Rediscovering Collective Bargaining : Australia's Fair Work Act in International Perspective [1 ed.] 9780203112212, 9780415529273

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Rediscovering Collective Bargaining

Routledge Studies in Employment and Work Relations in Context

1 Employment Relations in the Health Service The Management of Reforms Stephen Bach 2 Globalisation, State and Labour Edited by Peter Fairbrother and Al Rainnie 3 Sexualities, Work and Organizations Stories by Gay Men and Women in the Workplace at the Beginning of the 21st Century James Ward 4 Vocational Training International Perspectives Edited by Gerhard Bosch and Jean Charest 5 Industrial Relations in Education Transforming the School Workforce Bob Carter, Howard Stevenson and Rowena Passy 6 Social Regionalism in the Global Economy Adelle Blackett and Christian Lévesque 7 Unions and Globalization Governments, Management, and the State at Work Peter Fairbrother, John O’Brien, Anne Junor, Michael O’Donnell and Glynne Williams

8 Privatization of Public Services Impacts for Employment, Working Conditions, and Service Quality in Europe Edited by Christoph Hermann and Jörg Flecker 9 Rediscovering Collective Bargaining Australia’s Fair Work Act in International Perspective Edited by Breen Creighton and Anthony Forsyth

Rediscovering Collective Bargaining Australia’s Fair Work Act in International Perspective Edited by Breen Creighton and Anthony Forsyth

NEW YORK

LONDON

First published 2012 by Routledge 711 Third Avenue, New York, NY 10017 Simultaneously published in the UK by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Routledge is an imprint of the Taylor & Francis Group, an informa business © 2012 Taylor & Francis The right of Breen Creighton and Anthony Forsyth to be identified as the authors of the editorial material, and of the authors for their individual chapters, has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark Notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. Library of Congress Cataloging-in-Publication Data Rediscovering collective bargaining : Australia’s Fair Work Act in international perspective / edited by Breen Creighton and Anthony Forsyth. — 1st ed. p. cm. — (Routledge studies in employment and work relations in context ; 9) Includes bibliographical references and index. 1. Collective bargaining—Australia. 2. Collective bargaining—Case studies. 3. Industrial relations—Case studies. I. Creighton, W. B. (William Breen) II. Forsyth, Anthony. HD6892.R423 2012 331.890994—dc23 2011052240 ISBN13: 978-0-415-52927-3 (hbk) ISBN13: 978-0-203-11221-2 (ebk) Typeset in Sabon by IBT Global.

Printed and bound in the United States of America on sustainably sourced paper by IBT Global.

Contents

List of Figures List of Tables Preface 1

Rediscovering Collective Bargaining

vii ix xi 1

BREEN CREIGHTON AND ANTHONY FORSYTH

2

Collective Bargaining and Agreement Making in Australia: Evolution of the Legislative Framework and Practice

21

PETER GAHAN AND ANDREAS PEKAREK

3

International Labour Standards and Collective Bargaining under the Fair Work Act 2009

46

BREEN CREIGHTON

4

The Role of Fair Work Australia in Facilitating Collective Bargaining

68

RICHARD NAUGHTON

5

The Mechanics of Agreement Making under the Fair Work Act 2009: Promoting Good Faith Bargaining and Genuine Agreement 90 AMANDA COULTHARD

6

The Relationship between Protected Industrial Action, Recognition and Bargaining in Good Faith under the Fair Work Act 2009 114 SHAE MCCRYSTAL

vi

Contents

7

Getting to the Table? Fair Work, Unions and Collective Bargaining

135

RAE COOPER AND BRADON ELLEM

8

Industrial Conflict with Awards, Choices and Fairness

159

DAVID PEETZ

9

Government as Industrial Relations Role Model: Promotion of Collective Bargaining and Workplace Cooperation by NonLegislative Mechanisms

182

JOHN HOWE

10 Comparing Purposes and Concepts in United States and Australian Collective Bargaining Law

203

ANTHONY FORSYTH

11 Recognition in Respect of Bargaining in the United Kingdom: Collective Autonomy and Political Neutrality in Context

225

ALAN BOGG AND TONIA NOVITZ

12 The Canadian Conception of Collective Representation and Bargaining

246

SARA SLINN

13 After EFCA, What Next for Unions? The Future of Labour Law Reform and of Collective Bargaining in the United States 270 JOHN LOGAN

14 Collective Bargaining and Good Faith Obligations in New Zealand

290

PAM NUTTALL

List of Contributors Bibliography Index

313 317 337

Figures

2.1 2.2 2.3 2.4 2.5 2.6 7.1

The number of collective agreements lodged (all sectors), 1991–2010. The number of current agreements, 1997–2010. The coverage of enterprise agreements lodged, 1992–2009. The coverage of current agreements, 1997–2010. Average number of workers covered, union and non-union agreements, 1997–2010. Average annualised wage increase, union and non-union agreements, 1997–2010. Federal agreements (current last day of quarter), December 2006–September 2010.

34 35 37 38 38 39 142

Tables

2.1 4.1 7.1 7.2 8.1 8.2 8.3 8.4 8.5 8.6 8.7 8.8 8.9

Key NWC Decisions and the Framework for Enterprise Agreement Making Applications 1 July 2009–30 June 2010 Federal Agreements (Lodged in Quarter) Made under the WR Act (December 2006–September 2009) Federal Agreements (Lodged in Quarter) Made under the FW Act (September 2009–September 2010) Working Days Lost per Thousand Employees and per Thousand Union Members, by Period, 1967–2010 Reason Work Resumed, Share of All Working Days Lost, by Period, 1963–2010 Average Number of Workers Involved per Dispute per Quarter, by Method of Resolution, by Period, 2003–2010 Unweighted Duration of Dispute, Share of Total Working Days Lost, by Period, 1963–2010 Average Weighted Duration of Disputes per Employee, by Method of Resolution, by Period, 2003–2010 Cause of Dispute (Issue), Share of Total Working Days Lost, by Period, 1966–2010 Cause of Dispute (Enterprise Bargaining versus Non-EB), Share of Total Working Days Lost, by Period, 2003–2010 Average Weighted Duration of Disputes per Employee, by Cause of Dispute, by Period, 2003–2010 Average Number of Workers Involved per Dispute, by Cause of Dispute, by Period, 2003–2010

31 74 143 144 167 169 171 173 174 175 177 178 179

Preface

This Collection originated in a Research Workshop held at RMIT University in Melbourne on 23–24 November 2010. The purpose of the Workshop was to explore the new Australian collective bargaining framework introduced by the Fair Work Act 2009, in the context of developments in collective bargaining regulation in several other common law countries. The Workshop participants were drawn from the fields of labour law, industrial relations and management studies. This enabled discussion of both the relevant legal rules and their impact on employer and union strategies, agreement coverage and the incidence of industrial confl ict. The papers delivered at the Workshop have subsequently been revised and edited for inclusion in this Collection. We would like to thank, fi rstly, the participants in the Melbourne Workshop—including those whose papers are published herein, and a number of other colleagues who attended and made valuable contributions to the discussion. In particular we would like to thank Commissioner Barbara Deegan (Fair Work Australia), Chris Gardner (Freehills, Lawyers), Tim Lyons (Australian Council of Trade Unions) and Peter Nolan (Australian Industry Group), who participated in a fascinating Panel Discussion on the last afternoon of the Workshop, and who provided many practical insights into the operation of the legislative provisions which constituted the principal focus of the Workshop. We would also like most sincerely to thank the contributors to this Collection for their cooperation and diligence in fi nalising and editing their papers. Secondly, we thank the three organisations that jointly funded the Workshop: the Graduate School of Business and Law at RMIT University, the Centre for Sustainable Organisations and Work at RMIT University, and the Department of Business Law and Taxation at Monash University. The GSBL and Monash’s Workplace and Corporate Law Research Group also provided administrative support for the Workshop. Thirdly, we thank Routledge for agreeing to publish the Workshop papers in this Collection—in particular, we are grateful to Laura Stearns, Stacy Noto and Michael Watters (Integrated Book Technology Global) for all their assistance in fi nalising the book for publication.

xii

Preface

Finally, special thanks go to Rebecca Moore of Corrs Chambers Westgarth who provided much-needed support in preparing the fi nal manuscript and organising the Bibliography. The Editors are pleased to have been involved with the contributors, and others mentioned here, in producing the fi rst detailed analysis and assessment of the collective bargaining system introduced by Part 2-4 of the Fair Work Act. We hope that the inter-disciplinary and comparative nature of this Collection will provide important insights into the nature, role and effectiveness of legal interventions to promote collective bargaining internationally. The law and other developments are stated as at 30 September 2011. Breen Creighton Anthony Forsyth Melbourne, 1 May 2012

1

Rediscovering Collective Bargaining Breen Creighton and Anthony Forsyth

INTRODUCTION AND OVERVIEW OF THE BOOK As Breen Creighton points out in Chapter 3 of this Collection, the International Labour Organisation (ILO) has been formally committed to the promotion of collective bargaining as a means of regulating terms and conditions of employment since the adoption of the Declaration of Philadelphia in 1944. Not only is this commitment enshrined in the Constitution of the ILO by virtue of the incorporation of the Declaration of Philadelphia, it also forms part of the principles of freedom of association which are binding upon all member-States by force of the fact of membership of the Organisation, and is a core element of the Right to Organise and Collective Bargaining Convention 1949 (No. 98). Not surprisingly, therefore, denial of access to, or interference with the outcomes of, collective bargaining have been a major focus of the work of the supervisory bodies of the ILO for more than 60 years. This universal recognition of the role of collective bargaining in protecting and promoting the rights and interests of workers no doubt helps explain why so many countries—including all of those whose law and practice are examined in this Collection—have adopted statutory provisions which are, ostensibly at least, intended to promote the regulation of terms and conditions of employment by collective bargaining. However, even a cursory examination of law and practice in countries such as the United States (US), Canada and the United Kingdom (UK) suggests that these legislative initiatives have, at best, enjoyed only a very limited measure of success. Traditionally, the situation in Australia and New Zealand was rather different. The adoption of statutory systems of conciliation and arbitration in both countries from the 1890s onwards was a response to the total repudiation of collective bargaining by employers in the course of a series of major industrial disputes in the fi rst half of that decade. The early measures, especially in Australia, were premised on the assumption that collective bargaining ought to be the means by which terms and conditions were regulated, but also had the effect that if the parties to industrial disputes were unwilling or unable to reach negotiated outcomes then

2

Breen Creighton and Anthony Forsyth

an independent ‘umpire’ could impose an arbitrated outcome upon them. Over time, both countries developed a curious hybrid whereby what were ostensibly arbitrated outcomes were to a significant extent the product of collective negotiation, frequently under the auspices of the industrial tribunal. Furthermore, those arbitrated outcomes were then commonly used (especially in Australia) as the basis for ‘over-award’ bargaining at the level of the enterprise or locality. By the 1970s, these systems helped to determine the terms and conditions of employment of the overwhelming majority of employees in both countries—for example, in Australia in 1974 the basic terms and conditions of no less than 87 percent of the workforce were regulated by the awards of either federal (39 percent) or State (48 percent) industrial tribunals (Creighton, Ford and Mitchell 1983: 502).1 By the early 1980s there was increasing recognition that the traditional system of award regulation in Australia was in need of radical overhaul. As described by Peter Gahan and Andreas Pekarek in Chapter 2, this overhaul took the form of a shift away from the traditional hybrid in favour of formalised collective bargaining at the level of the enterprise—albeit with awards continuing to provide a safety net for bargaining through the application of the no-disadvantage test. 2 Initially, enterprise bargaining by defi nition involved negotiations between trade unions on one side and employers on the other. However, from 1993 onwards it was recognised that in certain circumstances employers could negotiate terms and conditions with their employees without the necessity for union involvement. Even more importantly, from 1996 onwards the legislation enabled employers and individual employees to negotiate agreements—Australian workplace agreements (AWAs)—which had the effect of entirely displacing any otherwise applicable collective instrument. These agreements had to be approved by a public functionary called the Employment Advocate before they could become operative, and still had to pass a no-disadvantage test relative to any otherwise applicable award. The further changes introduced by the ‘Work Choices’ legislation in 2005 meant that AWAs could become operative as soon as they were lodged with the Employment Advocate, and no longer needed to pass the no-disadvantage test.3 The reaction against the traditional approach in New Zealand was even more dramatic, as Pam Nuttall explains in Chapter 14. The Employment Contracts Act 1991 abolished the system of conciliation and arbitration at a stroke, and instead put in place a minimalist framework which enabled parties to negotiate terms and conditions at an individual or (to a limited extent) collective level, but which accorded no formal role whatsoever to trade unions, and made no express reference to collective bargaining. Subsequent attempts to re-collectivise the New Zealand system—most notably through the Employment Relations Act 2000—have proved almost entirely ineffectual, as reflected in the fact that in 2010 the terms and conditions of only 8 percent of the private sector, and 60 percent of the public sector, workforce were regulated through collective bargaining (Blumenfeld 2010b: 14).

Rediscovering Collective Bargaining

3

The 2005 changes in Australia provoked a powerful electoral backlash, and played a major role in the defeat of the (conservative) Coalition Government at the 2007 Federal election. The Australian Labor Party fought that election on a platform which committed a future Labor Government to the creation of a new industrial relations system, at the heart of which would be ‘collective enterprise agreement making’ and in which ‘AWAs and statutory individual contracts’ would play no part (Rudd and Gillard 2007: 3). The Rudd Government gave effect to these commitments through the Fair Work Act 2009 (FW Act). The principal focus of this Collection is upon the ‘rediscovery’ of collective bargaining through the provisions set out in Part 2–4 of the FW Act. In Chapter 3, Creighton examines these provisions by reference to ILO standards relating to the promotion of collective bargaining—taking particular account of the criticisms of the arrangements put in place by the 1996 and 2005 legislation by the Committee of Experts on the Application of Conventions and Recommendations. This is followed by three Chapters which examine some of the key features of the new legislation from a legal perspective. The Work Choices legislation had almost entirely marginalised the Australian Industrial Relations Commission (AIRC) in the enterprise bargaining process. Instead, the legislation had encouraged parties to negotiate agreements without third party intervention, or with the involvement of other parties of their choice including, but not limited to, trade unions. These could include the AIRC, but the tribunal had no capacity to intervene of its own initiative, and could impose arbitrated outcomes on the parties in only very limited circumstances. In Chapter 4, Richard Naughton examines the rehabilitation of the AIRC in its new guise as Fair Work Australia (FWA). He suggests that whilst the role of FWA under the FW Act is not dissimilar to that of the AIRC under the Federal legislation post1993 (when the major shift towards enterprise bargaining fi rst occurred), the tribunal now has a more comprehensive range of powers available to it to facilitate the agreement making process than was the case in the past. These include powers to: make orders enforcing the good faith bargaining requirements that apply to all bargaining representatives; make determinations compelling an employer to bargain, if that is what a majority of employees want (majority support determinations (MSDs)); and make orders settling disputes over the coverage of agreements (scope orders). FWA also has general powers to assist negotiating parties to resolve bargaining disputes. The author further suggests that these powers have been framed so as to avoid some of the pitfalls which have compromised the efficacy of provisions intended to promote collective bargaining, in some of the other countries whose systems are considered in this Collection. In Chapter 5, Amanda Coulthard looks at the mechanics of making enterprise agreements under the FW Act. She points out that the procedural requirements set out in Part 2–4—including rules dealing with the representational rights of employees in bargaining, the provision of information

4

Breen Creighton and Anthony Forsyth

about proposed agreements, and the approval of agreements by employees and FWA—are both complex and confusing. As such, there is an obvious risk that the system could become excessively legalistic, as appears to have happened in the US, or that the parties would become so intimidated by the complexity of the system that they make little attempt to use it, as has happened in the UK. However, like Naughton, the author sees signs for cautious optimism: in her view, there has been an initial ‘settling in’ period during which the parties negotiating agreements—and FWA itself—have grappled with the complexities of the agreement making rules, but that a clearer approach to these rules is now emerging. Perhaps more importantly, the statutory requirements around agreement making are operating in such a way as to complement those relating to good faith bargaining. Shae McCrystal in Chapter 6 examines the relationship between the provisions relating to good faith bargaining and the capacity to take protected industrial action. She notes that despite the views of the dissentient in the fi rst Full Bench of FWA decision in JJ Richards and Sons Pty Ltd v. Transport Workers’ Union of Australia,4 and the protests of members of the business community, it is clear that in appropriate circumstances workers can take protected industrial action in order to try to compel their employer to negotiate with them.5 She also explores the practical implications of the requirement that a union that wishes to access a protected action ballot must be able to show that they have been genuinely trying to reach agreement with the other negotiating party. She notes that this requirement is theoretically separate from the good faith bargaining requirements set out in Division 8 of Part 2–4, and points out that FWA has insisted that the two requirements are conceptually separate. The author observes, however, that logically the two issues must be closely interrelated: the fact that a party has failed to engage in good faith bargaining must be strongly indicative of a failure genuinely to try to reach agreement, and vice versa. Finally, McCrystal notes that the complexity of the rules governing the interaction of good faith bargaining and taking protected industrial action is redolent of the rules governing good faith bargaining in the US and Canada, whilst the restrictive approach to taking protected industrial action evokes the approach that has been adopted in the UK. She sees hope, however, in the fact that the Australian system imposes good faith bargaining obligations upon all employers who agree to bargain. In Chapter 7, Rae Cooper and Bradon Ellem provide a rather different perspective on the provisions in Part 2–4 of the FW Act that are discussed by Naughton, Coulthard and McCrystal. They examine the effect of the new legislation’s provisions on employer and union strategy, and the level and type of agreement making that is occurring in Australian workplaces. The authors fi nd that the FW Act has already stimulated an increase in bargaining activity. They also detect a significant attitudinal shift on the part of several major Australian employers, who had previously been strong advocates of individualised employment relations but have now (to varying

Rediscovering Collective Bargaining

5

degrees) re-engaged with regulation of terms and conditions through collective bargaining. The authors look at the ways in which unions have made use of the enhanced powers of FWA to intervene in the bargaining process. They conclude that MSDs, good faith bargaining orders, and FWA’s oversight of negotiations in the low-paid bargaining stream are proving useful in getting reluctant employers to the bargaining table—although they also point out that much of this activity is occurring in sectors where unions were already well-established. Like Cooper and Ellem, David Peetz in Chapter 8 is more concerned with the practical operation of the FW Act bargaining system than with its legal niceties. He starts by briefly summarising some of the economic literature on strike activity, and in doing so notes that none of the conventional models gives proper consideration to the role of ‘unconditional’ strikes in the sense of strikes which do not involve any negotiation between the parties or any outcome being agreed or conceded by the parties. The author goes on to posit a model of strike activity which attempts to integrate economic and institutional explanations of such activity, and to examine the changing patterns of industrial conflict in Australia by reference to that model. Peetz notes that under the traditional conciliation and arbitration system all forms of industrial action were theoretically unlawful, but that there were in fact large numbers of strikes, characteristically of short duration and involving small numbers of workers. He fi nds that the introduction of a limited right lawfully to take industrial action in 1993 led to a reduction in unlawful strike activity, and that that trend has continued under the FW Act. However, he also notes that the restrictive approach to collective bargaining that was adopted by Work Choices led to substantial reductions in all forms of strike activity, and that the subsequent adoption of a less restrictive approach in the FW Act has not yet had any significant impact upon strike activity. This leads Peetz to conclude that changes in strike patterns take a long time fully to manifest themselves due to the resilience of culture and tactical behaviours that develop under earlier legislative regimes. Nevertheless, he does see some indications that under the FW Act Australian strike patterns are gradually moving towards those in the other countries considered in this Collection, but suggests that full convergence is unlikely due to the persistence of existing cultural traditions and associated patterns of behaviour. In Chapter 9, John Howe provides a timely reminder that legislative enactment is not the only, or necessarily the most effective, way of promoting collective bargaining. He does this by examining a number of non-legislative mechanisms which the Labor Government has adopted in order to provide a concrete indication of its support for collectivism, in addition to the introduction of a procedural right to access collective bargaining under the FW Act. The author considers the state’s role as employer of public sector workers under the Australian Government Employment Bargaining Framework; its efforts to influence, through the establishment of ‘Fair Work Principles’,

6

Breen Creighton and Anthony Forsyth

the behaviour of organisations that seek to participate in federal procurement programs; and initiatives undertaken by the Office of the Fair Work Ombudsman to educate and inform employers, employees and unions about improving their relationships and increasing productivity through collective bargaining. He concludes that, while the effectiveness of these measures awaits empirical evaluation, they are significant in and of themselves because they reverse the former Coalition Government’s message of antipathy towards unions and collective regulation of employment conditions. The last five contributions to the Collection provide comparative perspectives on the role of the law as a means of promoting collective bargaining, drawing upon experience in the US, Canada, the UK and New Zealand. Anthony Forsyth starts in Chapter 10 by comparing the purposes of the US and Australian collective bargaining statutes, and then examining how the legislation in each country seeks to give effect to the stated goal of promoting collective bargaining. The author examines three key concepts in the US bargaining system operating under the National Labor Relations Act (NLRA): certification/recognition of the majority union, exclusivity of representation rights and bargaining units. He fi nds that these concepts do not have direct equivalents under the FW Act, which provides instead for: various types of employee (and employer) bargaining representatives, a pluralistic approach to employee representation and the notion of a ‘group of employees’ that a proposed enterprise agreement will cover. However, approximate equivalents between concepts in the bargaining systems of the two countries can be identified, e.g., union recognition in the US and the MSD process under the FW Act; and bargaining unit determination (US) and applications for scope orders (Australia). Overall, the author reaches the preliminary conclusion that Australia’s adaptation of key concepts in the US collective bargaining system is likely to prove to be a successful exercise in legal ‘transplantation’, because of the reduced scope that the Australian regulation provides for employer resistance to bargaining. In Chapter 11, Sara Slinn notes that collective bargaining law in the various Canadian jurisdictions has its roots in the NLRA, but suggests that they have developed a quite distinctive approach to collective bargaining as a result of a number of important contextual differences between Canada and the US. These include the constitutional division between the Federal legislature and the provinces; the central role of the state in Canadian industrial relations; the role and power of labour boards (and a tradition of judicial reluctance to interfere with their activities); and, more recently, the increasing influence of Canada’s constitutionally entrenched Charter of Rights and Freedoms on the development of labour law. She explores these issues by reference to two issues: the acquisition of exclusive majoritarian bargaining rights, and the duty to bargain in good faith. On the basis of this analysis, the author confi rms that the constitutional foundations for the regulation of labour relations in Canada has given rise to a conception of access to, and procedure for determining, collective representation

Rediscovering Collective Bargaining

7

rights that is different from that in the US and the other countries dealt with in this Collection. She also fi nds that the recent recognition of protection of freedom of association in the Charter may lead to the collapse of the established distinction between certification for bargaining and bargaining itself, and may also open the possibility of ‘non-majoritarian and nonstatutory’, but constitutionally protected, systems of collective bargaining. Although it is still early days, this may eventually cause Canadian collective bargaining law to come more closely to resemble other non-NLRA systems such as that envisaged by the FW Act. In Chapter 12, Alan Bogg and Tonia Novitz examine the ways in which legal regulation of trade union recognition and collective bargaining in the UK over the last 40 years has been shaped by notions of ‘collective autonomy’ and ‘political neutrality’. They argue that the legislative framework within which unions now operate has to be understood in terms of the political aspirations of the law-makers, and conclude from their examination of the measures adopted by Labour Governments after 1997 that it is not that the law has failed to improve access to collective bargaining, but rather that ‘the pervasive concerns of successive legislators with collective and political autonomy has had the effect of limiting trade union influence’. This is reflected in the fact that although there is a measure of legal support for collective bargaining where workers want it, and the employer is willing to co-operate, there is no mechanism whereby unions can be confident of securing any agreement or award relating to terms and conditions of employment if the employer is not prepared to co-operate. These shortcomings are compounded by the retention of restrictions on trade union organisation and industrial action that were put in place by previous Conservative governments, and which have the effect of severely constraining the capacity of unions to exert pressure on employers in order to force them to bargain, or to make concessions during bargaining. To address the failures of the current system, the authors suggest that it is necessary to reconceptualise the legitimacy of trade unions as ‘civil society actors engaged in labour market governance’. Indeed, it is only by undertaking such a fundamental reconceptualisation that the law can begin to address what the authors see as ‘a failure of politics’. John Logan paints a dismal picture in Chapter 13 of the prospects for collective bargaining in the USA. The author traces recent developments which have seen a number of serious setbacks for collectivism, in a country where organised labour was already very much ‘on the back foot’. These include the Obama Administration’s failure to secure long-awaited reform of the NLRA through the Employee Free Choice Act (EFCA); the retreat from collective bargaining at the State level following the US mid-term elections in late 2010; and attacks on the role of the National Labor Relations Board (NLRB), arising from its involvement in a bitter dispute at Boeing Corporation. On the other hand, the author discusses several ways in which collectivism is being re-asserted, such as the NLRB’s proposed

8

Breen Creighton and Anthony Forsyth

rule change to expedite union recognition ballots, aimed at overcoming employer delay tactics; and the US Department of Labor’s tightening up of reporting requirements relating to employers’ use of external consultants in anti-union campaigns at the workplace. However, he observes that there is strong opposition to these proposed changes, which would (in any case) have only marginal influence on the ability of unions successfully to organise for collective bargaining in the US. Finally, in Chapter 14, Pam Nuttall describes how the New Zealand system of conciliation and arbitration, which owed its origins to essentially the same sequence of events as the traditional Australian system, was swept away by the Employment Contracts Act 1991 (EC Act). Instead of compulsory conciliation and arbitration, or legislatively supported collective bargaining, this measure left the regulation of terms and conditions of employment almost entirely to voluntary (individual and collective) contract-making, with just a minimalist statutory floor of rights. The author notes the devastating impact these developments had for a trade union movement which had been able to rely for almost a century on a social, political and legal consensus which was reflected in the very high levels of organisational security provided by the Industrial Conciliation and Arbitration Act 1894, and it successors. Following the enactment of the EC Act, both membership levels and the scope of collective regulation of terms and conditions of employment plummeted. Subsequent attempts to ‘re-collectivise’ the labour market through the Employee Relations Act 2000 (ER Act) appear to have enjoyed only a very limited measure of success, even after significant amendment in 2004. Nuttall attributes this to a number of factors, including the fact that the ER Act reflected an uneasy political compromise about the continuing role of individualism under the ostensibly collectivised system; judicial reluctance to give effect to the stated objects of the new legislative regime; and the fact that the trade union movement was so debilitated by events of the previous twenty years that it was unable to make effective use of such supportive mechanisms as had been made available to it. In conclusion, she notes that the fact that the (conservative) National Government that was elected in 2008 has shown little inclination radically to change the regime put in place by the ER Act has led some commentators to suggest that ‘a substantial degree of cross-party consensus has emerged on the general shape of labour and employment law, and the ER Act will continue to set the architecture of labour law for the medium-term future’ (Anderson 2010: 95). As against that, the author notes that there has been some erosion of the legislative supports which underpinned the system put in place by the ER Act, and that there have recently been a number of direct assaults upon the right to engage in autonomous collective bargaining. Overall, the New Zealand experience seems to provide a salutary lesson as to the limits of legislation as a vehicle for the promotion of collective bargaining—especially in the absence of whole-hearted political commitment, and judicial recognition of the stated policy objectives of the legislation that they are called upon to apply.

Rediscovering Collective Bargaining

9

THE CONTINUING RELEVANCE OF COLLECTIVE BARGAINING The contributions to this Collection all proceed from the assumption that collective bargaining is an appropriate way to protect and to promote the interests of workers, and to give them ‘voice’ in the workplace.6 The various authors provide important insights into the role of the law as an aid to the rediscovery of collective bargaining in the five countries that are the subject of this study: Australia, the US, Canada, the UK and New Zealand. The remainder of this Chapter considers—from a broader conceptual perspective—whether the law should and can play a constructive role in promoting collective bargaining as a means of giving workers greater voice.7 The principal concern is with the second of these issues: the effectiveness of statutory systems of collective bargaining. Before examining that issue, it is appropriate briefly to consider the moral, political or other bases for legal intervention to enhance worker voice through collective bargaining: in other words, what is the ‘case’ for collective bargaining (see, e.g., Hayter 2011: 7–10)? At its most basic, it has been asserted that ‘collective bargaining is a fundamental human right’, based on the fact that the employment relationship holds the potential for the oppression of human dignity. Therefore, collective bargaining is needed to protect employees from the coercive power of employers (Wheeler 2000: 535–536). These arguments fall back on assumptions of inequality of bargaining power in the individual employer-employee relationship, the traditional ‘protective’ rationale for collective labour regulation in its many forms (see, e.g., Davies and Freedland 1983: 18). Based on similar arguments to those made by Wheeler, Adams has recently framed collective bargaining as a ‘minimum employment standard’ to be enjoyed by all employees (Adams 2011). However, as will appear presently, the current interpretation of Article 4 of ILO Convention No. 98 by the ILO’s supervisory bodies does not entirely support this view. Davidov (2004) examines three main purposes of collective bargaining laws: • To promote workplace democracy: inequality of bargaining power leads to ‘democratic deficits’ in the employer-employee relationship; by giving workers a greater say in their employment conditions and setting rules as to how they should be treated, collective bargaining reduces employers’ arbitrary power and promotes a form of ‘democratic self-government’. • Redistribution of resources: collective bargaining is a form of ‘distributive justice’, which reallocates power and resources from employers to employees—but this also raises questions as to who ultimately pays the increased costs of higher wages and better conditions for unionised employees (e.g., consumers, the unemployed), and the other inequalities that are thus created.

10

Breen Creighton and Anthony Forsyth • Efficiency: most collective bargaining laws are designed to limit industrial conflict (which impedes efficiency), although the productivity-enhancing effects of collective bargaining are strongly contested; efficiencies may also be obtained through the reduced transaction costs for employers of bargaining with a group, rather than negotiating terms and conditions of employment with each employee separately.

These arguments in support of collective bargaining have been accepted—to varying degrees, and at different points in time—in the legislative arrangements for union recognition and collective bargaining in the five countries that constitute the focus in this Collection. To some extent, this is apparent from an examination of the statements of statutory purpose (or ‘objects’ provisions) of the relevant legislation, as illustrated by Forsyth’s study of the US and Australian collective bargaining statutes in Chapter 10. That discussion also highlights the competing interests that laws seeking to advance the practice of collective bargaining are often required to reconcile: • In the US case, the contest under the NLRA between the collective interests of workers, the individual rights of employees to exercise choice about questions of union representation and bargaining, and the rights of employers (e.g., to ‘free speech’ in communicating with employees regarding those same questions); • In Australia, the Labor Government’s attempt to balance the promotion of collective bargaining under the FW Act as an instrument to ensure fairness for employees, democratic objectives (i.e., the notion that bargaining rights are based on the preference of a majority of employees in the workplace), and the goal of increased productivity through enterprise-based bargaining. Where there are conflicting statutory purposes, questions inevitably arise as to which interests should prevail. For example, as Wheeler puts it, if collective bargaining is framed in terms of a right (indeed, a human right), ‘then it trumps mere economic interests of employers or the public’ (Wheeler 2000: 535). But how far should this extend? Do the rights of employees and their union representatives to obtain a collective agreement override all other considerations, including the viability or profitability of the enterprise; or the public interest, e.g., in the efficient provision of services by government or the private sector (assuming that the right to collective bargaining carries with it a right to strike in support of bargaining claims)? Adams, who draws upon the ILO conception of the rights of freedom of association and collective bargaining, would not permit any qualification of those rights (e.g., on economic grounds) (Adams 2009, 2011). However, as indicated, the jurisprudence of the supervisory bodies of the ILO does not presently support this interpretation—instead, as Creighton points out in Chapter 3 of this Collection, it supports a fundamentally flawed interpretation of

Rediscovering Collective Bargaining

11

Article 4 of Convention No. 98 which holds that it would be contrary to the ‘voluntary’ character of the collective bargaining that is to be promoted in accordance with that provision, to oblige employers to negotiate in circumstances where they did not wish to do so. However, as Creighton also points out, this interpretation is not impelled by the wording of Article 4, and it is to be hoped that in due course the supervisory bodies will adopt a view of Article 4 which recognises that (in appropriate circumstances) ‘promotion’ of collective bargaining does require that employers can be compelled to bargain—for example where the overwhelming majority of their employees wish to do so, or where considerations of public policy dictate that employers ought to be required to bargain collectively. Once it is accepted that there is a ‘right’ to collective bargaining, it is then necessary to determine how that right is to be given practical effect. This raises a further series of questions, such as: • Should the right to engage in collective bargaining be conditional upon some measure of majority support amongst the workers concerned—especially where the right to collective bargaining is asserted on democratic grounds—and if so, how is the required level of support to be ascertained? • In order to make the ‘right’ to collective bargaining effective, is it necessary to impose a correlative obligation upon employers to bargain with employees and unions?8 If so, should this obligation be cast in terms of a duty to ‘bargain in good faith’? • What restrictions should be placed upon employer conduct that prevents the exercise by employees of their right to collective bargaining? • Can labour tribunals and labour boards play a constructive role in facilitating collective bargaining processes? Is more active intervention on the part of these bodies required? • Can, and should, the state do more to promote collective bargaining than putting in place (more or less) appropriate legal frameworks? • Is ‘legalism’ an inevitable incident of attempts to use law to promote the development of collective bargaining? Can law prove counter-productive to the objective of fostering collectivism? These questions go to the heart of long-running international debates about the design, implementation and effectiveness of statutory systems of collective bargaining which are considered next.

LAW AND REDISCOVERING COLLECTIVE BARGAINING There are clearly strong conceptual foundations for collective bargaining rights in modern industrialised economies—e.g., in the framework of norms established by the ILO (Adams 2009), in human rights discourse (Wheeler

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2000; Fenwick and Novitz 2010) and in political and democratic theory (see Bogg 2009). Despite this, the very notion of collective bargaining is strongly contested in many countries, even those (like the US) with laws on the statute books that have as their explicit objective the promotion of a collective approach to determining employment conditions. The accounts of developments in the US by Forsyth in Chapter 10, and Logan in Chapter 13, show how the practical operation of the legal framework—combined with opposition from employers and elements of the state itself—can frustrate the achievement of collective bargaining in practice. On the other hand, the recent Australian experience of ‘rediscovery’ of collective bargaining demonstrates the positive role that legal rules and the state can play in supporting collectivism.9 This part of the Chapter is concerned with the efficacy of legal norms as a way of promoting worker voice through collective bargaining. To varying degrees, the law has been mostly ineffective in this respect in all of the countries examined in this Collection. This is reflected in the dismal failure of the US system, as evidenced by overall collective bargaining coverage of only 13 percent (Venn 2009: 18). The situation is little better in New Zealand (17 percent), with higher levels of coverage in Canada (29.3 percent) and the UK (34.6 percent), and reaching a peak of 43.4 percent in Australia (with a further 15.2 percent covered by awards).10 Even in Australia, though, significant areas of the private sector are wholly or mainly un-unionised and untouched by collective bargaining (van Wanrooy et al. 2009). Much attention has therefore been focused in the academic literature and in policy evaluations carried out at domestic and trans-national levels, on the reasons for the law’s failure to deliver the reality of a collective agreement for many workers. Highlighted are some of the key themes and issues that have emerged from this body of research.

THE PROBLEMS OF STATUTORY UNION RECOGNITION SYSTEMS Amongst others, Adams (1999) and Gall (2010a) have argued that statutory processes for recognition of a union for collective bargaining, premised on the view of the majority of the workforce, actually work against the realisation of workers’ rights to bargain collectively. This is particularly so where employees’ views are tested in a ballot (as is the case in the US, the UK and some Canadian jurisdictions). The problem in the US, according to Adams (1999: 98), is that the certification process makes it very difficult for unions to secure collective bargaining rights ‘in the face of determined employer resistance’. Gall (2010a: 7) takes this further, arguing that statutory recognition procedures ‘[transform] latent employer opposition to labour unionism into active opposition, and further [deepen] existing employer anti-unionism’. Moreover (Gall 2010a: 25), these systems ‘are of an enabling and not automatic nature, whereby [union recognition] is granted where specific conditions and thresholds are met . . . [E]mployers

Rediscovering Collective Bargaining

13

are invariably free to deny union access to workers and . . . to intimidate, cajole and coerce their workers into refusing to entertain a union’. Certainly, these are notorious features of the US system, which have also emerged in Canada and the UK. These issues are discussed further.11

MAJORITARIANISM (BALLOTS AND ‘CARD CHECK’) COMPARED WITH BARGAINING REPRESENTATIVES/AGENTS Determining majority support, or some other threshold, among the workforce as a basis for establishing bargaining rights has been opposed as intrinsically counter to the idea of a ‘right’ to collective bargaining (see above). This debate has also focused on the method of establishing the required level of support, and the competing merits of ballot-based and ‘card check’ systems. In the US, where ballots are mandatory and long delays occur in the conduct of the ballot, this creates opportunities for employers vigorously to oppose unionisation during the pre-ballot period.12 In four Canadian Provinces and under the Federal labour statute in that country, unions can be certified for collective bargaining through the simpler card check process (checking employees’ signatures on union membership or authorisation cards). In the remaining six Canadian provinces, ‘quick vote’ systems operate.13 Both card check and quick vote systems are intended to reduce the opportunity for employer opposition to union organising (Sachs 2010: 667–672). The card check method gained prominence recently as it formed part of the proposed EFCA reforms in the US.14 However, employers successfully mobilised against this initiative, relying on arguments as to the ‘sanctity’ of ballots as the clearest expression of employee preferences.15 In contrast to the majoritarian-based systems of the US, Canada and the UK, in Australia employee representation for collective bargaining follows a more pluralistic model. Unions are among several potential ‘bargaining representatives’ of employees in the making of enterprise agreements between those employees and their employer. Most collective agreements are not made between employers and unions—an agreement is only made once (a majority of) the employees to be covered by the agreement vote to approve it. Therefore, there is a distinction between two processes under Part 2–4 of the FW Act, which can operate in parallel: ‘agreement making’ (where the employer simply requests employees to vote on a proposed agreement after providing information and meeting certain other statutory requirements),16 and collective bargaining.17 In relation to the latter, unions are built into the process: a union is the default bargaining representative of any of its members who will be covered by a proposed agreement, unless they appoint someone else in writing.18 If the employer refuses to recognise or bargain with the union, it can apply to FWA for an MSD to compel the employer to bargain. Early evidence suggests that the flexibility in the methods that FWA can use to determine if majority support exists, and the default representative role

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of unions, are more conducive to ensuring that collective bargaining occurs than majoritarian (especially ballot-based) systems.19 New Zealand also deviates from the majoritarian model: bargaining in good faith occurs between employers and unions (without any requirement for a ballot or other test of employee support), but collective agreements apply to union members only. 20 However, as noted earlier, collective bargaining coverage in that country has declined significantly since the good faith provisions in the ER Act came into operation (Department of Labour (NZ) 2009; Blumenfeld 2010b).

EMPLOYER RESISTANCE As indicated earlier, employer resistance to union organisation for collective bargaining appears to be maximised by statutory recognition procedures that involve substantial delays in the holding of a workplace ballot. A further significant factor in this context is the efficacy of legal restrictions upon unlawful employer conduct, and the ready availability of remedies. Some of the tactics adopted by employers in the US and Canada are proscribed as ‘unfair labour practices’ (ULPs), but in the US in particular, the remedies against these are limited and difficult to obtain. 21 In 2004 the UK union recognition legislation 22 was amended in an attempt to curtail employer ULPs such as coercive speech, inducements, victimisation and seeking to negotiate employment conditions with a non-independent union. 23 These amendments appear to have effected some improvement on the US position—but still fall short of ensuring a ‘level playing field’ and the exercise of genuine free choice by employees.24 In Australia, the capacity of employers to resist collective bargaining reached its zenith under the Howard Coalition Government (1996–2007), with ‘hard line’ US-style strategies being adopted by some employers in the context of a legislative and policy framework that made collective bargaining (in effect) voluntary. 25 However, anti-union employer conduct is now more effectively regulated (in comparison to North America and the UK), with remedies available for breaches of both the ‘general protections’ provisions26 and relevant components of the obligation to bargain in good faith (i.e., the requirements that bargaining representatives refrain from conduct that undermines collective bargaining or freedom of association, and that they recognise/bargain with other bargaining representatives).27 New Zealand law also imposes good faith bargaining obligations, and indeed since 2004 s 33 of the ER Act has imposed a duty upon the parties not only to bargain in good faith, but ‘to conclude a collective agreement unless there is a genuine reason based on reasonable grounds, not to’. As Nuttall explains in Chapter 14, even these provisions have had only limited practical effect, although it would be misleading to suggest that they have been entirely ineffectual (see also Creighton and Nuttall 2012).

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15

‘FREE SPEECH’ AND UNION RIGHTS OF ACCESS Employer resistance to collective bargaining in the US is aided by the strong protections of employers’ rights to communicate with employees during union recognition campaigns (including the right to hold ‘captive audience’ meetings); and once bargaining commences, as long as such communications are neither coercive nor impermissible ‘direct dealing’.28 These ‘free speech rights’ are founded in the First Amendment to the US Constitution, and the NLRA (s 8(c)). US courts have determined that these rights override the collective interests of employees sought to be protected by the NLRA (Slinn 2008a; Secunda 2008). Employer communications are more closely regulated in Canada, especially during the negotiation phase (Slinn 2008a; Doorey 2008).29 However, union rights of access to employees are significantly restricted in both the US and Canada; employers are able to rely on the law of property and trespass to prevent unions from putting their views to employees on business premises (Doorey 2009–2010: 6–17). This approach can be contrasted with the attempt to provide for ‘parity of access’—including parity in the opportunities for communicating with employees—under UK law (Bogg 2009: 193–196; Doorey 2009–2010: 17–22).30 Australian unions have (in comparative terms) extensive rights of access to employers’ premises in order to hold discussions with employees (e.g., about their desire to make a collective agreement, and the progress of agreement negotiations once they have commenced).31 In Australia, the issue of employer communication with employees during bargaining has been dealt with as a potential breach of the good faith bargaining requirements (e.g., undermining the representative role of a union bargaining representative). To date, however, FWA has adopted a permissive approach to direct employer communications occurring in the context of the ‘rough and tumble’ of hard negotiations.32 This has led to consideration of the more restrictive Canadian and NZ approaches as blueprints for further reform (Bukarica and Dallas 2010; see also Nuttall 2007). However, recent amendments to the NZ legislation have provided employers with greater latitude to communicate directly with employees during bargaining.33

THE ROLE OF THE STATE: NEUTRALITY, ENABLING, ENCOURAGING—OR SOMETHING MORE? A number of commentators have considered the role of the state in failing to provide strong and unequivocal support for collective bargaining, even within systems where bargaining laws exist. For example, Dukes suggests that the UK statutory recognition procedure should be regarded as neutral regarding whether union recognition actually occurs or not: ‘indeed, [it is] best understood as a procedure for encouraging voluntary agreement on recognition and not as a procedure for encouraging collective bargaining’.

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This is explained by the determination of the New Labour Government, in enacting the procedure, to take an ‘unbiased approach’ to both recognition and collective bargaining.34 In contrast, previous statutory procedures under UK law were more clearly ‘intended to secure the growth of collective bargaining’ (although they were not entirely effective in doing so).35 Dukes demonstrates how the current UK union recognition procedure aims ‘not to secure . . . recognition, but rather to ensure a fair ballot, with fair competition between the parties seeking the worker’s vote’—and how it fails to achieve even this more limited ambition.36 As noted earlier, Gall (2010a) suggests that statutory union recognition processes should be seen as ‘enabling’ rather than ‘automatic’. Sachs, meanwhile, frames the secret ballot certification process operating under the NLRA, and other options such as card check and rapid elections, as mechanisms for ‘enabling employee choice’. According to Sachs, these mechanisms can be viewed as different types of ‘altering rules’ that facilitate a departure from the ‘default rule’ of ‘individual, non-union employment contracting’ (Sachs 2010: 672). The various altering rules differ in the extent to which they minimise or eliminate ‘management’s ability to intervene in the unionisation process’, and therefore the extent to which they facilitate the ultimate objective of ensuring employee choice (Sachs 2010: 656–663, 672). For Sachs: ‘[t]he default and altering rule analysis is thus meant to point us toward a revised labor law that removes certain impediments to the elicitation of workers’ preferences and that eliminates several forms of interference with employee preference formation’ (Sachs 2010: 660–661). The debate over the merits of secret ballot elections and card check, revived by the EFCA proposals, 37 therefore raises important questions as to the appropriate role of labour law—and, if reducing employer intervention is a legitimate goal, questions of ‘institutional design’ (Sachs 2010: 657–658, 661–662, 672). Australia’s FW Act also uses the language of ‘enabling’ and ‘facilitating’ collective bargaining38 —although, as noted earlier, this must be viewed in the context of an important symbolic shift from the previous emphasis on individual agreement making and state support for employer resistance. Cooper et al. (2009: 340) have demonstrated ‘the pivotal role of the Australian state in constituting anti-union employer strategies’ during the Coalition Government’s term of office. The support expressed for collective bargaining in the FW Act is much stronger than, for example, the British statutory union recognition procedure. However, just like the UK legislation, an important feature of the design of the Australian system is that the various statutory mechanisms supporting collective bargaining are intended to operate in the background. Voluntary bargaining relationships developed between employers, employees and unions are meant to be the norm.39 This was, of course, very much the role that the framers of the original Conciliation and Arbitration Act 1904 envisaged for conciliation and arbitration under that measure, and indeed that is how the legislation

Rediscovering Collective Bargaining

17

operated until after the end of the First World War (see, e.g., McCallum and Smith 1986). The evidence so far suggests that resort to FWA for assistance through the statutory mechanisms set out in the FW Act occurs in relation to roughly 10 percent of the total number of enterprise agreements submitted to the tribunal for approval.40 It is apparent that many agreements are being negotiated through collective bargaining between employers and unions on a consensual basis.41 This invites consideration, and assessment through empirical study, of what has been described in the UK as the ‘shadow effect’ of the regulatory scheme on the tactics and behaviour of industrial relations parties (Gall 2010b). For example, several major Australian employers have moderated their former position of trenchant opposition to collective bargaining, following the introduction of mechanisms that unions can use to compel them to bargain under the FW Act.42 In summary, it can be seen that there are degrees of state support for collective bargaining that may affect the extent to which the law is successful in stimulating bargaining in practice. Effective legislation presupposes strong state support. However, legislation is not the only mechanism at the state’s disposal. It is also necessary to consider the other ways in which the state can provide a public policy framework that favours collectivism, such as procurement programs, funding arrangements, information on ‘best practice’ and the state’s role as a ‘model employer’.43 Again, recent Australian experience shows that these non-legislative measures, combined with well-designed statutory arrangements, offer the best prospects for enhancing the state’s capacity to influence the practices adopted by parties in negotiating employment conditions.

MEASURING THE LAW’S (LACK OF) IMPACT It was suggested earlier that the law in each of the five countries examined in this Collection has been largely ineffective in promoting collective bargaining in practice. This is, of course, a rather simplistic explanation based on the expectation that having laws in place that support collective bargaining should logically lead to greater bargaining coverage over time. Obtaining a more precise, and more nuanced, picture requires: • Clarity in determining the measures used to assess whether or not legislation has ‘succeeded’ (e.g., examining the extent to which collective bargaining has increased or decreased in particular sectors, or at different points in time,44 and why union recognition and other forms of bargaining rights may have been obtained but not led to concluded agreements in particular instances); • Consideration of the other factors that have contributed to the decline of collective bargaining in many industrialised countries, such as

18

Breen Creighton and Anthony Forsyth globalisation, increased competition, the rise of insecure forms of employment, and the shift from manufacturing to services industries (see Hayter et al. 2011: 226); and • Empirical research to examine the complexity of regulatory impacts in specific national settings,45 and in a comparative context.

The various contributions to this Collection provide many valuable insights— from a range of disciplinary perspectives—into the factors which serve to shape the capacity of legislation to promote the collective regulation of employment conditions, and the vindication of worker ‘voice’ more generally. These factors include the social and cultural context within which the legislation is to operate, the extent to which collective bargaining is in need of legislative support, and the capacity and preparedness of both employers and unions to operate constructively within the legislative framework. They also include the legal and constitutional framework of the country concerned, judicial attitudes to the objects of the legislation, and the extent of the political commitment of those who are responsible for framing and implementing the statutory support mechanisms to the attainment of those objects. In providing these insights, it is to be hoped that the Collection can also contribute to international understanding of the law’s capacity to stimulate particular outcomes in a broader social and economic context—and the limits of regulation in facilitating the rediscovery of collective bargaining. NOTES 1. Blackwood et al. (2006: 17) note that in 1990 around half of the private sector in New Zealand had their core terms and conditions regulated by awards or collective agreements. The same was true for almost the entire public sector. See also Nuttall in this Collection. 2. In simple terms, this test required that in order to approve a collective agreement, the industrial tribunal had to be satisfied that ‘on balance’ the agreement would not result ‘in a reduction in the overall terms and conditions of employment’ of the employees to whom it would apply, relative to any otherwise applicable award. If there was no such award, then the tribunal had the capacity to ‘designate’ an appropriate award for purposes of applying the test. In its current incarnation, this test is described as the ‘better off overall test’: see Fair Work Act 2009 ss 186(2)(d), 189, 190 and 193; and Coulthard in this Collection. 3. See Workplace Relations Amendment (Work Choices) Act 2005. 4. [2010] FWAFB 9963. 5. This is clearly confi rmed by the second Full Bench decision in this matter: see JJ Richards and Sons Pty Ltd v. Transport Workers’ Union of Australia [2011] FWAFB 3377. 6. On the concept of employee voice, see, e.g., Freeman et al. 2007; Estlund 2010: Chapter 7; Wilkinson and Fay 2011; Dau-Schmidt 2011. 7. In addition to the present Collection, these issues are presently the subject of extensive inquiry in an international research project on ‘Voices at Work: Legal Effects on Organisation, Representation and Negotiation’, funded

Rediscovering Collective Bargaining

8. 9. 10. 11. 12. 13. 14. 15.

16. 17.

18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28.

19

by the Leverhulme Trust in the UK and convened by Alan Bogg and Tonia Novitz; see: http://voicesatwork.org.uk/. For arguments in the affi rmative, see, e.g., Wheeler 2000: 537; and Adams 2011, describing this as necessary to address ‘the problem of ‘voluntarism’’. See Naughton, Coulthard, Cooper and Ellem, Forsyth and Howe in this Collection. These data are derived from ABS 2010; Hayter and Stoevska 2011. See also Forsyth, Logan, Slinn and Bogg and Novitz in this Collection. See Forsyth and Logan in this Collection. See further Slinn in this Collection. See Logan in this Collection. See, e.g., Bogg 2009: 183: ‘The argument from democratic legitimacy identifies the secret ballot as the pre-eminently authoritative, democratic arbiter of majority opinion. The seal of democratic legitimacy that a ballot confers on the union’s recognition claim dispels any doubts about the extent of support. . . . ’. On the competing arguments around card check and ballots, see also Sachs 2010; Eaton and Kriesky 2008–2009. See Coulthard in this Collection. See Naughton, and Cooper and Ellem, in this Collection. An enterprise agreement made under Part 2–4 must always involve agreement making (in the sense described earlier), but need not involve collective bargaining. The tensions between the processes of agreement making and collective bargaining are highlighted by FWA’s decision in Australian Municipal, Administrative, Clerical and Services Union v Global Tele Sales Pty Ltd [2011] FWA 3916, where a union’s attempt to assert good faith bargaining rights at a late stage of the agreement making process between the employer and its employees was rejected by the tribunal. Interestingly, Vice President Watson of FWA stated as follows, at [41]: ‘It appears to me that the process of agreement making between an employer and its employees at a workplace in accordance with the provisions of the [FW] Act is a process of collective bargaining. The [union] appears to infer that only through its involvement can collective bargaining occur. I am unable to fi nd any support for that notion in the [legislation]’ (emphasis added). See also the cases discussed in Coulthard in this Collection. The agreement making/collective bargaining distinction is considered in the context of the evolution of enterprise bargaining in Australia in Gahan and Pekarek in this Collection. On the problems this creates for employers in having to deal with multiple bargaining representatives, see Bussell and Farrow 2011: 398–399. Forsyth 2011. See also Naughton, Cooper and Ellem, and Forsyth in this Collection. See further Nuttall in this Collection. See, e.g., Slinn and Hurd 2011: 165–166; Godard 2004; and Forsyth, Logan and Slinn in this Collection. See Trade Union and Labour Relations (Consolidation) Act 1992, Sched A1. The occurrence of these practices in the UK context is examined in Ewing et al. 2003; Bogg 2009. Bogg 2009: 164–186; Dukes 2008: 248–249. See also Bogg and Novitz in this Collection. Cooper et al. 2009; see also Cooper and Ellem in this Collection. FW Act, Part 3–1: see Forsyth et al. 2010: Chapter 9; Creighton and Stewart 2010: 557–574. See Naughton, Cooper and Ellem, and Forsyth in this Collection. See Forsyth and Logan in this Collection.

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29. See also Slinn in this Collection. 30. See also Bogg and Novitz in this Collection. 31. Under the ‘union right of entry’ provisions in Part 3–4 of the FW Act (these rights are subject to numerous restrictions and conditions, e.g., the requirement to give 24 hours’ written notice of intended entry, and to hold meetings with employees only during meal times or other breaks): see Forsyth et al. 2010: Chapter 10; Creighton and Stewart 2010: 709–716. 32. The leading decision is that of a Full Bench of FWA in Construction, Forestry, Mining and Energy Union—Mining and Energy Division v Tahmoor Coal Pty Ltd [2010] FWAFB 3510, where the employer was permitted to hold briefi ngs with employees without the union present, and to send information about the proposed agreement to the employees’ homes: see further Forsyth, Naughton, and Cooper and Ellem in this Collection. Note the parallels between the outcome of this Australian case, and two decisions of the Central Arbitration Committee allowing vigorous employer campaigning against union recognition under the UK legislation (Unite-the Union and Kettle Foods Ltd TUR1/557/2007 and TGWU and Comet Group plc TUR1/502/2006, discussed in Bogg 2009: 170–171). 33. Bukarica and Dallas 2010: 68–69; see also Nuttall in this Collection. 34. Dukes 2008: 237–238 (emphasis in original), 246–248. See also Smith and Morton 2009; and Bogg and Novitz in this Collection. 35. On this historical background see Dukes 2008: 239–246; Bogg and Novitz in this Collection. 36. Dukes 2008: 248–260; see also Bogg 2009; Bogg and Novitz in this Collection. 37. See Logan in this Collection. 38. See Forsyth in this Collection. 39. See Dukes 2008: 255–256, arguing that the UK statute prioritises voluntary agreement over ‘the aim of securing trade union recognition and the spread of collective bargaining’, and thus: ‘[t]he process of collective bargaining— meeting and holding talks—is disconnected from its objective—improved terms and conditions of employment for the relevant workers—and only the former is secured by the legislation’. 40. See FWA, Annual Report of Fair Work Australia: 1 July 2009–30 June 2010, Melbourne, 2010: 73–77; FWA, Quarterly Report to the Minister (Reports for the periods July–September and October–December 2010, and January–March 2011). 41. It is also likely that many agreements are being made without any collective bargaining taking place at all (recall the distinction drawn earlier between collective bargaining and agreement making under the FW Act). 42. See Forsyth 2011; Cooper and Ellem in this Collection. 43. See Howe in this Collection. 44. See, e.g., Dukes 2008: 258–260, noting the overall rise in recognition agreements under the UK’s statutory union recognition procedure, but a ‘steady decrease since 2000–2001 in the number of new recognition deals agreed per year’. 45. See, e.g., Moore 2006; Blanden et al. 2006; Slinn 2008b; Foster et al. 2009; van Wanrooy et al. 2009.

2

Collective Bargaining and Agreement Making in Australia Evolution of the Legislative Framework and Practice Peter Gahan and Andreas Pekarek

INTRODUCTION Agreement making and collective bargaining have been an established part of Australia’s traditional model of compulsory conciliation and arbitration since its inception (Macklin, Goodwin and Docherty 1992: 12–13). Although its significance varied over time and across industries, it nonetheless remained a secondary component of the formal system of wage determination until the 1980s. From the mid-1980s, however, new wage-fi xing principles and legislative changes have paved the way for different forms of agreement making as the primary mechanism through which wages and conditions of employment have been determined, evolving towards a predominance of enterprise-level collective agreements (Alexander, Lewer and Gahan 2008: Ch. 6).1 These reforms have seen a significant growth in the number of workplace agreements and an expansion of the number of workers covered by them. At different stages over the course of the last century, the legislative framework has promoted the use of collective bargaining to varying degrees, and also sought to encourage different types of agreements (Hancock 1985: Ch. 2; Hancock and Isaac 1992). Despite these changes, successive reforms have largely been predicated on the idea that agreements should have an enterprise or workplace focus, and that wage comparisons and ‘spillovers’ between workplaces and/or discrete business units should generally be discouraged (Wooden 2001). Consequently, the use of multi-employer agreements, and ‘pattern bargaining’ in which standards established in one agreement would form the basis for agreements in other workplaces, have been subject to significant institutional and legislative constraints. This shift to enterprise bargaining has also been associated with a growing uneasiness with the terms on which the bargaining parties were able to negotiate. A particularly contentious issue has been the question of whether legislative provisions provided an adequate basis to enable the parties to negotiate on an equal footing (Lee 2005). For example, the Industrial Relations Reform Act 1993 (Reform Act) was strongly criticised on the ground that it privileged union involvement in the bargaining process, even in situations where only a minority of workers wanted union representation, and

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also because it placed constraints on the capacity of negotiating parties to make agreements where the terms deviated significantly from those in otherwise applicable awards. Similarly, questions were raised as to whether the Workplace Relations Act 1996 (WR Act) and the amendments effected by the Workplace Relations Amendment (Work Choices) Act 2005 (Work Choices) provided adequate safeguards to prevent an employer stripping employees’ entitlements through individual agreements.2 The 1996 and 2005 reforms were also criticised as providing an inadequate basis for the development of a system of collective bargaining because of the absence of any statutory mechanism for union recognition or requirement of ‘good faith bargaining’ (see Stewart 2009a). The reforms introduced by the Fair Work Act 2009 (FW Act) were explicitly intended to overturn Work Choices, and mark a return to collectivism. This was to be done primarily through the (re-)introduction of principles of good faith bargaining, and new provisions to facilitate union recognition and to protect low wage groups in the bargaining system (Stewart 2009a). That said, questions have been raised by a number of commentators as to whether these provisions have the capacity to achieve their stated objectives (see Forsyth in this Collection); and as to whether they meet externally derived criteria for fairness, such as ILO standards relating to collective bargaining and the right to strike (McCrystal 2010; also see Creighton in this Collection). The central aim of this Chapter is to place the recent ‘Fair Work’ reforms to the bargaining framework in the longer run context of a more evolutionary shift towards enterprise agreements as the primary mechanism through which wages and employee entitlements are determined, and the concomitant diminution of award regulation. This aim is achieved by deploying two related analyses. The fi rst approach involves a review and assessment of the key institutional and statutory reforms to agreement making that have taken place over the period since 1904, and how each sought to encourage or constrain different forms of enterprise bargaining. Particular attention is paid to the period since the late 1980s when the question of how agreement making and enterprise bargaining might be encouraged became a major policy focus for the industrial parties, government and tribunals. 3 The second approach involves an analysis of data on the incidence and spread of enterprise bargaining over the period 1992 to 2010. To do so, the analysis presented in this Chapter will primarily draw on the Federal government’s own Workplace Agreements Database (WAD) statistics reported in the Trends in Federal Enterprise Bargaining quarterly reports. In addition to this Introduction, the Chapter consists of five further sections. The fi rst of these examines the concept of collective bargaining and, in particular, differentiating between the concepts of ‘agreement making’ and ‘collective bargaining’. The second section then traces the legal evolution of agreement making and collective bargaining in Australia. It examines the statutory provisions regulating collective bargaining and agreement making for the period from the establishment of the Federal system of

Collective Bargaining and Agreement Making in Australia 23 compulsory arbitration in 1904 to the present time. The third section traces the more recent shift to enterprise-based bargaining arrangements through wage-fi xing principles enunciated by the federal tribunals in the formative period of the current system of enterprise bargaining. The fourth section presents data from the WAD, which permits an assessment of the spread of agreement making since 1991, whilst the fi nal section draws the threads of the discussion together and presents a number of conclusions.

‘COLLECTIVE BARGAINING’ AND ‘AGREEMENT MAKING’ IN THE AUSTRALIAN SYSTEM In order to understand relevant developments within the Australian system, it is necessary to draw a distinction between ‘agreement making’ and ‘collective bargaining’.4 This reflects the fact that the Australian system differs significantly from other national systems of bargaining—an issue that is revisited later in this Chapter. The term ‘agreement making’ is used to refer to any process which employees (or their representatives) and employers (or their representatives) seek to utilise for the purpose of completing an industrial agreement that is legally enforceable. Whilst it can generally be anticipated that the process will involve negotiation or the use of a third party to conciliate, mediate or arbitrate (Botero et al. 2004), at various points in time, the Australian legal system has recognised other processes as legitimate ways of fi nalising an industrial agreement (Creighton and Stewart 2010: Ch. 12). 5 ‘Collective bargaining’, in contrast, refers to one particular process through which employers and/ or their representatives and employees and/or their representatives seek to reach an agreement through negotiation. In his seminal book comparing collective bargaining systems across six countries, Clegg defi ned collective bargaining thus (1976: 5–6): Its subject matter is terms of employment. It is collective because employees associate together, normally if not invariably in trade unions, in order to bargain with their employers. It does not require collective action on the employers’ side as well, for unions bargain both with employers’ associations and with individual employers or their representatives . . . The process is called bargaining because each side is able to apply pressure on the other. Mere representation of views or appeal for consideration is not bargaining. The best-known forms of pressure are the strike and the lockout, but there are many others. In many instances bargaining leads to a collective agreement, but by no means always. The parties may leave the issue unresolved, and, even when they agree, they need not sign a joint document . . . But that is only half the story; or more accurately, only the visible part of the iceberg. Agreements have to be administered, and many hours of the

24

Peter Gahan and Andreas Pekarek working time of managers and trade unionists are spent on the administration of agreements for every one which goes into negotiating them . . . This is one of the reasons why Allan Flanders suggested that ‘joint regulation’ was a more appropriate term than collective bargaining; for regulation implies, as bargaining does not, the application of rules as well as their making. But ‘collective bargaining’ is now so fi rmly established in the vocabulary of trade unionism and industrial relations that there is no hope of replacing it.

While much of this defi nition resonates with contemporary Australian understandings of the term ‘collective bargaining’, there are at least four aspects of it that warrant further comment. First, while it countenances the idea that collective bargaining does not require a role for unions, the presence of unions as the collective voice of workers in the bargaining process is all but taken as a given—collective bargaining rests on the presence and legitimacy of unions at both a systemic level and in the workplace. As discussed here, however, this proposition is not central to the current legal framework regulating collective bargaining in Australia, where there is provision for both union and non-union forms of collective agreement making—as indeed has been the case since 1993. Second, Clegg’s defi nition identifies the capacity of the parties to exert pressure and make credible threats to impose costs on the other party as critical to the functioning of bargaining. Without these elements the process may not involve ‘genuine’ bargaining. While the injection of provisions into Australian labour law relating to ‘protected industrial action’ was clearly intended to promote the capacity to create the pressure for genuine bargaining envisaged by Clegg, these provisions are (and always have been) more prescriptive and procedurally bound than is the case in most other bargaining systems. The various provisions enabling protected industrial action have, since 1993, gradually replaced arbitration as the primary legal mechanisms through which genuine bargaining (including the exercise of industrial pressure) has been facilitated. However, it is worth emphasising that the right to strike in pursuit of a collective agreement has only been enshrined in Australian legislation since 1993. Prior to that time, the law formally restricted the use of strikes, and at various times, tribunals and governments have sought to use the full force of the law to discourage and retard the use of industrial action even where the parties have used such tactics in a way that was intended to generate the genuine shift towards collective bargaining envisaged by Clegg (McCrystal 2010; see also McCrystal in this Collection). A third issue raised in applying Clegg’s analysis in the Australian context concerns his insistence on a defi nition that encompasses both the acts of negotiating and implementing collective agreements as twin elements of any system of collective bargaining or ‘joint regulation’. Over the course of the last two decades, as bargaining has played an increasingly significant

Collective Bargaining and Agreement Making in Australia 25 role in the system, union rights of access to the workplace and involvement in monitoring compliance with agreements have been curtailed by successive amendments to the legislation (Creighton and Stewart 2010: 709). These changes have largely been intended to restrict union activity in the workplace, and to inhibit their capacity to recruit members or play a more expansive role in implementing agreements. Finally, it should be noted that Clegg’s more general definition encompasses bargaining arrangements that might occur at three distinct levels: at the enterprise or workplace level, at industry level and at national level. As will be evident from the discussion of the evolution of bargaining arrangements, each of these three elements has at different times constituted a significant focus of bargaining processes in Australia. The next section examines the evolution of the nature and extent of statutory support for bargaining and agreement making. This process reflects distinct shifts in government policy, as well as the preferences of the parties in relation to the balance between agreement making and award regulation.

STATUTORY PROVISIONS FOR AGREEMENT MAKING, 1904–2010 One of ‘chief objects’ of the original Conciliation and Arbitration Act 1904 (1904 Act) was to provide ‘for the making and enforcement of industrial agreements between employers and employees in relation to industrial disputes’ (s 2(vii)). The available evidence indicates that initially these provisions were more widely used than awards, at least for the period before the First World War (Hancock 1979). Macklin et al. (1992) report that, between 1905 and 1921, 1,488 industrial agreements were registered under the 1904 Act, compared with just 190 new awards.6 Indeed, over the course of the twentieth century numerous studies noted that unions and employers used collective bargaining and agreement making in a variety of ways. For example, Walker (1970: 66–67) observed that: Although most unions operate through the arbitration machinery, they also engage in a good deal of direct negotiation with employers. Some of this takes place within the arbitration system, since the normal procedures within both the arbitration and the wages board systems involve negotiation for agreements or conferences concerning an award; in most awards many of the terms have already been agreed to by the parties in conference . . . In addition to such negotiation over the provisions of agreements and awards, unions and employers continually negotiate over minor matters not included in awards and also in the course of checking on the observance of the award. Despite the fact that bargaining and agreement making persisted throughout much of the twentieth century, it must be recognised that its significance

26

Peter Gahan and Andreas Pekarek

relative to regulation through awards varied considerably over time. For example, during the 1960s and the 1970s there were high levels of ‘overaward bargaining’ (Plowman 1981; McLelland 1976) and ‘productivity bargaining’ (Yerbury 1973).7 These, in turn, had lasting consequences for the form of wage determination in the 1980s and 1990s, including a general reluctance by employers and the federal tribunal to endorse the shift towards enterprise bargaining that was increasingly favoured by the Australian Council of Trade Unions (ACTU) and the Federal Labor government in the late 1980s and early 1990s (Dabscheck 1989; Peetz 1998).8 Historically, there has also been a great deal of variation in the degree to which collective bargaining occurred across industries (Hancock 1985). For example, De Vyver (1959, 1970) described the development of an industry level agreement in 1956 between employer groups and unions operating in the Victorian building industry. Whilst the scope of the initial agreement was limited to a number of over-award matters, this agreement evolved into a more comprehensive arrangement that operated in conjunction with relevant awards. A number of commentators also examined bargaining within the metal trades industry, where the Amalgamated Engineering Union had taken a relatively hostile view of arbitration (see, e.g., Hutson 1968; Walker 1970; Sheridan 1975). Similarly, Gahan (1996) reported on the almost exclusive use of agreement making by the Tobacco Workers Union of Australia for much of the twentieth century, encouraged by the high profitability of that sector. The 1904 Act sought to promote agreement making through two distinct channels. First, it enabled the Court of Conciliation and Arbitration, as part of its conciliation and arbitration function, to register agreements that had voluntarily been reached by the parties to a formal ‘industrial dispute’ before the Court (‘consent awards’). Second, Part VI of the 1904 Act (which later became Part X) provided for registration of agreements made between the parties without involvement of the Court. The Act stipulated that these could not be extended to other parties not bound by the agreement, but could be varied by consent, or by the Court ‘to bring it into conformity with any common rule declared by the Court’ (s 80). McCallum and Smith (1986: 83) noted that the original intention of Part VI was to enable unions and employers to opt out of the arbitration system by entering into industrial agreements. They also suggested that Part VI sought to prevent any industrial agreements undercutting award entitlements, which were deemed to apply as common rule standards to all workers.9 However, a subsequent High Court decision in 1910 rendered common rule awards constitutionally invalid.10 This meant that the Court of Conciliation and Arbitration had to adopt a significantly narrower interpretation of these provisions,11 which in turn led to an irreversible decline in their use in the period after World War I. As a consequence, industrial agreements remained uncommon for the remainder of the period during which the 1904 Act remained operational.

Collective Bargaining and Agreement Making in Australia 27 Nonetheless, the ‘consent award’ provisions of the 1904 Act were retained as s 112 of the Industrial Relations Act 1988 (IR Act), whilst the Part X provisions allowing for the registration and enforcement of a negotiated agreement were also retained in the form of ‘Certified Agreements’ (ss 115–117). Again, however, both these provisions were limited in scope and restrictive in nature, and remained somewhat of a ‘dead letter’ (Plowman 1992). These provisions were subsequently repealed by the Industrial Relations Legislation Amendment Act 1992, which introduced two critical changes to the operation of legislative provisions related to agreement making (Creighton and Stewart 2010: Ch. 12). The fi rst of these was to ‘clip the wings’ of the Australian Industrial Relations Commission (AIRC),12 by removing its discretionary powers to refuse to certify agreements it considered to be contrary to the public interest (Dabscheck 1995: Ch. 3). Second, the 1992 Act introduced a ‘no disadvantage test’, which required the AIRC to register agreements provided that employees were no worse off compared with entitlements provided for in any otherwise applicable award. These amendments reflected a clear policy preference for injecting more bargaining into a system dominated by awards and a highly centralized system of wage-fi xing (Cook 1991).13 The full extent of these intentions were signalled by the then Prime Minister Paul Keating in 1993 in a highly controversial speech to the Australian Institute of Company Directors, in which he stated that: ‘there is no economic reform more central than to complete the construction of a system of industrial relations which will enhance productivity, protect the weak and distribute fairly the rewards of cooperation in the workplace’ (Keating, 1993: 10). He went on to describe the ‘model of industrial relations’ towards which Australia had been moving (ibid.: 10–11): It is a model which places primary emphasis on bargaining at the workplace level within a framework of minimum standards provided by arbitral tribunals. It is a model under which compulsorily arbitrated awards and arbitrated wage increases would be there only as a safety net . . . Over time the safety net would inevitably become simpler. We would have fewer awards, with fewer clauses. For most employees and most businesses, wages and conditions of work would be determined by agreements worked out by the employer, the employees and their union . . . We would have an Industrial Relations Commission which helped employers and employees reach enterprise bargaining . . . but which would rarely have to use its compulsory arbitral powers. Instead, parties would be expected to bargain in good faith. The radical vision set out by Keating was given effect by the Reform Act. This legislation introduced two ‘streams’ for agreement making: enterprise or ‘Certified Agreements’ (CAs) between an employer and one or more unions; and ‘Enterprise Flexibility Agreements’ (EFAs), which could be

28

Peter Gahan and Andreas Pekarek

made between an employer and its employees directly, without the involvement of a union as a representative agent in the negotiating process—as long as the employer took reasonable steps to consult with employees covered by the agreement and explain its terms, and the majority of employees genuinely agreed to be bound by the EFA (IR Act, Part VIB, Divisions 2 and 3). Clearly, EFAs represented a significant threat to the established role of unions in negotiating agreements. Employers could now negotiate outside the traditional award framework, although awards provided a ‘safety net’ for bargaining through the operation of the ‘no disadvantage test’. However, several safeguards for unions were built into these provisions. For instance, for the AIRC to approve an EFA it had to be satisfied that the EFA did not discriminate between unionists and non-unionists; that those employees wishing to be represented by a union were provided with the opportunity to do so; and that the employer had notified relevant unions about the proposed EFA, and provided them with an opportunity to review and engage in negotiation over the agreement. In practice, the EFA provisions were not utilized to any great extent during the three years in which they remained operative (Creighton and Stewart 2010: 294). At the same time, the Reform Act also provided more conventional foundations for the development of a system of enterprise bargaining by extending the role of unions in two main ways. First, it enabled unions (and employers) to engage in ‘protected industrial action’ in support of claims made in a ‘bargaining period’ for the negotiation of a CA (Naughton 1994; McCarry 1994). Although the relevant provisions imposed considerable procedural hurdles and limits on the taking of protected industrial action, they constituted the fi rst statutory protection of the ‘right to strike’ under Australian federal law. Second, as part of the introduction of a framework to facilitate a more structured approach to enterprise bargaining, the Reform Act provided the AIRC with powers to terminate bargaining periods on specified grounds, and (more importantly) to require parties to conduct negotiations in good faith (Naughton 1994). Specifically, the AIRC was empowered to assist negotiating parties to reach agreement by conciliation, and (if necessary) to make orders under s 170QK of the Reform Act to ensure that the parties negotiated in good faith, to promote the efficient conduct of negotiations, or otherwise to facilitate the making of an agreement. However, the AIRC could not exercise its arbitration powers to resolve a bargaining impasse between negotiating parties, although it did retain the capacity to arbitrate to prevent or settle interstate industrial disputes (Reitano 1994: 70). These reforms, which had the intended effect of creating a regulatory system focused on facilitating enterprise bargaining, were subsequently consolidated and extended by the Howard government’s Workplace Relations and Other Legislation Amendment Act 1996. Amongst other things, this measure renamed the IR Act as the WR Act. It retained bargaining

Collective Bargaining and Agreement Making in Australia 29 provisions which provided for both union and non-union certified agreements, which were required to meet a no disadvantage test to be certified (Creighton and Stewart 2010: 295–296). However, it also removed the AIRC’s capacity to make good faith bargaining orders, and further limited its powers of intervention during a bargaining period to conciliation, but not arbitration. The 1996 Act also introduced the now defunct AWAs, which enabled non-union agreement making between an employer and an individual employee.14 Importantly, the terms of an AWA would prevail over a State or Federal award or a certified (union) agreement (Rimmer 1997: 72). Controversial as some of these legislative reforms were at the time they were fi rst enacted, they pale into insignificance compared to the changes introduced by Work Choices. The extent to which this measure represented a radical departure from traditional Australian arrangements for ordering industrial regulation is subject to some debate,15 but on any view they were clearly intended to undermine the essentially collectivist enterprise bargaining regime that had emerged in the late 1980s and early 1990s (Forsyth and Sutherland 2006). The most recent phase in the development of legislative support for enterprise bargaining is to be found in the FW Act. The changes effected by this legislation are more fully examined in other contributions to this Collection (see especially Coulthard, Forsyth, McCrystal and Naughton). In considering these changes it is important to account for both the ‘transition’ arrangements set out in the Workplace Relations Amendment (Transition to Forward with Fairness) Act 2008 (Transition Act) as well as the substantive provisions in the FW Act itself. The Transition Act took effect on 28 March 2008 and, among other things, replaced the ‘fairness test’ with a modified version of the former ‘no disadvantage test’ for all new agreements. It also provided that the nominal life of pre-Work Choices collective agreements could be extended, and their content varied, rather than being superseded by a new agreement under the post-Work Choices WR Act. The FW Act repealed the WR Act, and became fully operational on 1 January 2010, although most of its provisions, including the new bargaining arrangements set out in Part 2–4, took effect from 1 July 2009.16 These provisions replaced the existing suite of statutory workplace agreements with a more limited and general set of ‘enterprise agreements’ (see Creighton and Stewart 2010: 301–305).

THE EVOLUTION OF PRINCIPLES OF WAGE FIXATION, 1978–1991 Although the 1980s were not marked by significant legislative changes intended to facilitate the expansion of agreement making and collective bargaining, this period in many ways provided the context for the major legislative reforms introduced in the 1990s. Of particular importance were

30

Peter Gahan and Andreas Pekarek

the changes to wage-fi xing principles endorsed by the Commission in its National Wage Case (NWC) decisions throughout this period.17 Against the backdrop of the ‘Prices and Incomes Accord’ (the Accord), which commenced in mid-1983 after the election of the Hawke Labor government,18 NWCs also provided the vehicle through which the emerging system of ‘managed decentralism’ was facilitated (McDonald and Rimmer 1989). Table 2.1 summarises the major reforms to wage-fixing principles associated with NWC decisions over the period from 1978, commencing with the Conference on Wage Fixation Principles, convened by the federal tribunal in March 1978. This Conference, which led to the end of quarterly indexation of award wages against movements in the Consumer Price Index, has been identified as marking ‘the end of one period of wage fixation and the commencement of a new system’ (Macken 1989: 18). Among the wage fixation principles developed at the Conference was Principle 6. This principle established a commitment to consider future applications for national wage increases on the basis of productivity improvements. However the Federal tribunal showed a reluctance to consider productivity-based claims at an industry level, and indicated that any claim for productivity-based wage increases would need to be negotiated at the national level (Macken 1989: 19). This reluctance to entertain productivity bargaining at the industry or workplace level continued into the early 1980s. At the same time, however, the Commission expressed its ongoing frustration at the parties’ unwillingness to comply with wage indexation principles, and repeatedly expressed concern with its diminishing capacity to limit excessive wage increases that could fuel inflation and reduce competitiveness.19 However, the scope for pursuing enterprise-based agreements through claims that partially linked wage movement to productivity improvements was evident in the fi rst NWC decisions after the election of the Hawke Labor government in March 1983 (Peetz 1998). Specifically, the September 1983 NWC principles included provision for ‘an increase in wages and salaries or changes in conditions of employment . . . [to] be awarded on account of productivity’. 20 While worsening economic circumstances, as well as subsequent Accord agreements between the ACTU and the Federal government, underpinned the maintenance of centralized wage fi xation in subsequent NWCs, the managed shift towards enterprise bargaining began to take shape in a number of decisions which followed that decision. 21 Of particular importance were: the June 1986 decision, which provided unions with the capacity to pursue superannuation claims based on productivity improvements; 22 the 1987 two-tiered system which incorporated productivity bargaining (the ‘Restructuring and Efficiency Principle’); the ‘Structural Efficiency Principles’ associated with a series of decisions commencing in August 1988; and the subsequent shift to more comprehensive set of Enterprise Bargaining Principles associated with the NWC decisions of April and October 1991. This brief account of the evolving institutional and regulatory framework within which the shift to enterprise bargaining occurred prompts

Collective Bargaining and Agreement Making in Australia 31 a number of observations and questions that warrant investigation. As emphasised earlier, the Australian system has generated a very particular form of collective bargaining which gives rise to a number of conundrums for traditional ways of thinking about ‘collective bargaining’. First, governments have pursued a strong policy preference for enterprise-level collective bargaining over more co-ordinated or centralised forms of bargaining. This preference has to varying degrees been shared by both employers and unions (Briggs 2001). This policy preference emerged relatively early in the evolutionary process, and the political economy of those developments is well documented by a number of researchers.23 It reflects a deep-seated suspicion of the consequences of more centralised or co-ordinated arrangements, particularly through the practice of ‘pattern bargaining’ in which concessions gained through bargaining at one workplace are then systematically flowed on to other businesses within the same sector (Alexander, Lewer and Gahan 2008: 96). These concerns are repeatedly found in the tribunal’s own deliberations and decisions through the 1980s and 1990s, and seem to reflect the fear of a re-emergence of the inflationary pressures that characterised the period of wage indexation and over-award bargaining during the 1970s and early 1980s. Table 2.1 Key NWC Decisions and the Framework for Enterprise Agreement Making NWC Key principles relating to enterprise bargaining decision March 1978

- End of quarterly wage indexation (partial or full); replaced with biannual indexation. - Total wage movements to be considered in line with changes in national productivity. - Rejection of principle that productivity should be distributed at industry or workplace level.

July 1981

- Bi-annual wage indexation abandoned.

September - Reintroduction of wage indexation under the Prices and Incomes 1983 Accord. - Wage-fixing Principle 2: Re-affirmation of commitment to consider wage increases based on productivity. June 1986

- Wage-fixing Principle 3: Provision for Certified Agreements to include employer contributions to approved superannuation schemes based on productivity improvements. A number of constraints placed on the parties, including: (a) an agreement to make such contributions should not involve a wage increase of more than 3 precent; and (b) the tribunal would not arbitrate disputes over the provision of superannuation based on productivity improvements. Continued

32

Peter Gahan and Andreas Pekarek

Table 2.1

Continued

March 1987

- Restructuring and Efficiency Principle: Introduction of a two-tiered wage determination system, consisting of a flat wage increase of $20 per week, plus a provision for productivity-based wage increase of up to four percent.

August 1988

- Structural Efficiency Principle: Wage increases made contingent on the ability of the parties to negotiate award changes that improved efficiency.

February - Review of Structural Efficiency Principle. 1989 - Principles for approving Certified Agreements made under s 115: Required the agreement to relate to circumstances which were of a special and isolated nature; and could not be used to circumvent the general wage fixation principles. The AIRC also indicated that it would invite submissions from any union with members employed in the enterprise concerned and from the relevant peak union council. August 1989

- Revised Structural Efficiency Principle: Review of ‘paid rates awards’ and relationship with s 115 agreements.

April 1991

- Revised Structural Efficiency Principle: Introduced revised principles placing emphasis on the enterprise or workplace, but refused to establish principles for enterprise bargaining on the grounds that the parties to industrial relations had still to develop the maturity necessary for responsible negotiation of enterprise agreements. - Section 115 agreements must be expressed as a paid rates award and meet requirements for paid rates award. - Agreements which were inconsistent with NWC principles to be referred to Full Bench for review.

October 1991

- Enterprise Bargaining Principles: Commission establishes a set of principles for negotiating comprehensive enterprise agreements.

Sources: National Wage Case Decisions: September 1983 (Print F2900); June 1986 (Print G3600); March 1987 (Print G6800); August 1988 (H4000); February 1989 (H8200); August 1989 (H9100); April 1991 (J7400); October 1991(K0300).

THE EVOLUTION OF ENTERPRISE AGREEMENT MAKING IN PRACTICE These observations raise a host of questions which have not been systematically investigated by labour law or industrial relations researchers. The fi rst of these concerns how these reforms were received by employers and unions. In particular, to what extent were the parties rushing to take advantage of the emerging opportunity to pursue collective bargaining and agreement making, rather than work through the traditional award system? To what extent did the institutional constraints and barriers placed before the parties inhibit the spread of agreement making? How did these constraints

Collective Bargaining and Agreement Making in Australia 33 shape bargaining behaviour and tactics? And how different were the terms and conditions contained in enterprise agreements compared with the awards they replaced? Not all of these issues can be addressed in this Chapter. Instead, the aim is to draw on available data to map the spread and impact of enterprise bargaining over the last two decades, and to make an initial assessment of whether the FW Act has made any difference to the pattern that had emerged before its enactment. The data used to examine this issue are drawn from the Department of Education, Employment and Workplace Relations’ (DEEWR) Workplace Agreements Database (WAD). Although this database is not publicly accessible, the data are reported in Trends in Federal Enterprise Bargaining, which are made publicly available. These reports have been produced quarterly by DEEWR and its predecessors since 1992. They provide summary data on agreement making covering the following key dimensions of bargaining arrangements:24 • Number of agreements made —defined as the total number of agreements that are lodged (or current) in each quarter. • Average annualised wage increases— measures the average annual wage increase per employee for agreements lodged (or current) in each quarter. These estimates exclude performance pay, one-off bonuses, profit-sharing, etc. • Coverage— estimates the number of individuals covered by agreements lodged (or current) in each quarter. • Effective Duration— estimates the difference in months between certification, commencement or the date of fi rst wage increase (whichever comes fi rst), and expiry date or last wage increase (whichever comes last) or termination data. The remainder of this section uses these data to review the major trends in the spread of agreement making over the period 1992 to 2010. As explained in detail here, the data reveal a strong growth trend for much of the period, reflecting the changes in the legislative framework and greater scope for bargaining provided through national wage-fi xing principles. Whilst the total number of agreements rose throughout the entire period, the trend in relation to coverage is more ambiguous, as evidenced by a downward trend in the coverage of both union and non-union agreements. Figure 2.1 reports the long run trend in the number of enterprise agreements lodged across all industry sectors for the period from the December Quarter 1991 through to the June Quarter 2010. Panel A presents the data on a quarterly basis, and Panel B presents the same data on an annualised basis. The data presented in Figure 2.1 prompt a number of observations. First, the quarterly data reveal a clear cyclical pattern in the number of

34

Peter Gahan and Andreas Pekarek

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agreements lodged over the entire period. A separate analysis of the data at the standard industrial division level (not shown)25 reveals that this cyclical pattern is most evident in the construction industry, coinciding with major bargaining rounds in that sector. Although not as marked, the same cyclical pattern is evident in other industry sectors over the period for which data are available. Second, within this cyclical pattern, the annual data show a strong upward trend in the number of agreements made each year, although this trend is clearly disrupted between 2006 and 2008—the period in which Work Choices was in operation. Third, the introduction of the FW Act in July 2009 is marked by a clear spike in the number of agreements lodged—with the third quarter recording the largest number of agreements for any quarter for the entire period. This spike is evident across all sectors (not shown). It pre-dates the operative date of the FW Act, but does include the transition period in

Collective Bargaining and Agreement Making in Australia

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which all agreements were subject to a re-introduced NDT. Nonetheless, the most plausible explanation for the spike seems to be a rush on the part of some employers to lodge agreements made under Work Choices rather than the FW Act. The data for the fi rst two quarters of 2010 show that the

36

Peter Gahan and Andreas Pekarek

number of agreements lodged is similar or lower than the same periods in the previous two years, but below the number of agreements lodged prior to the introduction of Work Choices in March 2006. This apparent tapering off in the rate of growth in the number of agreements lodged occurred across a number of industry sectors where collective agreement coverage has traditionally been more prevalent, including manufacturing, metals and non-metals manufacturing, and health and community services. The construction sector moved against the trend and accounts for a large proportion of the spike observed in the June Quarter 2009. Figure 2.2 shows the total number of current collective agreements for each quarter from 1997 to June 2010: i.e., the number of agreements that have been certified but have not yet been terminated or expired at the end of the relevant quarter.26 Panel A reports the data for all current agreements, whilst Panel B reports the same data, but distinguishes between union and non-union agreements. Again, the strong cyclical nature of bargaining is clearly evident from Panel A. Moreover, Work Choices does not appear to have had a lasting impact on the number of collective agreements. Indeed, the data reveal a marked increase in the number of agreements that were current in the year between June 2008 and June 2009, followed by a distinct levelling off and subsequent fall in the number of current agreements in the quarters that follow. Although it is far too early to draw defi nitive conclusions, this decline raises some question about the impact thus far of the Fair Work reforms on bargaining outcomes.27 Some caution needs to be exercised in drawing any conclusions from Panel B, particularly after June 2009. This is because the Trends in Federal Enterprise Bargaining Report no longer provides data for union and nonunion agreements separately. As a consequence, the data reported in this panel after that date do not allow us to determine whether newly registered ‘single-enterprise agreements’28 are union or non-union agreements (other than greenfields agreements, which can only be made with unions). This has the effect of under-estimating the number of agreements in the main union/non-union categories reported in Panel B. New single-enterprise agreements are reported separately in Panel B (the ‘Don’t Know’ category). Nonetheless, the trends prior to the introduction of the FW Act are revealing. The data show the strength of the Work Choices effect in terms of the growth of non-union collective agreements. While non-union agreement making had increased as a proportion of all agreements made for the entire period from 1997 to 2009, the rate of growth in non-union agreements accelerated significantly after March 2006. At the same time Figure 2.2 shows a dramatic fall in the number of union agreements current in each quarter after June 2008. Figure 2.3 reports the number of employees covered by collective agreements lodged in each year for the period December 1991 to June 2010. This Figure again shows the cyclical pattern in relation to the number of agreements lodged. Interestingly, it also indicates that the initial negative effect

Collective Bargaining and Agreement Making in Australia

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of Work Choices on the coverage of current agreements was not sustained. Analysis of the data disaggregated by industry, however, shows that the number of employees covered by successive cycles of collective bargaining declined for much of the period in a number of sectors; notably: Information, Media and Telecommunications, Financial and Insurance Services, and Transport, Postal and Warehousing. Again the consequences of the Fair Work reforms are difficult to discern from the data—it is simply too soon to draw any conclusions with confidence. It is nonetheless worth noting that the number of workers covered by all agreements lodged has begun to increase in some of those sectors where previously coverage had shown signs of decline. The impact of Work Choices on the coverage of agreements is more evident once the data are disaggregated by union involvement. These data are reported in Figure 2.4. Again, the impact of the Work Choices legislation is evident in the significant decline in the coverage of current union agreements, particularly after June 2008. Again, the data from September 2009 cannot be read as a reliable estimate of the decline in coverage, as single-enterprise agreements covering existing workplaces (i.e., non-greenfields sites) are again excluded. Also of interest is the growing coverage of non-union agreements, which had remained relatively stable for much of the period until December 2006. Figure 2.5 reports the average coverage rate of current agreements, for union and non-union agreements separately. The coverage rate is calculated

38 Peter Gahan and Andreas Pekarek 1800000 1600000 1400000 1200000 1000000 800000 600000 400000 200000 0 OC*,

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Collective Bargaining and Agreement Making in Australia

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