only industrial action taken in support of claims for a single enterprise collective agreement qualified as protected action, thus making subject to statutory penalties and/or common law damages any industrial action taken while a collective agreement was in force, or in support of a multi-employer agreement or over issues not subject to bargaining (such as retrenchments) or connected with sympathy or protest action. According to the complainant, the Bill introduced the following additional restrictions to protected industrial action:
(a) protected action should be preceded by a secret ballot under a complex, costly and time-consuming procedure (sections 82, 85-115, 119, and 123-124 of the Bill). In particular, in order to take protected industrial action a union should make an application to the Australian Industrial Relations Commission (AIRC) and serve a copy on various parties which should have a reasonable opportunity to make submissions before the AIRC could determine the application. The AIRC should not grant an application for a ballot unless it was satisfied that the applicant had genuinely tried to reach agreement with the employer and was continuing to do so (sections 62 and 97 of the Bill). The order (if granted) should specify various matters concerning inter alia, the employees to be balloted, the voting method, the timetable of the ballot, the person authorized to conduct the ballot and the questions to be put to the employees. The industrial action would only be authorized if a prescribed percentage of persons on the roll voted in the ballot, more than 50 per cent of valid votes were in favour of the action and the action was taken within 30 days of the date of the declaration of the results of the ballot. The union would ordinarily be liable for the cost of holding the ballot. According to the complainant, this procedure would remove in practice any possibility to take lawful industrial action;
(b) protected industrial action might be taken only during a “window” of 14 days after the date notified as its commencement date, after which it should be specifically authorized by the AIRC no earlier than 21 days after the expiry of the 14 days. Thus, a mandatory 21-day cooling-off period was introduced 14 days after industrial action was notified to commence or had actually commenced – and an additional cooling-off period was introduced after a further 14 days of strike (section 81 of the Bill). The AIRC might moreover decide not to certify the continuation of the strike after the end of the cooling-off period, taking into account inter alia the public interest, the effect of the industrial action on third parties, whether any party had failed to genuinely try to reach agreement, and the extent to which the conduct of the bargaining parties during the bargaining period had not been reasonable (section 81(3)(c), (d), (e) and (f) of the Bill);
(c) protected action could not be taken during the term of a certified agreement, even though the issue in dispute was not addressed by the agreement and had been specifically laid aside to be dealt with at a later time (industrial action was currently possible under these conditions – section 80 of the Bill);
(d) despite the extensive sanctions already in place for unprotected industrial action, the Bill introduced a new blanket prohibition on the taking of unprotected action which might be enforced by an injunction and which was punishable both by significant fines and financial compensation payable to the employer or to other persons who could show that they had suffered damage as a result of the action. Thus, the competent courts could impose a pecuniary penalty of up to AU$110,000 for a body corporate, including an industrial association, and AU$22,000 for an individual (sections 72(1), 73-75, 134, 136, 215 and 227 of the Bill).
416. With regard to the Bill’s provisions concerning collective bargaining, the complainant stated that the Bill sought to further restrict the scope of bargaining, although the WRA already practically prevented bargaining on a multi-employer or industry-wide basis. Thus:
(a) the Bill prohibited “pattern bargaining” defined as “a course of conduct or bargaining, or the making of claims … that involves seeking common wages or other common conditions of employment … and extends beyond a single business”. This meant that unions were prohibited from making common claims (and taking industrial action) across part or all of an industry even though each enterprise received a specific claim and all other requirements of the WRA were met, including notification of any industrial action to the enterprise. The Bill also provided for injunctions to be issued by the Federal Court to prevent “proposed” pattern bargaining, whether or not the union had actually engaged in pattern bargaining or, if it had done so, was likely to engage in such bargaining again and irrespective of whether or not any damage to the employer or anyone else had been caused by the pattern bargaining (sections 56, 67 and 81 of the Bill);
(b) the Bill provided that project agreements were unenforceable. Project agreements were an efficient means of ensuring that all employees on a building site, who might be employed by a large number of small subcontractors, were covered by one agreement setting standard wages and conditions. Project agreements were normally negotiated between unions and major employer contractors at the commencement of the building project (although agreements of this type were not currently capable of being certified under the WRA; this provision was aimed at agreements made outside the WRA which could be enforceable as ordinary contracts, and involved unions which were not registered under the WRA – section 68 of the Bill);
(c) although the WRA currently excluded certain matters from collective bargaining, (including bargaining service fees, preference to unionists and other union-related matters), the Bill would extend the exclusions to provisions encouraging union membership (sections 7, 57, 69 and 70 of the Bill), right of entry to employer’s premises for union officials (sections 179, 180, 182, 184, 199 and 200(2) of the Bill) and the ability of unionists to address introduction sessions for new employees;
(d) the Bill sought to place a number of procedural hurdles in the way of negotiating and certifying collective agreements by requiring that a bargaining period should be initiated as a precondition to certifying an agreement and that a ballot of employees should be conducted to approve the giving of notice of the initiation of the bargaining period (section 64 of the Bill). This cumbersome new procedural requirement had nothing to do with ensuring that employees were satisfied with the terms of their agreement as the WRA provided anyway that agreements might be certified only if there was evidence that a majority of employees had approved the making of the agreement.
417. The Bill also established, according to the complainant, the office of the Australian Building and Construction Commissioner (ABCC), with wide-ranging powers to monitor, investigate and enforce the legislation and the code. Employers would be required by law to notify the ABCC of events, including the taking and cessation of unprotected industrial action (sections 76 and 135 of the Bill). The new restrictive right to entry conditions for union officials required that the ABCC be supplied by the union with a copy of each notice of entry supplied to an employer (sections 189(8) and 190(3)(c) of the Bill). Moreover, the ABCC had extensive powers of interrogation, with the Bill seeking to override the common law privilege against self-incrimination (sections 230-234 of the Bill). Finally, in case of unprotected industrial action, the ABCC was empowered to assess the damages suffered by the employer or any other person and that assessment was treated as prima facie evidence of the damage, thus reversing in practice the onus of proof in relation to claimed loss (section 77 of the Bill).
418. In addition to this, according to the complainant, the Bill provided for the Minister for Workplace Relations to issue a building code or code of practice which was expected to deal with the bargaining and other industrial relations practices in the building industry (section 26 of the Bill). The code was not subject to approval or amendment by Parliament and would extend the operation of the Government’s current code, which was not provided for in legislation, but which had been used to deny Commonwealth funding to building projects where the collective agreement binding the proposed contractor, although lawful, did not meet the requirements of the code.
419. In its initial communication, the complainant concluded that the Bill, if passed, would further exacerbate Australia’s non-compliance with fundamental ILO principles, and pose a serious threat to the ability of building and construction industry workers and their unions to exercise their rights, in particular the right to strike and the right to bargain collectively.
420. In a communication dated 3 October 2005, the complainant indicated that the 2003 Bill lapsed due to the prorogation of Parliament and a new version was reintroduced at the commencement of the new Parliament. The BCII Bill 2005 (the 2005 Bill) contained some specific elements of the 2003 Bill but not all. When the 2005 Bill was reconsidered by Parliament, the Government moved amendments to the Bill to incorporate a number of aspects of the 2003 Bill into the legislation. In general terms, the 2005 Bill was a reflection of the 2003 Bill, save for those matters that went to bargaining. The 2005 Bill was proclaimed and came into law on 12 September 2005 (the Building and Construction Industry Improvement Act 2005 – hereinafter the 2005 Act); some aspects – those in particular that touch upon the right to strike – were retrospective in their operation to March 2005.
421. The complainant raised the following objections with regard to the 2005 Act. First, it provided for the introduction of the Industry Code (section 27), the content of which would not be subject to parliamentary scrutiny and would be subject to change at the wish of the Government. According to the code of practice for the building and construction industry as well as the Guidelines for Implementation adopted by the Government, any company wishing to contract for a construction project in receipt of federal government funding should be “code compliant”. The code placed several restrictions on collective bargaining and, in any case, could not be seen as promoting collective bargaining as required by Convention No. 98, ratified by Australia.
422. Second, the Act established the Australian Building and Construction Commissioner (ABC Commissioner) (section 9); the powers of the ABC Commissioner remained the same as in the 2003 Bill and the comments in the initial complaint remained relevant. More generally, with regard to the issue of inspection, the complainant noted that in considering a number of matters arising from the exercise of the powers of inspectors under the WRA, the Courts had found that inspectors were undertaking roving inquiries foreign to industrial relations in Australia, pursuing cases that were hopeless and prosecuting matters that were much ado about nothing (PG&LJ Smith Plant Hire Pty Ltd. v. Lanksey Constructions Pty Ltd. [2004] FCA 1618; Pine v. Seelite Windows & Doors Pty Ltd. [2005] FCA 500; Thorsen v. Pine [2004] FCA 1316). The complainant attached several notices issued to individual workers with the purpose of intimidating them and discouraging them from participating in trade union activities. Third, the Act introduced a blanket prohibition on the taking of industrial action and the comments in the initial complaint remained relevant. Fourth, the legislation did not allow protected action to be taken by employees where any aspect of their employment was already subject to an agreement – even if the issue in dispute was not subject to agreement (section 41).
B. The Government’s reply
423. In its communication dated 14 February 2005, the Government emphasized the critical importance of the building and construction industry to Australia’s economic welfare and prosperity (in 2002-03 it was an AU$46 billion industry, accounting for nearly 6 per cent of GDP and for more than 775,000 employed persons representing 8.2 per cent of total employment). The Government also emphasized the unique nature of the industry where employment was often temporary and cyclical, dominated by small businesses (94 per cent of businesses in the industry employed fewer than five persons), covering a diverse range of building and construction-related activities and being reliant on continuous cash flow like most small businesses. The diversity of the industry and the vulnerability of its small businesses to industrial action made it difficult for existing government bodies to regulate it effectively. The Government added that the building and construction industry in Australia had a high rate of industrial disputation. In 2003, the industry recorded 249 working days lost per 1,000 employees due to industrial action. This figure compared to 53 working days for all industries and accounted for around 28 per cent of all industrial disputes. According to the Government, independent research found that improving workplace practices in the building and construction industry could bring a gain of AU$2.3 billion per year to the economy, see the cost of living decline by 1 per cent and GDP increase by 1 per cent.
424. The Government added that the Royal Commission into the Building and Construction Industry (Royal Commission) was established by the Government in August 2001 to “conduct inquiries into the unlawful and otherwise inappropriate practice and conduct in the building and construction industry.” The Government had found it necessary to establish an independent Royal Commission following claims by the National Secretary of the Construction Division of the Construction, Forestry, Mining and Energy Union (CFMEU) that organized crime elements were infiltrating his union; a series of violent invasions on Perth building sites, allegations of corruption by a former New South Wales CFMEU official, and an Employment Advocate report that the problems of the industry were beyond his office’s power and capacity to handle. According to the Government, the Royal Commission was the most comprehensive independent investigation of the building and construction industry ever undertaken in Australia. The Commission conducted 171 days of public hearings. Some 750 witnesses gave evidence. Over 20 general submissions were received from interested parties throughout the industry and 1,489 summonses to attend public or private hearings were issued, as well as 1,677 notices to produce relevant documents. The final report of the Royal Commission, tabled in March 2003, found an unassailable case for reforming the building industry, concluding that the latter was characterized by lawlessness and widespread disregard for the rule of law, including the Workplace Relations Act (WRA), by both unions and employers. The findings demonstrated an industry which departed from the standards of commercial and industrial conduct exhibited in the rest of the Australian economy. The report catalogued numerous examples of unlawful and highly inappropriate conduct. The Royal Commission saw lasting change in the industry being achieved through structural and cultural change. The report proposed a number of initiatives to reform the industry, including industry-specific legislation. In addition to this, a permanent and dedicated enforcement body was seen as necessary for real and lasting reform of the industry.
425. The Government added that following the release of the final report of the Royal Commission, it announced that it would accept the Royal Commission’s key recommendations, including introducing industry-specific legislation to regulate workplace relations in the industry, setting up a new regulatory body, the Australian Building and Construction Commission (ABCC), and implementing changes to occupational health and safety. The industry-specific legislation, the Building and Construction Industry Improvement Bill 2003, was a key plank in the most significant reform of the building and construction industry ever attempted in response to the compelling and unassailable case for reform presented by the Royal Commission.
426. An exposure draft of the Bill was released for public comment on 18 September 2003. During the four-week consultation period, the Department of Employment and Workplace Relations received a total of 61 submissions from employer organizations, unions, subcontractors, and other interested parties. It also met with key industry participants and state and territory governments. The measures proposed in the Bill were both appropriate to the national conditions in Australia’s building and construction industry and necessary to address effectively the findings of the Royal Commission. On 6 November 2003, the Minister of Employment and Workplace Relations introduced the Bill into the House of Representatives. It was passed on 4 December 2003. In the Senate, the Bill was referred to the Senate Employment, Workplace Relations and Education References Committee on 3 December 2003. The Committee received over 120 submissions and heard 141 witnesses in 14 public hearings over a six-month period. Its report was tabled on 21 June 2004. The Government was yet to respond to this Report. Subsequently, the Bill lapsed with the prorogation of the 40th Parliament, prior to its final consideration by the Senate. On 4 November 2004, the Minister announced that the Government would reintroduce the Bill into the Parliament in 2005. The precise form of the Bill and timing of its reintroduction were still under consideration by the Government.
427. As for the Bill’s compliance with ILO Conventions, the Government indicated that in developing the legislative response to the Royal Commission’s findings, it had regard to its international obligations and considered that the Bill complied with these obligations. The Bill sought to establish a framework for fair and effective agreement-making between employers and employees, including appropriate access to industrial action. The Bill also sought to build on the focus of Australia’s federal workplace relations framework on bargaining at the enterprise level. In particular, the Bill supported the goal of an inclusive and cooperative workplace relations system that sustained and enhanced living standards, jobs, productivity and international competitiveness. The Bill also recognized that many building and construction employees were covered by collective instruments and contained provisions for collective agreements to be made through collective bargaining. The Bill did not seek to prescribe bargaining outcomes, whether collective or individual, reflecting the Government’s view that these were matters for employers and their employees to determine.
428. According to the Government, the Bill afforded additional protection for freedom of association thereby enhancing Australia’s compliance with Convention No. 87. It provided greater protection from discrimination or victimization on the basis of a person’s decision to join or not to join an industrial association. For example, the Bill would have enhanced the protection of persons who chose to be members or officers of industrial associations. It also ensured that independent contractors and employers were afforded the same level of protection and freedom of choice as employees. Further, the Bill would have enhanced Australia’s compliance with the Labour Inspection Convention, 1947 (No. 81), and the Occupational Safety and Health Convention, 1981 (No. 155).
429. Finally, the Government indicated that following the Minister’s announcement that the Bill would be reintroduced into Parliament, interested parties were invited to provide suggestions on the Bill. Although this request was only made in early November 2004, the Department of Employment and Workplace Relations had, at the time of the communication, received feedback from employer organizations, key industry participants and interested parties. The Minister would consider the suggestions received prior to reintroduction. The reintroduced Bill would be subject to the formal legislative processes of Parliament, as provided by the Australian Constitution. This would enable non-Government parties, senators and members of parliament to comment on the proposed legislation, to question Government ministers about the content of the legislation and to propose amendments. The Government stated its steadfast commitment to reintroduce the Bill into Parliament in 2005, so as to reintroduce the rule of law in the industry. At this stage, it would be inappropriate to pre-empt the final content or form of the legislation.
430. The Government concluded by indicating that it undertook to keep the ILO informed on the progress of the proposed legislation and would continue to have regard to Australia’s international obligations and its particular national conditions when developing workplace relations legislation.
431. In a communication dated 16 May 2005, the Government indicated that, in March 2005, it introduced the Building and Construction Industry Improvement Bill 2005 into Federal Parliament (the 2005 Bill). This Bill incorporated only the unlawful industrial action and ancillary provisions of the initial (2003) Bill. The remaining elements of the initial Bill were expected to be introduced separately into Parliament after July 2005. The 2005 Bill was referred to the Australian Senate’s Employment, Workplace Relations and Education Committee on 16 March 2005 for an assessment of its provisions. The Senate Committee tabled its report on 10 May 2005 and the Government was currently considering its response to the Committee’s report. The Government attached a copy of the 2005 Bill.
432. In its communication dated 28 September 2005, the Government indicated that it had significantly amended the 2005 Bill after its introduction in Parliament to include only those provisions relating to the establishment of the Australian Building and Construction Commissioner’s office. The Government attached a supplementary explanatory memorandum provided to Parliament. The Parliament passed into law the Building and Construction Industry Improvement Act 2005 (the 2005 Act), a copy of which was attached to the communication. According to the Government, the key elements of the complaint relative to alleged restrictions on the ability of building and construction workers to strike and negotiate collectively across the industry were not included in the 2005 Act. The Government therefore considered that, as the substantive elements of the complaint were no longer included in the 2005 Act, the Committee should give due consideration to closing this case.

C. The Committee’s conclusions

433. The Committee notes that this case concerns allegations that the Building and Construction Industry Improvement Bill 2003 (the 2003 Bill) would affect: the right to strike of workers in that industry by extending the scope of unprotected industrial action and introducing significant penalties; and their right to bargain collectively by restricting the scope of bargaining, preventing “pattern bargaining”, and making “project agreements” unenforceable. The Committee observes that the 2003 Bill lapsed with the prorogation of the 40th Parliament, prior to its consideration by the Senate. The Building and Construction Industry Improvement Bill 2005 (the 2005 Bill) was introduced into Federal Parliament and the Senate in March 2005. This Bill incorporated only part of the provisions of the 2003 Bill on unlawful industrial action and ancillary provisions. After its introduction in Parliament, the 2005 Bill was significantly amended by including in it further elements from the 2003 Bill, specifically as regards the Australian Building and Construction Commissioner’s office (ABCC), the issuing of a building code, the possibility of applying for an injunction against unlawful industrial action, the prohibition of industrial action involving “extraneous participants”, the non-enforceability of project agreements, the prohibition of discrimination, coercion and unfair contracts, and finally, occupational safety and health. The 2005 Bill was passed into law as the Building and Construction Industry Improvement Act, 2005 (the 2005 Act) on 12 September 2005.
434. By way of background, the Committee notes that the 2003 Bill was prepared on the basis of the recommendations of the Royal Commission into the Building and Construction Industry. According to the complainant, the Royal Commission was established following a number of unsubstantiated allegations of improper and unlawful conduct by building and construction industry unions and was widely seen as biased and unfair in its processes and in its findings, focusing on relatively minor breaches of industrial relations legislation by unions and virtually ignoring evidence of tax avoidance and non-payment of employee entitlements by employers. According to the complainant, unions were given very restricted opportunities to appear in the Royal Commission’s proceedings in order to present contrary evidence or to cross-examine witnesses while efforts were made by the Commission to actively seek evidence against unions and to maximize damage to the unions’ reputation.
435. The Government for its part states that the Royal Commission was established pursuant to claims by the National Secretary of the Construction Division of the Construction, Forestry, Mining and Energy Union (CFMEU) that organized crime elements were infiltrating his union, a series of violent invasions on Perth building sites, allegations of corruption by a former New South Wales CFMEU official, and an Employment Advocate report that the problems of the industry were beyond his office’s power and capacity to handle. It was the most comprehensive independent investigation of the building and construction industry ever undertaken in Australia and found an unassailable case for reforming the building industry, concluding that the latter was characterized by lawlessness and widespread disregard for the rule of law, including the Workplace Relations Act (WRA), which is the general industrial relations law, by both unions and employers. The Committee also notes from the Government’s initial communication that interested parties had been invited to provide suggestions on the Bill prior to its reintroduction to Parliament and the Senate, and that feedback had been received from employer organizations, key industry participants and interested parties, while further comments could be made by non-Government parties after the Bill’s reintroduction to Parliament.
436. The Committee takes due note of the Government’s indication that various interested parties had the possibility to provide feedback and submit comments on the 2003 and 2005 Bills. It also observes, however, that the Government does not provide any indication of any direct consultation on the Bill’s form and content with the social partners which are directly concerned by the legislation in question. The Committee emphasizes the importance that should be attached to full and frank consultations taking place on any questions or proposed legislation affecting trade union rights. It is essential that the introduction of draft legislation affecting collective bargaining or conditions of employment should be preceded by full and detailed consultations with the appropriate organizations of workers and employers. [see Digest of decisions and principles of the Freedom of Association Committee, 4th edition, 1996, paras. 927 and 931]. The Committee requests the Government to provide specific information as to the forums for consultations and proposals tabled by the social partners with regard to the 2003 and 2005 Bills.
437. The Committee notes that, according to the initial complaint concerning the 2003 Bill, the instances in which protected industrial action could be taken was restricted by:
(a) requiring a secret ballot under a complex, costly and time-consuming procedure which would remove in practice any possibility to take lawful industrial action;
(b) limiting the duration of industrial action to a window of 14 days from notification, after which a mandatory 21-day cooling-off period would be imposed;
(c) preventing industrial action while an agreement was in force even though the issue in question was not addressed in the agreement;
(d) introducing a blanket prohibition on unprotected action which might be enforced by an injunction and was accompanied by significant fines (up to AU$110,000 for an industrial organization and AU$22,000 for an individual) and financial compensation payable to the employer.
438. Moreover, according to the complainant, the 2003 Bill would further restrict collective bargaining by:
(a) prohibiting “pattern bargaining” (and related industrial action) so that trade unions would be unable to make common claims across part or all of the industry;
(b) rendering unenforceable project agreements, which ensure that all employees on a building site, who may be employed by a large number of small subcontractors, are covered by one agreement setting standard wages and conditions of employment;
(c) excluding certain issues from the scope of collective bargaining, in particular, the encouragement of union membership, the right of entry to employer’s premises for union officials and the ability of unionists to address introduction sessions for new employees;
(d) placing procedural hurdles in the way of negotiating and certifying collective agreements (requirement of notification of the initiation of a bargaining period preceded by a ballot of employees);
(e) granting the ABCC wide ranging powers to monitor, investigate and enforce all of the above;
(f) enabling the Government to deny Commonwealth funding to contractors bound by a collective agreement which, although lawful, does not meet the requirements of a building code issued by the Government in the absence of any parliamentary involvement.
439. The Committee notes that in its communication dated 14 February 2005, the Government does not provide a point-by-point answer to the allegations but rather indicates in general that it considers that the 2003 Bill complied with Conventions Nos. 87 and 98 and sought to establish a framework of fair and effective agreement-making between employers and employees, including appropriate access to industrial action. According to the Government, the 2003 Bill built on the focus of Australia’s federal workplace relations framework on bargaining at the enterprise level. It supported the goal of an inclusive and cooperative workplace relations system that sustained and enhanced living standards, jobs, productivity and international competitiveness. It also sought to ensure that collective agreements were made through collective bargaining and did not prescribe bargaining outcomes. It provided moreover greater protection from discrimination or victimization on the basis of a person’s decision to join or not to join an industrial association. Finally, it addressed the economic significance and the difficulties of regulating this diverse industry which encompassed small businesses that were vulnerable to industrial action. The Committee finally notes the Government’s statement in its communication dated 28 September 2005 that the substantive elements of the complaint were no longer included in the 2005 Act and therefore the case should be closed.
440. The Committee takes note of the text of the 2005 Act, which has been transmitted by the Government. The Committee notes that the following provisions of the 2003 Bill, which were the subject of the complaint, do not appear in the 2005 Act:
(a) provisions requiring a secret ballot for the initiation of protected industrial action;
(b) provisions limiting the duration of industrial action to a window of 14 days from notification after which a mandatory 21-day cooling-off period would be imposed;
(c) provisions concerning “pattern bargaining”;
(d) the exclusion of certain issues from the scope of collective bargaining;
(e) procedural hurdles in the way of negotiating and certifying collective agreements.
The Committee therefore considers that these aspects of the case do not call for further examination.
441. With regard to the provisions of the 2005 Act, which would introduce a blanket prohibition on unprotected industrial action which might be enforced by an injunction and significant fines, the Committee notes from the text of the 2005 Act, which was communicated by the Government, that sections 36(1), 37 and 38 introduce the statutory concept of “unlawful industrial action” and prohibit a person from engaging in such action, unless industrial action is conducted in conformity with the requirements established in the Workplace Relations Act, 1996 (WRA). More specifically, section 37 of the 2005 Act defines unlawful industrial action as all “constitutionally connected”, “industrially motivated”, “building industrial action” that is not “excluded action”. “Excluded action” is defined in section 36(1) of the 2005 Act as building industrial action that is “protected action” for the purposes of the WRA. Whereas the concept of “protected action” under the WRA implies that trade unions might be divested from immunity and incur liability in tort in case of industrial action taken in contravention of the conditions specified in the WRA, the concept of “unlawful action” in the 2005 Act implies not simply liability vis-à-vis the employer, but a wider responsibility towards third parties and an outright prohibition (section 38).
442. With regard to the references in the 2005 Act to the WRA, the Committee recalls that it has already reached conclusions and recommendations on certain of the provisions of the WRA relating to protected action in a previous case concerning Australia [Case No. 1963, 320th Report, paras. 143-241]. The Committee recalls in this respect that it had considered that, by linking restrictions on strike action to interference with trade (sections 170MW and 294), a broad range of legitimate strike action could be impeded, and had requested the Government to amend the WRA accordingly [Case No. 1963, 320th Report, paras. 229-230 and 241(c)].
443. As regards the definition of unlawful industrial action under section 37 of the 2005 Act as all “constitutionally connected”, “industrially motivated”, “building industrial action” that is not “excluded action” (i.e. action protected under the WRA), the Committee notes that these concepts are defined in broad terms in sections 4, 5 and 36(1) of the 2005 Act, so as to render the prohibition of unlawful industrial action applicable in respect of a wide range of workers, activities and types of industrial action. The Committee notes in particular that section 36(4) of the 2005 Act includes within the definition of “industrial dispute” (and thereby, within the scope of industrial action) situations that are “likely” to give rise to an industrial dispute in addition to situations where an industrial dispute is threatened, impending or probable. Although this provision largely replicates the corresponding provision of section 4 of the WRA, its effects go further than the WRA due to the fact that the 2005 Act introduces an outright prohibition of unlawful industrial action accompanied by severe penalties and sanctions (see below). Moreover, section 39 of the 2005 Act enables any person, and not just the employer or the authorities, to request the appropriate court to grant an injunction against unlawful industrial action, not only where such action is occurring or impending but also where it is “probable”. Consequently, the scope for the application of injunctions, fines and penalties due to unlawful industrial action is enlarged, to encompass situations where an industrial action is not just impending but “likely” or “probable”.
444. The Committee further notes that the prohibition of unlawful industrial action in the 2005 Act is accompanied by significant civil penalties and criminal sanctions which may be claimed by a wide circle of “affected” persons against persons who may have a remote connection to the industrial action in question. Thus, the Committee notes that section 49(2) of the 2005 Act imposes pecuniary penalties for a contravention of its section 38 of up to 1,000 penalty units for bodies corporate (AU$110,000) and 200 penalty units for individuals (AU$22,000). The Committee further notes that these penalties would appear to be much higher than the corresponding ones established in the WRA, which are up to AU$10,000 for bodies corporate and AU$2,000 for individuals (sections 170CR, 170HI, 170NF, 170VV, 178, 285F, 298U and 533 of the WRA). Section 49(6) of the 2005 Act moreover has the effect of extending the range of persons who may seek compensation and penalties for damages caused by unlawful industrial action, so as to include parties not directly involved in the dispute who may be affected by the contravention. Section 48(2) of the 2005 Act finally includes among those potentially liable for a contravention those who aided, abetted, counselled or procured the contravention, induced the contravention by threats or promises or otherwise, were directly or indirectly knowingly concerned in or party to the contravention, or conspired with others to effect the contravention.
445. Furthermore, the Committee notes that section 40 of the 2005 Act has the effect of rendering unlawful any industrial action, which involves “extraneous participants”, that is to say, one or more persons who are not employees of the employer in question or officers or employees of the organization, which is a negotiating party to the proposed agreement. This provision introduces higher penalties, as noted above, for a contravention of the provisions found in both the WRA and the Trade Practices Act, 1974, with regard to the prohibition of industrial action associated with the negotiation of multi-employer agreements, sympathy action and secondary boycotts (sections 170LI, 170MM and 170MW(4) and (6) of the WRA and section 45DB of the Trade Practices Act). The Committee recalls that in a previous case concerning Australia, it had already reached conclusions in respect of the Trade Practices Act noting that a general prohibition on sympathy strikes could lead to abuse and workers should be able to take such action provided the initial strike they are supporting is itself lawful [Case No. 1963, 320th Report, para. 235]. The Committee further recalls that provisions which prohibit strikes, if they are concerned with the issue of whether a collective employment contract will bind more than one employer, are contrary to the principles of freedom of association on the right to strike; workers and their organizations should be able to call for industrial action in support of multi-employer contracts [see Digest, op. cit., para. 490].
446. In sum, the Committee notes that the 2005 Act carries over to the building industry the restrictions to strike action already criticized by the Committee in respect of the WRA and the Trade Practices Act and would appear to even broaden their effect within that industry. It further notes that the 2005 Act stiffens these restrictions by imposing penalties and sanctions which may be as high as 11 times the generally applicable penalties and sanctions. These may become applicable to workers having a remote connection to the building and construction industry and may be enforced by third parties. The Committee considers that the broad prohibition of unlawful industrial action and the heavy and widely applicable penalties and sanctions provided for in the 2005 Bill are likely to discourage any involvement in industrial activity due to fear of the consequences. The Committee emphasizes that the right to strike is one of the essential means through which workers and their organizations may promote and defend their economic and social interests. To determine situations in which a strike could be prohibited, the criteria which has to be established is the existence of a clear and imminent threat to the life, personal safety or health of the whole or part of the population [Digest, op. cit., paras. 474 and 540]. Construction is not an essential service in the strict sense of the term [Digest, op. cit., para. 545] and therefore workers in this industry should enjoy the right to strike without undue impediments.
447. The Committee therefore requests the Government to take the necessary steps with a view to modifying sections 36, 37 and 38 of the 2005 Act so as to ensure that any reference to “unlawful industrial action” in the building and construction industry is in conformity with freedom of association principles. It further requests the Government to take measures to adjust sections 39, 40 and 48-50 of the 2005 Act so as to eliminate any excessive impediments, penalties or sanctions against industrial action in the building and construction industry. The Committee requests to be kept informed of measures taken or contemplated in this respect on all the abovementioned points.
448. With regard to the provisions of the 2005 Act which would render project agreements unenforceable, thus preventing negotiations at a multi-employer level, the Committee notes that section 64 of the 2005 Act provides that project agreements are not enforceable if they are: (a) entered into with the intention of securing standard employment conditions for building employees in respect of building work that they carry out at a particular building site or sites; (b) not all employees are employed by the same employer; (c) either (i) a party to the agreement is an organization and at least some of the employees are members of that organization; or (ii) a party to the agreement is a constitutional corporation and at least some of the employees are employees of that corporation; and (d) the agreement is not certified. The Committee emphasizes that according to the principle of free and voluntary collective bargaining embodied in Article 4 of Convention No. 98, the determination of the bargaining level is essentially a matter to be left to the discretion of the parties and, consequently, the level of negotiation should not be imposed by law, by decision of the administrative authority or by the case law of the administrative labour authority [see Digest, op. cit., para. 851]. The Committee further considers that the type of demands that may be made by one of the parties to negotiations, such as the establishment of a common wage, should be a matter for the parties concerned and their authority to make such agreements. The Committee therefore requests the Government to take the necessary steps with a view to revising section 64 of the 2005 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 or the case law of the administrative labour authority. The Committee requests to be kept informed in this respect.
449. With regard to the provisions of the 2005 Act which, according to the complainant, might enable the Government to deny Commonwealth funding to contractors bound by a collective agreement that, although lawful, does not meet the requirements of a building code issued in the absence of parliamentary involvement, the Committee notes that section 27(1) of the 2005 Act, authorizes the Minister for Employment and Workplace Relations to issue a code of practice (the Building Code) “to be complied with by persons in respect of building work”. This document is, according to section 27(5), a “legislative instrument” for the purposes of the Legislative Instruments Act 2003. Section 28 provides that any person is required to comply with the Building Code in respect of particular building work and may be requested by the ABCC to report in writing on such compliance within 14 days. Failure to comply incurs a penalty of AU$11,000 for a body corporate and AU$2,200 for others. As explained in a Government Information Sheet on the Code and Guidelines, although the only sanction for non-compliance provided in the text of the Code and Guidelines is an inability to tender for Australian government-funded construction work (so that from 1 October 2005, all new construction projects will need to be compliant with the Code and Guidelines in order to tender for an Australian government-funded construction project), the 2005 Act will impose tough sanctions for non-compliance to all industry participants. The Committee further notes that the 2005 Act gives wide-ranging powers to the ABCC to investigate violations of the Code (see below). The Committee observes that, under the revised Guidelines, an industrial instrument:
(i) must not contain a provision that restricts the type of agreement that can be offered to, or requested by, an employee. In particular, provisions must not inhibit, explicitly or in practice, an employer’s capacity to offer an AWA to an employee during the term of a certified, registered or unregistered agreement;
(ii) must not include a provision for access to be granted to a site to a representative of an industrial association other than in strict compliance with the procedures governing entry and inspection under the WRA. In particular, the instrument must not include provisions allowing access in addition to that permitted under the WRA;
(iii) must not put any restriction or limitation on the choice of industrial instrument and, in particular, must not contain a requirement that an employer will renegotiate a future industrial instrument with a union;
(iv) must not contain provisions for particular terms and conditions, including the making of an over-award payment, with regard to a group apprenticeship scheme or similar provider;
(v) if it provides for a site allowance, the amount must be specified in an industrial instrument certified under the WRA or otherwise approved under relevant state legislation;
(vi) must not make provision for project agreement other than for major contracts;
(vii) must not include a provision requiring the employment of a non-working shop steward or job delegate, or other person;
(viii) must not include a provision requiring an employer to apply union logos, mottos or other indicia to company-supplied property or equipment, including clothing;
(ix) in case they contain dispute settlement provisions, they must allow an employee to have freedom of choice in deciding whether to be represented and, if so, by whom;
(x) must not contain selection criteria for redundancy that ignore the employers’ operational requirement, such as “last on, first off” clauses;
(xi) must not contain a provision that restricts an employer’s short- or long-term labour requirements; nor provisions that stipulate the terms and conditions for the labour of any person not a party to the industrial instrument. Accordingly, an industrial instrument must not include provisions that require an employer to consult or seek the approval of a union over the number, source, type (e.g. casual, contract) or payment of labour required by the employer;
(xii) must not preclude the employer from making “all-in payments”, i.e. payments (on an hourly, daily or weekly basis) in lieu of payment for all or some entitlement specifically provided for by legislation or awards, such as annual leave or overtime.
450. The Committee recalls that the right to bargain freely with employers with respect to conditions of work constitutes an essential element in freedom of association, and trade unions should have the right, through collective bargaining or other lawful means, to seek to improve the living and working conditions of those whom the trade unions represent. The public authorities should refrain from any interference, which would restrict this right or impede the lawful exercise thereof. Any such interference would appear to infringe the principle that workers’ and employers’ organizations should have the right to organize their activities and to formulate their programmes. [see Digest, op. cit., para. 782]. The Committee considers that the matters which might be subject to collective bargaining include the type of agreement to be offered to employees or the type of industrial instrument to be negotiated in the future, as well as wages, benefits and allowances, working time, annual leave, selection criteria in case of redundancy, the coverage of the collective agreement, the granting of trade union facilities, including access to the workplace beyond what is provided for in legislation etc.; these matters should not be excluded from the scope of collective bargaining by law, or as in this case, by financial disincentives and considerable penalties applicable in case of non-implementation of the Code and Guidelines.
451. As for the relationship between collective agreements and AWAs in particular, the Committee recalls that, in a previous case concerning Australia, it had already taken note of the concerns expressed by the Committee of Experts with regard to the primacy given to individual over collective relations through the AWA procedures. The Committee had therefore requested the Government to take the necessary measures, including amending the legislation, to ensure that AWAs do not undermine the legitimate right to bargain collectively or give primacy to individual over collective relations [see Case No. 1963, 320th Report, paras. 238-239]. The Committee notes that, by requiring collective agreements to contain a clause enabling employers to offer AWAs, even when a collective agreement is in force, the Code, Guidelines and the 2005 Act, which attaches significant penalties in case of non-implementation, tend to promote individual agreements over collective bargaining. The Committee recalls in this respect that, while significant incentives exist to ensure that AWAs can override collective agreements, the opposite is not possible under the WRA (section 170VQ6(c)), which provides that, once an AWA is in place, it excludes the application of a collective agreement.
452. In light of the above, the Committee requests the Government to take the necessary steps with a view to promoting collective bargaining as provided in Convention No. 98, ratified by Australia. In particular, the Committee requests the Government to review, with the intention to amend, where necessary, the provisions of the Building Code and the Guidelines so as to ensure that they are in conformity with freedom of association principles and do not result in promoting, in practice, violations of these principles. It further requests the Government to ensure that there are no financial penalties, or incentives linked to provisions that contain undue restrictions on freedom of association and collective bargaining. The Committee requests to be kept informed in this respect.
453. With regard to the provisions of the 2005 Act concerning the wide-ranging powers of the ABCC to monitor, investigate and enforce the provisions in the 2005 Act on freedom of association and collective bargaining, the Committee notes that section 9 of the 2005 Act provides that “there is to be an Australian Building and Construction Commissioner” appointed by the Minister (section 15 of the 2005 Act). Sections 11 and 12 provide that the Minister may give written directions to the ABCC and may require specific reports from the ABCC in addition to the annual report issued under section 14. The functions of the ABCC include, according to section 10, the investigation of suspected contraventions of the 2005 Act, the WRA, an award, certified agreement, AWA, order of the Australian Industrial Relations Commission (AIRC) and the Building Code. In particular, section 52 of the 2005 Act, gives the ABCC the power to serve written notices requiring persons to give information, produce documents and answer questions, and section 52(6) requires the persons concerned to comply with the ABCC’s notice under penalty of six months’ imprisonment. Section 53 provides that a person is not excused from complying with the ABCC’s notice on the ground that to do so would contravene any other law, or might tend to incriminate the person, or would be otherwise contrary to the public interest. Section 55 authorizes the ABCC to take possession of any document produced under section 52 “and keep it for as long as is necessary for the purposes of conducting the investigation to which the document is relevant”. Section 56 enables the ABCC to make and keep copies of all or part of any documents produced under section 52. Section 59(3) and (5) enables the ABCC to enter any premises on which he/she has reasonable cause to believe that there are documents relevant to compliance purposes and to inspect, make copies of any document that is on the premises, or is accessible from a computer kept on the premises, being a document that the inspector believes, on reasonable grounds, to be relevant to compliance purposes. Section 59(7) authorizes the inspector to keep the documents for as long as necessary. Section 59(9) and (10) authorizes the ABCC to enter business premises and interview any person who might have information relevant to compliance purposes.
454. The Committee observes with concern that, in addition to the restrictions on collective bargaining and industrial action imposed as a result of the 2005 Act, this Act also gives considerable investigatory powers to the ABCC without sufficient safeguards against interference in trade union activities. The Committee notes that the ABCC has the power to enter premises, take possession of documents “for as long as necessary”, keep copies, and interview any person for “compliance purposes”, that is to say, in the absence of any suspected breach of the law. Moreover, there is no reference in the 2005 Act to the possibility of lodging an appeal before the courts against the ABCC’s notices. The Committee further notes that there is no consideration in the 2005 Act for the need to ensure that penalties are proportional to the offence committed, given that serious sanctions can be incurred in case of failure to comply with a notice by the ABCC to give information or produce documents. The Committee further notes from the complainant’s allegations that these broad powers come within a context where the courts have found that inspectors have been undertaking roving inquiries foreign to industrial relations in Australia, pursuing cases that were “hopeless” and prosecuting matters that were “much ado about nothing”.
455. The Committee considers that the expansive powers of the ABCC, without clearly defined limits or judicial control, could give rise to serious interference in the internal affairs of trade unions. The Committee therefore requests the Government to introduce sufficient safeguards into the 2005 Act so as to ensure that the functioning of the ABC Commissioner and inspectors does not lead to such interference and, in particular, requests the Government to introduce provisions on the possibility of lodging an appeal before the courts against the ABCC’s notices prior to the handing over of documents. As for the penalty of six months’ imprisonment for failure to comply with a notice by the ABCC to produce documents or give information, the Committee recalls that penalties should be proportional to the gravity of the offence and requests the Government to consider amending this provision. The Committee requests to be kept informed on all of the above.
456. In light of the above, the Committee, recalling once again the importance that should be attached to full and frank consultations taking place on any questions or proposed legislation affecting trade union rights, requests the Government to initiate further consultations with the representative employers’ and workers’ organizations in the building and construction industry with a view to exploring the views of the social partners in considering proposed amendments to the legislation having due regard to Conventions Nos. 87 and 98, ratified by Australia, and with the abovementioned principles of freedom of association. The Committee requests to be kept informed of developments in this respect.

The Committee's recommendations

457. In the light of its foregoing conclusions, the Committee invites the Governing Body to approve the following recommendations:
- (a) The Committee requests the Government to provide specific information as to the forums for consultations and proposals tabled by the social partners with regard to the 2003 and 2005 Bills.
- (b) The Committee requests the Government to take the necessary steps with a view to modifying sections 36, 37 and 38 of the Building and Construction Industry Improvement Act, 2005 (the 2005 Act), so as to ensure that any reference to “unlawful industrial action” in the building and construction industry is in conformity with freedom of association principles. It further requests the Government to take measures to adjust sections 39, 40 and 48-50 of the 2005 Act, so as to eliminate any excessive impediments, penalties and sanctions against industrial action in the building and construction industry. The Committee requests to be kept informed of measures taken or contemplated in this respect.
- (c) The Committee requests the Government to take the necessary steps with a view to revising section 64 of the 2005 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 or the case law of the administrative labour authority. The Committee requests to be kept informed in this respect.
- (d) The Committee requests the Government to take the necessary steps with a view to promoting collective bargaining as provided in Convention No. 98, ratified by Australia. In particular, the Committee requests the Government to review, with the intention to amend, where necessary, the provisions of the Building Code and the Guidelines so as to ensure that they are in conformity with freedom of association principles. It further requests the Government to ensure that there are no financial penalties, or incentives linked to provisions that contain undue restrictions of freedom of association and collective bargaining. The Committee requests to be kept informed in this respect.
- (e) The Committee requests the Government to introduce sufficient safeguards into the 2005 Act so as to ensure that the functioning of the ABC Commissioner and inspectors does not lead to interference in the internal affairs of trade unions and, in particular, requests the Government to introduce provisions on the possibility of lodging an appeal before the courts against the ABCC’s notices prior to the handing over of documents. As for the penalty of six months’ imprisonment for failure to comply with a notice by the ABCC to produce documents or give information, the Committee recalls that penalties should be proportional to the gravity of the offence and requests the Government to consider amending this provision. The Committee requests to be kept informed on all of the above.
- (f) In light of the above, the Committee, recalling once again the importance that should be attached to full and frank consultations taking place on any questions or proposed legislation affecting trade union rights, requests the Government to initiate further consultations with the representative employers’ and workers’ organizations in the building and construction industry so as to explore the views of the social partners in considering proposed amendments to the legislation having due regard to Conventions Nos. 87 and 98, ratified by Australia, and with the principles of freedom of association set out in the conclusions above. The Committee requests to be kept informed of developments in this respect.