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Current Issues Brief

No. 6 1997-98

Award Simplification: Progress Report

ISSN 1321-1560

 Copyright Commonwealth of Australia 1999

Except to the extent of the uses permitted under the Copyright Act 1968, no part of this publication may be reproduced or transmitted in any form or by any means including information storage and retrieval systems, without the prior written consent of the Department of the Parliamentary Library, other than by Senators and Members of the Australian Parliament in the course of their official duties.

This paper has been prepared for general distribution to Senators and Members of the Australian Parliament. While great care is taken to ensure that the paper is accurate and balanced, the paper is written using information publicly available at the time of production. The views expressed are those of the author and should not be attributed to the Information and Research Services (IRS). Advice on legislation or legal policy issues contained in this paper is provided for use in parliamentary debate and for related parliamentary purposes. This paper is not professional legal opinion. Readers are reminded that the paper is not an official parliamentary or Australian government document. IRS staff are available to discuss the paper's contents with Senators and Members and their staff but not with members of the public.

Published by the Department of the Parliamentary Library, 1999


Current Issues Brief No. 6 1997-98

Award Simplification: Progress Report

Steve O'Neill Economics, Commerce and Industrial Relations Group 10 November 1997


Thanks to Georgina McGill, Nola Adcock, John Kain and Christine Haywood for providing comments on this paper.


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Major Issues Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . i

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1

What are awards? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2

Industrial matters: managerial autonomy challenged . . . . . . . . . . . . . . . . . . . . . . . 5

Award simplification: the Hawke-Keating Governments' approach . . . . . . . . . . . . 6

The Coalition Government's approach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. 8

Transitional Provisions of the WROLA Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10

Who is covered by awards? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11

Award simplification: the test case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13

Related award simplification developments . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15

A Conclusion? . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17

Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18

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Major Issues Summary

The Workplace Relations Act 1996 (the WR Act) stipulates in section 89A that awards of the Australian Industrial Relations Commission (AIRC) can only deal with or regulate certain issues within the employment relationship. The legislation introducing this Act, the Workplace Relations and Other Legislation Amendment Act (WROLA Act) prescribes a timeframe within which current awards are to be simplified, so as to conform with allowable award matters (i.e. by July 1998). At the end of this time, award provisions falling outside the allowable matters will be rendered unenforceable. Transitional provisions are provided in Part 2 of Schedule 5 of the WROLA Act for an award review process to ensure that awards comply with section 89A.

The current award simplification process will counter a trend towards broadening the provisions which could be included in awards. Provisions concerning occupational health and safety, technological change and consultation over major organisational change were included in awards over the 1980s as the content of these provisions was interpreted to fall within the definition of industrial matter.

The awards nominated for review before the Australian Industrial Relations Commission in a test case are: the Graphic Arts-General-Interim Award 1995; the Hospitality Industry-Accommodation, Hotels, Resorts and Gaming Award 1995, the SDA (Shop Distributive and Allied Employees' Association) (Victoria Shops) Interim Award 1994, the SDA (Food and Liquor) Interim Award 1994, the SDA (Booksellers and Stationers) Interim Award 1994 and the Nurses (ANF-WA Private Hospitals and Nursing Homes) Consolidated Award 1991.

There is a certain irony to the award simplification program as awards no longer exercise the direct influence over wages and employment conditions which they once did. Certified Agreements (both union and non-union), Enterprise Flexibility Agreements, Australian Workplace Agreements as well as facilitative provisions within awards can override award provisions. It also appears that many employers have agreed to include provisions which may be excluded from awards into enterprise agreements.

There are a number of provisions which employer organisations want removed from awards. The Australian Chamber of Commerce and Industry (the principal employers' organisation) has argued that 53 conditions from the Graphic Arts Award be removed; these include: minimum and maximum hours for part-time workers; union right of entry

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and preference clauses; reduction in the rate of penalty rates on Sundays and Public Holidays (the reduction in penalty rates is being argued under section 143 of the WR Act (that award provisions should not hamper productivity); training; stop work meetings; notification to the CES during retrenchments and provision of after hours transport.

The period to conduct the review has been narrowed (from three years under section 150A of the previous Industrial Relations Act to 18 months). In addition, the WR Act's requirement of narrowing award provisions to the prescribed allowable award matters (while being vague on the treatment of non-allowable matters) has possibly heightened difficulties inherent to the task.

It is anticipated that a decision on the test case will be given on 17 November 1997. Much is at stake, particularly after the employers and non-Labor Governments proposed a reduction of penalty rates as part of award simplification. Should a decision supporting such submissions be determined, it is likely that the unions will consider a challenge, presumably in the Federal Court. More likely might be the provision of guidelines which might then be applied to awards on a case by case basis.

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The ongoing role of industrial awards is much in contention currently. Awards have been criticised as being overly prescriptive in their role of governing employment relationships. As the Federal Minister for Workplace Relations and Small Business said recently:

Over 90 years, a system of highly prescriptive arrangements have [sic] been developed which dictate to business the terms and conditions under which people are employed, regardless of the actual circumstances facing those businesses.1

Therefore simplifying awards is intended to make employment less burdensome for employers and therefore alleviate unemployment. The irony of the concern with prescriptive awards and recent award simplification programs is that, as will be explained, awards no longer exercise the direct influence over wages and employment conditions which they once did. Certified Agreements (both union and non-union), Enterprise Flexibility Agreements, Australian Workplace Agreements as well as facilitative provisions within awards can override award provisions.

This paper provides an outline of the processes which lead to the making of federal awards. It reviews processes involved in formulating and serving a log of claims and the role of ambit in order to attract federal jurisdiction. It describes interpretations of 'industrial matters' as prescribed in earlier federal industrial legislation processes. It then discusses the review of awards initially prescribed in the Industrial Relations Act 1988, and the simplification of award provisions as required by the Coalition Government in the Workplace Relations Act 1996 (the WR Act). The paper reviews recent initiatives by employers to reduce the provisions of awards to allowable matters, and the response by unions to this process.

The paper notes that a process of simplifying award provisions has essentially received bi-partisan political support. An ongoing review of awards, in some form, would therefore appear unavoidable as well as being prime facie constructive in its intent—it is difficult to avoid the conclusion that some awards, particularly industry-wide awards are complex, provisions tend to be more readily added to awards rather than removed, and provisions may reflect the times (and work processes) for which they were designed.

However requiring awards to conform with 'allowable matters', as the most recent simplification process requires, would appear to add degrees of complexity and potential

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resistance without an enormous amount of goodwill shown by all sides. This is why it is helpful to describe the procedures which give rise to awards. An additional constraint of the current review is a narrow timeframe. There remains about nine months to determine award simplification guidelines, and then apply these to almost 3000 active awards before certain provisions may become unenforceable. In addition, transitional provisions express an intent that the parties should alter the award by agreement and do not preclude the option of including provisions found to be non-allowable in enterprise agreements.

What are awards?

Awards are legal instruments which, when active and operating, underpin an individual's contract of employment with an employer by expressing a range of entitlements and requirements which must be met, mainly, by the employer. The pertinent award provisions readily recognised by most employees are pay, hours of work and leave entitlements. Awards contain many other provisions. This paper deals with federal awards, although similar instruments have featured in many State industrial jurisdictions, notably New South Wales, Queensland, South Australia and Western Australia. The Australian Capital Territory and the Northern Territory operate within the federal industrial jurisdiction.

Federal awards are derived from collective bargaining deliberations, and are determined through a formal process of conciliation (forming 'consent' awards) and, if this fails, through arbitration between employers, unions and Australian Industrial Relations Commission (AIRC). So, awards are determinations made by the AIRC and are made, in the federal system, to settle interstate industrial disputes in accordance with the conciliation and arbitration power of the Commonwealth under section 51(35) of the Commonwealth Constitution. Note however that there are arguments suggesting that broader authority for the AIRC might be available in the prevention of industrial disputes under the same constitutional power.2 Federal awards arise from a unique procedure involving logs of claims served by registered organisations of employees (i.e. trade unions registered under the WR Act) on organisations of employers also usually registered under the Act (note that employers need not be registered to be served with a log of claims).

Most often, the union will serve the log and the employer may either refuse to accede to the claim by responding to the effect that the employer will continue to abide the terms and conditions of the relevant award, or respond with a counter log of claims. Such action forms a 'dispute' and the limits of the claims contained in the log will form the ambit of the claim. The next important step is for the AIRC to make a finding of a dispute.3 The size of the components of an ambit (e.g. $3000 per week for 25 hour week) often alarms employers, and may cause problems for unions as well by falsely building up expectations of members.

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Over time, the ambit of the components of the original log may be exhausted through variations to the award.4 Increases in award pay rates over ten or more years, for example, may reach those demanded in the original log. Thus at different times, the dispute creating process which created a particular award will need to be repeated, just to retain the award. It is the dispute procedure which attracts the jurisdiction of the AIRC.5 It is also important that certain requirements expressed in the Act and its regulations are complied with:

• that each component of the log be regarded as a legitimate industrial matter6

• that the claim is genuine and is to be negotiated in accordance with the rules of the organisation7

• that the rules of the organisation contain acceptable procedures for notifying industrial disputes8

• that the employee organisation is eligible to cover the classifications (or the callings of an industry as the case may be) itemised in the log.9

Some of these matters may be contested by award parties in hearings before the AIRC. The Australian Industrial Registry (AIR) monitors organisations' rules compliance with the Act's provisions and regulations. Assessments of an organisation's compliance with its own rules vis-a-vis the requirements of the Act may ultimately determine whether the organisation is allowed to continue its registration. Matters concerning disputes over compliance with rules can be determined by the Federal Court.

In short, the procedures underpinning the creation of federal awards reflect mainly the constitutional requirements concerning 'interstate industrial disputes', and to a lesser degree the organisational procedures for initiating and solving industrial disputes. They also reflect an era when resort to prolonged industrial conflict to achieve (or resist) claims was not legally sanctioned, nor condoned. The compulsory referral of disputes to conciliation and arbitration processes was the central attraction of the Australian (and pre-1991 New Zealand) approaches to dispute resolution because, it was thought, the harmful effects of industrial disputes, certainly prolonged disputes, could be mitigated if not averted.

The requirement that the contents of awards be confined to industrial matters has constrained the issues that awards have been able to address, although the 1980s witnessed a widening of these issues. In section 4 of the Conciliation and Arbitration Act 1904, industrial matters were defined (but not necessarily limited) to the following areas of employment:

a) all matters or things affecting or pertaining to work done or to be done

b) the privileges, rights and duties of employers and employees

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c) the wages, allowances and remuneration of persons employed or to be employed

d) the piece-work, contract or other reward paid or to be paid in respect of employment

e) the question whether piece-work or contract work or any other system of payment by results shall be allowed, forbidden or exclusively prescribed

f) the question whether monetary allowances shall be made by employers in respect of any time when an employee is not actually working

g) the hours of employment, sex, age, qualifications and status of employees

h) the mode, terms and conditions of employment

i) the employment of children or young persons, or of any persons or class of persons

j) the preferential employment or the non-employment of any particular person or class of persons being or not being members of an organisation

k) the right to dismiss or to refuse to employ, or the duty to reinstate in employment, a particular person or class of persons

l) any custom or usage in an industry, whether general or in a particular locality

m) any shop, factory or industry dispute, including any matter which may be a contributory cause of such a dispute

n) any question arising between two or more organisations or within an organisation as to the rights, status or functions of the members of those organisations or of that organisation or otherwise, in relation to the employment of those members

o) any claim that the same wage shall be paid to persons of either sex performing the same work or producing the same return or profit or value to the employer

p) any question as to the demarcation of functions of employees or classes of employees, whether as between employers and employees or between members of different organisations, and

q) the provision of first aid equipment, medical attendance, ambulance facilities, rest rooms, sanitary and washing facilities, canteens, cafeteria, dining rooms and other amenities for employees.

These are a reasonably broad set of parameters for their time; nevertheless, they do not broach management practices, nor work organisation issues, nor other matters concerning management-staff consultation. The effect of so limiting industrial matters to those

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specified was to, inter alia, protect management's discretion to operate an enterprise as it saw fit.

Industrial matters: managerial autonomy challenged

However, the view that industrial matters should be so confined came under increasing challenge in the 1960s. Some notable disputes include the One Man Bus cases10 concerning the reduction of numbers in bus crews operating in the Melbourne public transport system. Later in the 1970s in the Federated Clerks Case11 concerned the union receiving advanced warning on, and being consulted over technological change. In the Social Welfare Workers Case12 the High Court moved away from the notion that 'industrial disputes' be confined to disputes in productive industry and organised business carried on for the purpose of making profits. Later, the High Court recognised in Cram's case13 the right of unions to be consulted over management issues such as the determination, or change to manning levels in the operation of an enterprise. In a unanimous decision the Court held:

…Many management decisions, once viewed as the sole prerogative of management, are now seen as directly affecting the relationship of employer and employee and constituting an 'industrial matter'.

A dispute about the level of manning is a good example. It has a direct impact on the work to be done by employees: it affects the volume of work to be performed by each employee and the conditions in which he performs his work. So also with the mode of recruitment of the workforce. The competence and reliability of the workforce has a direct impact on the conditions of work, notably as they relate to occupational health and observance of safety standards.14

The long standing Conciliation and Arbitration Act's definition of industrial matters remained until the Industrial Relations Act 1988 replaced the former Act and deleted the definition of industrial matter. The new legislation incorporated a key recommendation of the Hancock Committee's review of Australia's industrial relations system which sought for the federal industrial tribunal the:

widest possible jurisdiction within the constitutional power of section 51(35) to hear and determine industrial disputes involving employers and employees and/or their representative organisations.15

Recently, a full bench of the AIRC affirmed its authority to arbitrate on managerial issues in relation to the Queensland coal industry in the statement:

Undoubtedly, in a proper case (i.e. where a bargaining period and protected action are not involved) the Commission has a power to arbitrate about the issue of a reduction in the workforce and the terms upon which that may occur and would be able to make an

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award. So too could the parties reach an agreement about a reduction in hands that did not operate in a way contrary to any provisions of the Act.16

In summary, by the end of the 1980s, there had been a discernible trend to broaden the matters which could be addressed in awards. Provisions concerning occupational health and safety, technological change and consultation over major organisational change were included in awards as the content of these provisions was interpreted to fall within the definition of industrial matter.

Nevertheless, widening the scope of awards did not ensure that the documents were necessarily 'modern'—they have often included clauses and classifications describing operational structures which industry may have long by-passed.

Award simplification: the Hawke-Keating Governments' approach

Guidelines or principles for modernising federal awards were adopted by the Australian Conciliation and Arbitration Commission in its national wage case decision of August 1988.17 The cause for restructuring awards was at that time also championed by the then Treasurer, Mr Keating and a strategy to modernise awards was canvassed in the 1988-89 Budget Papers. There it was contended:

Most awards have become outdated, their classification structures and conditions no longer appropriate to modern economic, technological and industrial circumstances…They are in need of substantial review and restructuring...

At its simplest level, award restructuring can merely involve overhauling an existing award by deleting irrelevant job categories and reducing their number by grouping together job classifications…award restructuring, however, goes beyond the revision of job classification structures (and) can include a range of issues, for example, work organisation and working time arrangements and payment systems, depending on the particular award and the circumstances of the industry…

Award restructuring is not a new phenomenon. Limited changes have occurred over the past few years using the mechanisms available under the wage fixation principles applying at the time, such as Work Value Change.18

Section 151 of the Industrial Relations Act 1988, accordingly, introduced a requirement that the Australian Industrial Registrar review federal awards over five years, to check that they were still active and had not been dispensed with or been superseded by other instruments or arrangements. For the 2973 consolidated awards then maintained, the Registry reported in the first section 151 review (1993):

Pursuant to section 151 of the Act, the first review of the currency of awards of the AIRC commenced in May 1993. At this stage approximately 390 awards have been

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identified as not being varied for at least five years. These awards will be referred to the parties for clarification of their status. The review should be completed early in the new financial year.19

It was later reported by the Registrar that 196 awards were set aside arising from the section 151 process and the number of consolidated awards numbered 2733.20 Section 151 essentially remains the same provision in the WR Act, and the latest annual report from the AIR/AIRC indicates that since the initial section 151 review, 1272 awards have been identified for review with over 50 per cent of these being set aside.21

Proposals to take the award reform process further were canvassed both in amendments to the Industrial Relations Act and also announced in Working Nation.

The Industrial Relations Reform Act 1993 incorporated an additional award review requirement in a new section 150A. This provision required a three yearly review of federal awards to see that award terms were up to date and relevant; that terms did not discriminate against employees on a number of criteria including race, colour, religion and others; that provisions were not otherwise obsolete; that the award was expressed in plain English; that provisions were structured in a reasonably understandable way and that matters were not prescribed in unnecessary detail.

However, the Commonwealth's submission to the AIRC's Safety Net Adjustment and Review in 1994 suggested that the s.150A award review could be used to assist the transition to enterprise bargaining:

…s. 150A goes beyond a 'housekeeping' exercise for awards and represents an important factor in facilitating the effective transition of the system as a whole to direct bargaining at the enterprise and workplace level. Encouraging bargaining over a wide range of issues will help ensure that arrangements are appropriately tailored to the enterprise or workplace so that productivity gains and associated benefits are maximised ...

The Commonwealth considers that the s. 150A process should not result in a gutting of conditions from awards. Rather s. 150A is an important factor in developing clearer and more relevant protections under awards which will underpin and facilitate the transition over time to an increasing number of matters being addressed by direct bargaining.22

The AIRC established a pilot review of selected awards and the formation of central working parties to conduct the review. In its next report of the progress of these structures, the AIRC identified that key issues to be pursued under section 150A would be the development of an anti discrimination model clause, a review of the enterprise flexibility model clause, facilitative and majority clauses in awards and agreements and updating awards to reflect test case standards.23 The AIRC's emphasis on enterprise flexibility, facilitative and majority clauses recognised the need for quick changes to enterprise procedures (e.g. start and finish times) with simple agreement of employees, or, where a

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multiplicity of provisions from different awards addressed the one issue in the enterprise, the clause which covered the majority employed would be taken to be the one used. The AIRC later produced a resource guide for industrial parties on award simplification.24 Agreement was reached in the Australian Public Service to rationalise some 70 awards and replace these with one award.25

Working Nation outlined the Keating Government's urgency to modernise awards and provided more detail on the Government's objectives:

The Government sees the process of further reforming awards and removing detailed prescription as vital. The process of overhauling the classification structures of awards, allowing for multiskilling, flexible job design, and clearer career paths has been a major initiative…In addition there is a need to simplify awards to make their operation more flexible, while retaining their safety net function. An important role of the AIRC is to review substantially all federal awards within a three year time frame and to remedy any deficiencies, such as obsolete and unnecessarily detailed provisions.26

The Coalition Government's approach

The content of federal awards was highlighted in the Coalition's industrial relations election platform statement Better Pay for Better Work in February 1996.27 There it was put:

We will require the AIRC to expedite and make more effective its existing review of awards and to remedy any deficiencies such as obsolete and unnecessary detailed provisions. Over time, existing paid rates awards should become minimum rates awards after consultation between the relevant parties. The process of award simplification will not be a device to reduce wages.28

In the event, a potentially far reaching award review exercise has been prescribed in the Workplace Relations and Other Legislation Amendment Act 1996 (WROLA, which, in respect of most of its 21 schedules, became operative in January 1997).

The WROLA Act introduced a requirement that all federal awards be reviewed within 18 months (the 'interim period') of Schedule 5 of the Bill coming into effect (1 January 1997), i.e. by July 1998. Section 89A prescribes the issues which award provisions could address, these are:

a) classifications of employees and skill-based career paths

b) ordinary hours of work and the times within which they are performed, rest breaks, notice periods and variations to working hours

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c) rates of pay generally (such as hourly rates and annual salaries) rates of pay for juniors, trainees or apprentices, and rates of pay for employees under the supported wage system

d) piece rates, tallies, bonuses

e) annual leave and leave loading

f) long service leave

g) personal/carer's leave including sick leave, family leave, bereavement leave, compassionate leave, cultural leave and other like forms of leave

h) parental leave

i) public holidays

j) allowances

k) loadings for working overtime, or casual or shift work

l) penalty rates

m) redundancy pay

n) notice of termination

o) stand-down provisions

p) dispute settling procedures

q) jury service

r) type of employment (full-time, part-time, casual, regular part-time work and shift work)

s) superannuation, and

t) pay and conditions for outworkers but only to extent necessary to ensure that their overall pay and conditions of employment are fair in comparison with pay and conditions of employment specified in a relevant award or awards for employees who perform the same kind of work at an employer's business or commercial premises.

However, as has been noted, award provisions now incorporate issues other than those specified above, but the simplification (or 'award stripping') process requires non specified provisions to be reviewed. Also, section 89A provides that the AIRC can only make

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minimum rates award (s.89A(3)). There are limits put upon the power of the AIRC to make award provisions concerning part-time work (section 89A(4), (5)). Section 89A(6) allows for award provisions incidental to the 20 allowable matters where it is necessary for the effective operation of award. Under section 89A(7) an exceptional matters order can be made re matters not falling within the 20 allowable matters (see also section 120A). Under section 106(1) a full bench of the AIRC may establish principles concerning the making or varying awards regarding each of 20 allowable award matters.

Transitional Provisions of the WROLA Act

Transitional provisions are provided at Part 2 of Schedule 5 of the WROLA Act to conduct an award review process to ensure that awards comply with section 89A. These transitional provisions are detailed here because they form the basis of much argument in current AIRC proceedings to simplify awards.

Item 49(1) of Part 2 of Schedule 5 of the WROLA Act allows one or more of the parties to an award to apply for a variation of the award during the interim period. Importantly, under item 49(4), the AIRC may only deal with the application by arbitration if it is satisfied that the applicant or applicants have made reasonable attempts to reach agreement with the other parties to the award about how the award should be varied and the treatment of matters that are not allowable award matters (emphasis added). Item 49(5) requires the AIRC to convert rates awards to minimum rates awards. But also under item 49(7), the AIRC must, if it considers it appropriate, review the award to determine whether or not it meets the following criteria:

(a) it does not include matters of detail or process that are more appropriately dealt with by agreement at the workplace or enterprise level

(b) it does not prescribe work practices or procedures that restrict or hinder the efficient performance of work (in this context note also section 143 of the WR Act which requires award provisions to not prescribe restrictive work practices, nor contain provisions which hinder productivity)

(c) it does not contain provisions that have the effect of restricting or hindering productivity, having regard to fairness to employees.

Under item 49(8) the AIRC must also review the award to determine whether or not it meets the following criteria:

(a) where appropriate, it contains facilitative provisions that allow agreement at the workplace or enterprise level, between employers and employees (including individual employees), on how the award provisions are to apply

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(b) where appropriate, it contains provisions enabling the employment of regular part-time employees

(c) it is expressed in plain English and is easy to understand in both structure and content

(d) it does not contain provisions that are obsolete or that need updating

(e) where appropriate, it provides support to training arrangements through appropriate trainee wages and a supported wage system for people with disabilities, and

(f) it does not contain provisions that discriminate against an employee because of, or for reasons including, race, colour, sex, sexual preference, age, physical or mental disability, marital status, family responsibilities, pregnancy, religion, political opinion, national extraction or social origin.

At the time of the 1996-97 Budget, the Government argued that award reforms along these lines would assist negotiations at the workplace level:

(Award simplification) should help to reduce prescription in workplace practices. This will be assisted by the proposed insertion of provisions which will allow for the more flexible application of award provisions by agreement at individual workplaces…As a result employers and employees should, over time, more easily develop work practices which best suit their needs.29

The most recent award simplification process has been substantially prescribed under the WR Act, but the period to conduct the review has been narrowed (from three years under section 150A of the previous Act to 18 months). In addition, the Act's requirement of narrowing award provisions to the prescribed allowable award matters (while being vague on the treatment of non-allowable matters) has possibly heightened difficulties inherent to the task..

Who is covered by awards?

With the complicated task of simplifying federal awards legislatively mandated, it is pertinent to ascertain the extent of award coverage. The Australian Bureau of Statistics (ABS) released data on the coverage of workers by awards in 1990, the last time it conducted such a survey.30 The ABS distinguished coverage between under federal and under State awards and reported that the overall incidence of award coverage had slipped over the previous two years falling from 85 per cent of the workforce covered, to 80 per cent. Of award covered employees, almost 40 per cent were then under federal awards, leaving the majority of award workers under the combined State jurisdictions.

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The study is now very dated and there is evidence of a move of award workers from the State to the federal jurisdiction since the 1990 study.31 However, the Australian Centre for Industrial Relations Research and Teaching (ACIRRT) which reviews most of the key federal and State workplace agreements (including individual contracts ) suggests that given the move to enterprise bargaining in all jurisdictions, it is more useful to focus on the split of coverage between enterprise agreements, individual contracts and award only coverage as displayed in the table below .32

Coverage of employees between awards, agreements and individual contracts

Form of regulation Percentage of employees

Awards only 35

Awards and enterprise agreements 30

Registered enterprise agreements 5

Individual contracts 30

Source: ACIRRT, ADAM Report No.11, December 1996

Information concerning the number of employees covered by an enterprise agreement provided at the time of certification provides the basis for ACIRRT's estimates. This table shows that regulation of workers by awards only has been surpassed by the combined advance of coverage of workers under individual contracts and enterprise agreements.

The move from dependence on awards to agreements was also canvassed by the AIRC's Vice President Ross in the recent 'Living Wage' case.33 His decision relied on data compiled in the Federal Government's Workplace Agreements Database (WAD). This showed that 3989 certified agreements were formalised in 1995-96 as compared with 2563 agreements in the 1994-95. An additional 1061 agreements were formalised in the September quarter of 1996. The WAD also showed that about 1.74 million employees were covered by federal agreements in September 1996, having risen from 1.26 million employees so covered at the end of 1994. Vice President Ross concluded from this evidence that the increase in numbers of agreements and those covered by them:

supports the conclusion that there has been a decline in the number of employees who depend on the award safety net.34

The reduced role of awards was also confirmed in the 1995 Australian Workplace Industrial Relations Survey (AWIRS) undertaken by the (then) Department of Industrial Relations. The results of this survey have recently been published.35 It found that workplaces with award coverage declined from 98 per cent to 96 per cent over the five years since the last survey; and in 1995, almost 40 per cent of workplaces (not

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individuals) had agreements which partially or wholly overrode the award.36 In summary, there is strong evidence suggesting that awards (of all jurisdictions) do not exercise the influence they once did. This is because of the growth of contracts and agreements.

Award simplification: the test case

Applications to expedite the removal of non-allowable award matters were made by affiliates of the peak employer body, the Australian Chamber of Commerce and Industry (ACCI) to the AIRC in February 1997—not long after the relevant WROLA schedule came into force. The ACCI sought that a full bench be established to ensure that awards fell within section 89A (and section 143) specifications by selecting certain key awards with which the AIRC would develop simplification principles.37

The awards nominated in the review applications are the:

− Graphic Arts-General-Interim Award 1995

− the Hospitality Industry-Accommodation, Hotels, Resorts and Gaming Award 1995

− the SDA (Shop Distributive and Allied Employees' Association) (Victoria Shops) Interim Award 1994

− the SDA (Food and Liquor) Interim Award 1994

− the SDA (Booksellers and Stationers) Interim Award 1994 and

− the Nurses (ANF-WA Private Hospitals and Nursing Homes) Consolidated Award 1991.38

One important employers' organisation, the Metal Trades Industry Association (MTIA) initially sought a separate path from the ACCI and reported to the AIRC that it would propose a number of award simplification options for its members to consider. The union counterpart to the MTIA, the Metal Trades Federation of Unions resolved to exhaust conciliation processes before conceding to arbitration. The resulting MTIA agenda concerns the adoption of facilitative clauses, whereby an individual in a workplace can agree with an employer about the application of an award clause and the spread of ordinary hours (to reduce the application of penalty rates).39 This more cooperative approach appears to be producing good results, with agreement being reached to rewrite the very complex Metal Industry Award, with all but a few issues requiring further deliberation.40

The ACCI was granted a full bench reference for its section 89A applications in April and a three point direction was issued by the AIRC which, inter alia, indicated that members

Award Simplification: Progress Report


of the AIRC would be made available to conduct conferences for each of the six awards if requested.41 ACCI members have submitted draft replacement awards which, they believe, embody the award simplification principles.

Unions have a different view: in the application to simplify the Graphic Arts Award, the relevant union (the Australian Manufacturing Workers Union or AMWU) sought to ascertain precisely which provision of the Act that the ACCI was relying on to remove each of the 18 award provisions it targeted, and what the grounds for removal were.42

The AIRC full bench hearing the ACCI test case applications issued a statement on 27 June stating that it would begin arbitrating on the test case award simplification process if it was satisfied that by a 23 July report back, conciliation had been exhausted. As well, the then AIRC president (Justice Deirdre O'Connor) required that all heads of panels commence a review of all federal awards to be run in conjunction with the test case applications. The AIRC indicated that it would continue to assist with conciliation proceedings, but if in later report-backs it was satisfied that conciliation had been exhausted, it would proceed to program for arbitration of the outstanding issues. The AIRC also indicated that it was not satisfied that conciliation had been exhausted.43

Concerning the application to simplify the Hospitality award, the relevant union, the Australian Liquor, Hospitality and Miscellaneous Workers Union (ALHMWU) has sought to retain right of entry award provisions for its officials by arguing that right of entry is incidental to avoiding industrial disputes (i.e. falls within section 89A(6)) and will also try to maintain certainty of hours of work for part-timers by specifying pay rates. While in respect of another of the awards listed, the Australian Nurses Federation (ANF) drafted a revised WA private hospitals and nursing homes award and considered it as coming entirely within allowable matters thereby rejecting employer assertions that, for example, ten provisions concerning rostered days off needed to be excised from the earlier document.44

In the hearing of 23 July, the ACTU responded to ACCI and Federal Government submissions for the AIRC to arbitrate, by arguing that employers had refused to hold meaningful negotiations and the AIRC could not arbitrate without first actively assisting the parties to reach agreement as required by item 49(4) of the WROLA Act. The ACTU argued that any arbitration should only proceed on an award by award basis having regard to the circumstance of each award—the situation has been summarised thus:

Employers and unions hold starkly contrasting views on which award provisions fall within the 20 allowable matters.45

The parties were to report on progress by 26 August. On 17 August 1997 Geoffrey Guidice was appointed President of the Australian Industrial Relations Commission. He is to head the full bench which will arbitrate on award simplification in the hospitality industry award.

Award Simplification: Progress Report


On 1 September, the full bench stated that it proposed to deal with the Hospitality Award by arbitration, but it was not satisfied that conciliation had been exhausted with respect to the Graphic Arts and Nurses Awards.46

At further hearings on 15-16 October the ACCI argued that 53 conditions from the Graphic Arts Award be removed. These include:

• minimum and maximum hours for part-time workers

• union right of entry and preference clauses

• reduction in the rate of penalty rates on Sundays and Public Holidays (the reduction in penalty rates is being argued under section 143: award provisions should not hamper productivity)

• training

• stop work meetings

• notification to the CES during retrenchments and

• provision of after hours transport.47

The Commonwealth's submission supports the ACCI. Further hearings are planned for early November and a final hearing date of November 17. A decision on this test case is expected then or soon after.

Related award simplification developments

In a number of award simplification rulings, developments have been taking place away from the test case review. For example, a full bench did not accept that section 89A prevented the AIRC granting the Finance Sector Union's application for accident pay to be inserted into the Bank Officers award. It also accepted that a claim for medical expenses for the costs of an injury incurred at work was an 'allowance', but refused the claim for impairment insurance.48 Elsewhere, a training clause in the National Metal and Engineering On-Site Construction Industry Award was held by Senior Deputy President Watson to be necessary to give effect to a new skills-based classification structure.49

A recently made award, the Hotels (ACT) award was also submitted by the Australian Hotels Association for a review of provisions (to comply with section 89A). The Australian Liquor, Hospitality and Miscellaneous Workers Union relied on an argument that the Acts Interpretation Act upheld the right of the union for effect to be given to the

Award Simplification: Progress Report


award, and a full bench found in favour of the union (which meant that the allowable award matters issue did not need to be considered).50

The New South Wales Government has received advice from the NSW Solicitor-General concerning the validity of sections of the WR Act, particularly section 89(A)(3) which specifies that when making an award, it should be confined to a minimum rates award. This, the Solicitor-General argues, imposes restrictions on the AIRC's power to settle industrial disputes. The NSW Government is considering whether to challenge the WR Act in the High Court.51 It might be noted that at the time when the Bill was being debated, Professor Ron McCallum a respected academic on federal industrial law, felt satisfied that the Bill would withstand legal challenge on its key provisions.52

Another development appears to have been the adoption of award clauses in enterprise agreements. A review of 100 recent enterprise agreements has concluded that many employers have agreed to roll award entitlements into their enterprise agreements:

A huge amount of time, effort and manpower is going into the Award Simplification process. But on the other side of the coin, there is a very clear case that a lot of employers are simply incorporating all the award provisions into an EBA (or are having written into the agreement, that the agreement should be read in conjunction with the award at such and such a date).53

Also, the AIRC has refrained from removing provisions which prefer union members over non-union members in respect of termination of employment from the main Australian Public Service General Employment Conditions Award. Arguments put by the Community and Public Sector Union that the preference issue was subject to bargaining processes within APS agencies (therefore the clause forms part of the no disadvantage test) were accepted, however the application to delete right of entry provisions in the same award was granted.54 Unions are interpreting this decision as having a potential for delaying award simplification in any circumstances where an enterprise covered by the award is conducting enterprise negotiations.

The situation where 'mirror' State awards parallel federal awards creates the possibility of having non-allowable clauses of federal awards 'enforced' through the State award. This avenue has been used in the past where the federal award contains a 'savings' clause, which saves a matter for State regulation. Note however that the Hancock report did not favour such an approach, and preferred that the AIRC be able to hear most industrial disputes.55 In any case, it is too early to judge whether a 'savings' approach would work, and if it did, it is most likely to operate in a piecemeal way.

Award Simplification: Progress Report


A Conclusion?

It is helpful to ask what will be gained if award simplification proceeds, at least to a point where clauses are removed from awards, or nominated as being unenforceable. The main gain (for employers) will be that the bar for the no disadvantage test (NDT, as applies in the Act to various forms agreements) will be set lower, given that award provisions will be less. This will mean that in future enterprise bargaining rounds, it will be easier for an agreement to meet the NDT, and this is the main force behind employers' push to simplify awards. Therefore as noted by The Australian there is much at stake:

For the Government and employers, it is vital that this case puts the tightest possible interpretation on what falls into the 20 allowable matters stipulated in the Act, and removes award clauses that fall outside. Unions have been arguing for the widest possible interpretation of the 20 allowable matters.56

Nevertheless, award simplification or modernisation as has been outlined, has been a concern of ALP and now Coalition governments. A mild form of review commenced in 1989 leading to more than one hundred awards being set aside (some four years later). This review process was augmented in 1994 by section 150A review process intended to run for three years. This review, in part, developed streamlined and structure award formats in 1995, but debates over the pace of award review, held within the safety net review (the successor to national pay cases), allowed the then Government to argue for a more widespread award review to hasten enterprise bargaining, and so attracted the hostility of unions.

The current review under the WR Act creates an urgency to award review by stipulating that by July 1998 award provisions not coming within allowable matters are rendered unenforceable, but also the Act does not state clearly how other provisions are to be treated.

Should a decision be given on 17 November to delete award clauses without providing direction on their treatment outside of the award, it is likely that the unions will consider a challenge, presumably in the Federal Court. More likely might be the provision of guidelines which might then be applied on a case by case basis.

Award Simplification: Progress Report



1. The Hon. Peter Reith MP, Minister for Industrial Relations, Edited Address to Austcham, 10 April 1997. The Department of Industrial Relations became the Department of Workplace Relations and Small Business from 18 July 1997.

2. Outlined in the 1997 Foenander lecture delivered by Professor Ron McCallum, see Workforce 1136, 10 October 1997.

3. Section 101 of the WR Act.

4. Applications to vary awards can be made under section 113 of the WR Act.

5. The AIRC's power to make and/or vary awards is found at section 111 (1) of the WR Act. The provision is based on the conciliation and arbitration power of the Australian Constitution at section 51 (35), and interpretations of this provision in the WR Act (and its predecessors) by the High Court.

6. For example, the payment of union subscriptions by deduction from the employer's payroll has not been accepted by the AIRC as an industrial matter. Recently, the Australian Workers Union has sought to reverse this through protracted legal proceedings.

7. According to Brian Brooks in Why Unions? (CCH 1980) the process of unions consulting with their members in award-making processes is thus:

Members are asked for their opinions as to what sort of matters should be demanded at meetings on the job. The next step is for the union to establish a negotiating committee…The members are then consulted on the form of the final log of claims which is sent to the employers. Usually the employers reject the claims and state that they will offer the wages and conditions which are found in the present award. Once this statement is delivered to the union it then notifies the AIRC (AIRC) that there is a dispute.

8. Section 195(b)(vi) of the WR Act.

9. Section 195 (a) and section 204 of the WR Act.

10. 108 Commonwealth Law Reports (C.L.R.) 166, 113 C.L.R. 228, 115 C.L.R. 443.

11. 1984 Australian Industrial Law Review (A.I.L.R.) paragraph 272.

12. 57 Australian Law Journal Reports (A.L.J.R.) p. 574.

13. Re Cram: Ex parte New South Wales Colliery Proprietors Association 72 Australian Law Reports (A.L.R.) p. 161.

14. ibid., p. 169.

15. Recommendation 13 of the Australian Industrial Relations Law and Systems: Report of the Committee of Review, Volume 2: Report, AGPS, Canberra 1985, p. 376.

Award Simplification: Progress Report


16. AIRC, Print P0859, 12 May 1997.

17. AIRC, Print H4000, 12 August 1988.

18. Labour Market Reform: The Industrial Relations Agenda, Budget Related Paper No.9 (1988- 89) circulated by the Hon. R.Willis, Minister for Industrial Relations.

19. Australian Industrial Registry Annual Report 1992-93.

20. Australian Industrial Relations Commission/Australian Industrial Registry Annual Report 1995-96, p. 6.

21. Australian Industrial Relations Commission/Australian Industrial Registry Annual Report 1996-97, p. xiii.

22. Department of Industrial Relations, Safety Net Adjustments and Review July-September 1994 Commonwealth Government Submissions and Exhibits, AGPS Canberra, 1994.

23. Australian Industrial Relations Commission, Third Safety Net Adjustment and Section 150A Review, 9 October 1995.

24. Australian Industrial Relations Commission, Making Federal Awards Simpler (1995).

25. See Attachment B of Schedule 1: 'section 150A Review and Award Rationalisation and Simplification' in Continuous Improvement in the APS, Enterprise Agreement 1995-96.

26. The Hon P. J. Keating Working Nation, policies and programs, AGPS, Canberra, 1994, p. 33.

27. Better Work for Better Pay, The Federal Coalition's Industrial Relations Policy, February 1996.

28. ibid., p. 8.

29. Budget Statements 1996-97, Budget Paper 1, pp. 2-46.

30. ABS, Award Coverage Australia, Cat. No. 6315.0.

31. The 1995 workplace industrial relations survey confirmed that federal award coverage increased, while that of State awards fell between 1990 and 1995, see Morehead, A. et al. Changes at Work: The 1995 Australian Workplace Industrial Relations Survey, Longmans, Melbourne, 1997, p. 208.

32. Australian Centre for Industrial Relations Research and Teaching, Agreement Database and Monitor (ADAM) Report No.11, December 1996.

33. Australian Industrial Relations Commission, Print P 1997, 22 April 1997.

34. ibid., p. 67.

35. Morehead, A. et al. Changes at Work, op. cit.

36. ibid., pp. 207, 210.

37. Workforce 1104, 21 February 1997.

38. Award simplification hearings have been listed under C.60081/97 (and others)

Award Simplification: Progress Report


39. See Industrial Relations and Management Newsletter, Vol. 14, No. 8, September 1997.

40. 'Overhaul for Metal Industry Award', The Australian Financial Review, 6 November 1997.

41. AIRC, Print P0391, 23 April 1997.

42. Workforce 1106, 7 March 1997.

43. In transcript of hearing 26 June 1997; see reference in AIRC Print P 3469, 24 July 1997.

44. On unions 'shoe-horning' award provisions into allowable award matters (in draft awards), see Workforce 1122, 4 July 1997.

45. 'No hope of a union deal on stripping back awards' The Australian Financial Review, 24 July 1997.

46. AIRC, Print P4530, 1 September 1997.

47. 'Hotel employers put the squeeze on penalty rates', The Australian Financial Review, 16 October 1997.

48. AIRC, Print P1297, 29 May 1997.

49. AIRC, Print P4026 25 May 1997. The industry panel (of commissioners) may review this decision.

50. AIRC Print P1116, 23 May 1997.

51. 'High Court challenge to IR laws', The Australian Financial Review 4 October 1997.

52. 'Laws must cross a divide' The Australian Financial Review, 24 May 1996.

53. Industrial Relations and Management Newsletter, Vol. 14, No.8, September 1997.

54. AIRC, Print P4693, 2 September 1997.

55. Australian Industrial Relations Law and Systems: Report of the Committee of Review, Volume 2: Report, AGPS, Canmberra, 1985, p. 351.

56. 'Welcome to arbitration-90s style', The Australian, 18 September 1997.