Australian Workplace Relations Reform

Australian Workplace Relations Reform

The processes and structures that underline Australian industrial relations arrangements have seen significant changes in the last three decades. Indeed, organisation of Australian industrial relations was regulated at the industry level through provision of national and state-based awards for most periods of the 20th century (Wooden, 2000). However, the industrial relations system in the country has been overhauled particularly since mid-1990s. The determination of working conditions and setting of minimum national standards has been largely determined at a firm level. Workplace relations reforms have been conducted since 1990s in Australia and it led to establishment of enterprise bargaining system that has been so dominant form of labour relations system in the country. This essay discusses rationale for workplace relations reform in Australia and identify winners and losers of this process. It also briefly explains reasons why Australian voters are reluctant to accept an individual workplace bargaining system.

Industrial relations processes are classified into two categories. Employment relationship regulation is the first process and it basically entails setting down of rules governing salaries and work conditions. According to Bray and Waring (2006, p. 01), four sub-processes regulates Australian employment relationship. They include collective bargaining; individual, common law contracts; state regulation (either through modern awards or enactment of legislation); or by directly exercising managerial prerogative. For most employees that are working in industries other than the public sector or industries that have well organised unions, state regulation and managerial prerogative are the major ways of regulating the employment relationship. Dispute resolution is the second process of workplace relations. Inherent characteristic of employment relationship is the issue of disputes (Bray et al., 2005). The collective bargaining system, FW Act and modern awards all set out the mechanisms by which disputes can be settled.

The industrial relations system in Australia has evolved in a different manner compared to evolution of workplace relations systems in other OECD countries. Since the beginning of the 20th century, conciliation and arbitration tribunals developed by the state and federal governments regulated matters relating to industrial relations through provision of national and state-based awards. However, this system significantly diminished from 1980s as enterprise bargaining system became more prominent method of setting industrial disputes in Australia (Creighton & Forsyth, 2012). Indeed, setting terms and conditions of employment by tribunals have been significantly reduced. Labour government in place during this period started this shift and became popular in the middle of 1990s. At the time, the objective of workplace relations reforms that were carried out involve determination of wages and working conditions by means of enterprise bargaining system to an extent that it is possible.

The constitutional foundation of Australian industrial relations has been changed by successive governments since 1993 to 2005. As a result, the federal government has been given power, inter alia, to directly carry out legislation of minimum employment conditions for majority of companies that have been incorporated together with their employees. Nonetheless, in practice, it was only applicable to a number of matters while awards dealt with the remaining issues (Organisation for Economic Development and Co-operation (OECD), 2012). In 1996, Workplace Relations Act (WRA) was adopted to regulate industrial relations in Australia. It strengthened collective bargaining system and allowed employers to negotiate directly with employees and subsequently conclude agreements with them. It limited the instances when awards can be given to only “allowable matters” (OECD, 2012). Furthermore, WRA emphasise the role of awards as a safety net above which organisational employees and employers could carry out their respective bargaining. In 2005, Work Choices replaced WRA as principal legislation guiding industrial relations in Australia. It further stressed individual over collective workplace relations (Lounden, McPhail, & Wilkinson, 2009). It gave the newly established Fair Pay Commission the role of setting minimum wages. The commission sped up the process of simplifying and rationalising the national and state-based awards system. The measures introduced by the 2005 Work Choices became very controversial and played a significant role in the federal election campaign and results of 2007.

The controversies surrounding 2005 Work Choices were blamed for the lost of election by the coalition government in 2007. However, its constitutional basis remained intact as the next government used it in supporting its Fair Work Act 2009. The Fair Work Act 2009 (FW Act) is the legislation introduced by the Australian government to restore the collective bargaining as the principal means where employment conditions are determined (Creighton & Forsyth, 2012). It was primarily devised to be used at the enterprise level in determining conditions of employment. The FW Act provided several mechanisms for achieving fair framework for collective bargaining and agreement that includes a tribunal that facilitates the process in the Fair Work Australia (FWA). Moreover, it stipulates that these representatives should bargain in good faith (Forsyth, 2009). The procedural rules that govern the process of making enterprise agreements in the FW Act underpinned these core mechanisms. Indeed, the procedural rules that promote bargaining in good faith ensure that each employee has knowledge of his or her right to be represented in negotiations for a suggested agreement. Furthermore, they have a right to be informed of the agreement contents and its effect (Coulthard, 2012,). The FW Act reversed some features of 2005 Work Choices and earlier legislation. It re-emphasised collective instead of individual bargaining and it abolished Australian Workplace Agreements (AWAs) (Teicher, Holland, & Gough, 2013) and changed the manner in which unfair dismissal claims in small businesses were handled.

The world of collective bargaining system is not a smooth one as it is characterised by various issues and challenges. Indeed, overall workplace relations system in Australia is not so much popular with several criticisms directed towards it from different stakeholders. It needs to be reformed due to a number of factors. Democratic practices in Australian trade unions cannot be guaranteed. As a result, prosperity of enterprise bargaining is jeopardised (Peetz, 2012). If a workplace relations system is to prosper, there is need to have democracies in unions that ensures that the system does not harm any party. The current industrial relations system does not centre towards workplace. Indeed, as Peetz (2012) argued, coordination of trade union practices is harder when decision-making is based on workplace. For this reason, there is need to develop a system that solely focus on workplace and fully govern its activities.

The current workplace relations system in Australia has been heavily criticised. It has been faulted for its uncompetitive wage deals. Moreover, the awards that are given by the current workplace industrial systems are inflexible. Several arguments have been raised by trade unions and employers for improving collective bargaining process. Indeed, there is discontent among unions towards Fair Work Commission (FWC). The unions are demanding for better leadership as well as better management that is more capable of facilitating bargaining process at FWC. They want the FW Act reformed to allow for other forms of bargaining other than the mandatory collective bargaining regime.

There is need to reform Australian workplace relations. The current industrial relations system has proved to be ineffective and inefficient over time. Moreover, it does not capture all the aspects of workplace relations. Trade unions and employers would be the major losers while employees and taxpayers would highly benefit from a reformed workplace relations system. Before collective bargaining agreement system was introduced, award system was used where awards were given by tribunals established to settle disputes between employers and unions. Unions used to take advantage of the system by strategically using arbitration and wage board systems that focuses on advocacy in tribunals (Peetz, 2012). In some cases, this discourages the union organisation in the workplaces.

Enterprise bargaining has had several impacts on trade unions, employers and employees since its inception. The push for enterprise bargaining by Australian unions was as a result of several interrelated motives- the shift occurring due to the willingness but constrained choice by other parties to have some form of ‘flexibility’. The objectives of the unions were achieved although others have never been achieved. Indeed, enterprise bargaining has led to ‘negative’ consequences to the unions as some previous techniques used to maintain membership cannot be applied in the current industrial relations system. Australian voters are reluctant to accept an individual workplace bargaining system because it will lead to government losing its ability to control income and efficiency of business. This may bring problems such as inflation and loss of the government influence to control prices in the economy.

Enterprise bargaining has been part of industrial firmament in Australia. The decision by the Industrial Relations Commission of Australia in 1991 marked the formal acceptance and transition to enterprise bargaining in the country (McLaughlin, 2012). This was achieved after a long history of industrial relations regulation that is demonstrated by early growth in the role and significance of tribunals. In 1980s, economic and political forces led to decentralisation of dispute resolution. This trend continued into 1990s whereby Workplace Relations Act was enacted in 1996 to govern industrial relations. It was followed by Work choices in 2005 and then the FW Act in 2009. The FW Act has since been governing enterprise bargaining processes. It needs to be reformed because it is no longer applicable to the current situation at workplaces. Moreover, it leads to provision of uncompetitive wage deals and inflexible awards.


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