Agreement-making under WorkChoices: the impact of the legal framework on bargaining practices and outcomes

7 Nov 2007

Executive summary:

The Work Choices reforms substantially altered the rules for making agreements. This report identifies at least 15 ways in which the legal framework has shifted the balance of bargaining power away from employees.

The introduction of a ‘Fairness Test’ purports to remedy the effects of just one of these changes: the removal of the ‘no disadvantage test’. It is clear that this single measure will be unable to address the multiple ways in which the framework undermines the bargaining position of employees.

Contrary to the Government’s assertions, the Fairness Test is not, by any measure, stronger than the former ‘no disadvantage test’ – the new test is clearly narrower in scope and provides fewer procedural protections than the former test. Overall, there must be considerable doubt that the Fairness Test will provide outcomes which are procedurally or substantively fair for employees.

The emerging evidence of outcomes under workplace agreements confirms that the potential for the new framework to undermine the bargaining position of employees has been realised. Data on employer greenfields agreements strongly suggests that substantial numbers of employees have received no compensation for the removal of protected award conditions via these agreements. A combination of statistical and anecdotal evidence leads to a similar conclusion in relation to AWAs.

In the case of collective agreements, the report highlights a number of templates which are being used to set the terms and conditions of employment for retail and hospitality workers. Following a reduction in the involvement of traditional third parties in agreement-making (ie, the AIRC and unions), these templates have been adopted (often without alteration) by many employers. The effect is to allow an alternative third party - the industrial relations consultant - to exercise significant influence over the content of agreements.

The widespread replication of these templates in collective agreements in the retail and hospitality industries suggests that there is very little genuine bargaining taking place. A study of the templates themselves reveals the extent to which it is possible for an employer to reduce and remove employee benefits through the powerful mechanism of the Work Choices workplace agreement. The templates provide instances of the reduction of employee rights of control over hours of work, rostering, job location and job functions. The effect of these provisions is not only to displace conditions from awards and State legislation, but also to jeopardise the rights of an employee under his or her individual contract of employment.

The report also highlights some of the problems which have arisen because of the removal of a certification or vetting process before agreements are approved. The existence of provisions in agreements which fall below the ‘safety net’, or which mislead employees about their legal entitlements, suggests that the new framework is failing to ensure compliance with the basic legal rules.

The legal framework also appears to legitimate certain unfair employer bargaining practices by removing any positive requirement for employers to explain the effect of workplace agreements to employees, or to obtain genuine approval for these agreements, and by providing only weak protections against false or misleading conduct and duress. These unfair (but not unlawful) practices include: offering AWAs on a take-it-or-leave-it basis to new employees; using employer greenfields agreements on new projects to set a low base of employment conditions and to create a union-free environment; and ‘starving out’ employees by holding back pay rises until the employees enter into AWAs.

Perhaps emboldened by the environment created by Work Choices, some employers are engaging in unlawful bargaining practices, such as targeting employees who refuse to sign AWAs by reducing their shifts, or threatening to remove other employee benefits, or ending their employment.

Fundamental changes, not stop-gap measures, are required to address the bargaining practices and agreement outcomes which are permitted, and to some extent encouraged, under the Work Choices framework. Without legislative reform to ensure genuine bargaining and compliance with the agreement-making rules, it is inevitable that the working conditions of vulnerable employees will be further diminished.

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