The Australian 4 October 2001

A recent Federal Court Decision underlines the case for more industrial relations reforms

One of the Howard Government’s significant workplace relations reform is to allow employees and employers to negotiate individual agreements in place of awards. Its political importance is indicated by Labor’s decision that, if elected, it will not only prevent further such agreements but also phase out existing ones. This is part of its reactionary policy of re-regulating employer-employee relations despite the greater employment opportunities offered by individual agreements.

Labor’s policy reflects the close ties retained with a union movement whose power is heavily dependent on a continuation of a highly regulated labour market and sympathetic tribunals. The ACTU’s nomination of Ansett as the employer of 2000 underlies, for example, Mr Beazley’s extraordinarily enthusiastic support for reviving that airline, not to mention his preparedness to "overlook" the cost excesses deriving from Ansett’s

union-induced, much higher employment-to- plane ratio than Qantas.

Unions are naturally strongly opposed to individual bargaining policies, such as those adopted by Telstra. In a case that ran for over a year, they persuaded the Federal Court to fine that company a record $75,000 for sending to managers an email guidance regarding its redundancy process that could be interpreted as favouring employees working under individual agreements.

It is ironic that, while threatening to abolish individual agreements, Labor argues they have had only limited appeal. True, the Employment Advocate (also to be abolished by Labor) has approved only 180,000 Australian Workplace Agreements. But this partly reflects the ridiculously complex legislative provisions the Democrats insisted on applying to individual agreements before passing the Coalition’s 1996 legislation.

In fact, a recent survey commissioned by the Employment Advocate shows AWAs benefit both employers and employees. Indeed, the mere possibility that an employer might move to AWAs has helped improve flexibility.

Nonetheless, their validity depends on whether employees are judged by the Advocate to avoid any overall disadvantage as compared with existing award employment conditions. This piece of medieval regulation reflects the mistaken idea that employers generally hold the balance of bargaining power, allegedly requiring protection for employees against possible exploitation.

Other requirements are that employees’ rights to join (or not to join) a union are not infringed and that their positions are not reduced or threatened because they are on awards or certified agreements. This latter provision justified the fine imposed on Telstra after it announced the retrenchment of 10,000 employees last year and dispatched implementation guidance to Telstra managers that included the instruction to support the values of the company’s preferred model of individual employment (Telstra already had 3,300 of its redundancy-prone staff on AWAs and over 5,000 of other staff).

Interestingly, Justice Finkelstein concluded that Telstra has in place a fair procedure for selecting staff for redundancy and that the guidance to managers (it did not go to employees) did not in itself constitute discrimination. But in the flip-flop behaviour typical of tribunals handling industrial matters, the full Federal Court adopted a contrary view despite the withdrawal of the guidance.

The Court was doubtless influenced by the absurd statutory provision putting the onus on employers to prove that their intentions are not discriminatory. But it also reflects the continuing tendency for tribunal decisions to favour the union position.

In itself, the Telstra decision probably adds only marginally to the already existing uncertainty of existing arrangements and the difficulties of entering individual agreements. It is a typical example of union pay-back against the reforming managing director of Telstra’s employees, Rob Cartwright, whose "guidance" reflected the considerable efficiency improvements he made before becoming a senior deputy president of the AIRC itself.

It must also be seen, however, in the context that unions are all too often (wrongly) treated as the underdogs that can be allowed to get away with violence and intimidation, or with flouting statutory provisions.

Recent examples of such treatment include one Federal Court judge’s action in dismissing a union tape-recorded guidance forbidding a company to employ a non-unionist; and the open acknowledgement by the federal secretary of the Construction, Forestry, Mining and Energy Union to last week’s Master Builders Association conference that he believes in compulsory unionism (outlawed under the legislation).

Alarmingly, AIRC President Guidice recently acknowledged that the outcome of particular cases is of little predictive value in similar cases. His accompanying admission that the resultant uncertainties in employment relationships are eroding freedom and impacting adversely on the quality of society points to the urgent need for wholesale reforms.

Labor must abandon its employment-deterring anti-AWAs policy and both parties should accept the minimization of statutory regulation as a major contribution to reducing unemployment. The judiciary’s capacity to intervene in employer-employee relationships must also be constrained. It would help to have an authority charged with ensuring competition in the labour market, as the ACCC does elsewhere, and to convert the AIRC itself into a voluntary mediation body.

Des Moore, director of the Institute for Private Enterprise, is author of the Labour Ministers Council commissioned report on The Case for Further Deregulation of the Labour Market.