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Industrial Relations Reform Bill 1993



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House: House of Representatives

Portfolio: Industrial Relations

Commencement: Substantive provisions are to come into effect on a date fixed by proclamation, or if they do not commence within six months of the proposed Act receiving Royal Assent, they will commence on the first day after that period. The Bill also provides that no action may be instituted in the proposed Industrial Relations Court until the substantive parts of the Bill have been proclaimed.

Purpose

To amend the Industrial Relations Act 1988 (IR Act), the Trade Practices Act 1974 (TPA), the National Labour Consultative Council Act 1977 (NLCCA), the Public Service Act 1922 (PSA), the Judiciary Act 1903 (JA), and the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cross Vesting Act) to:

* facilitate the spread of enterprise bargaining within the federal system of industrial relations;

* in reliance on various treaty obligations, guarantee certain minimum standards of employment for all Australian workers;

* create a limited "right to strike" by modifying the operation of statutory and common law sanctions on industrial action;

* create a new federal court to be known as the Industrial Relations Court of Australia;

* restructure consultative arrangements involving the Commonwealth, employers and unions; and

* facilitate the growth of enterprise unions and worker organisations by lowering the threshold for union registration under the federal Act from 10,000 to 100.

The Bill is associated with the Industrial Relations Court (Judges' Remuneration) Bill 1993 which will amend the section 358 of the IR Act to provide for payment of salaries and related entitlements of judges of the proposed Industrial Relations Court of Australia.

The Government, by agreement with its Accord partner, aims to have the legislation enacted into law by the end of the present calendar year. It may be noted, however, that the Senate agreed on 28 October 1993 that the Bills would be referred to the Senate Standing Committee on Employment, Education and Training for consideration. The Committee held its first set of hearings on Thursday 11 November 1993 and is to report in the week beginning 22 November 1993.

The Minister for Industrial Relations, the Hon Laurie Brereton, has indicated that the Government intends moving " . . . a number of technical and drafting amendments when the Bill is debated." 1 Present indications are that the number of Government amendments, including those agreed in response to representations from the minor parties, may exceed 100. The Secretary of the NSW Labor Council, Mr Easson, has also indicated that the union movement will be proposing an extensive range of amendments including provision for independent contractors and quasi-employees to have the benefit of the minimum guarantees that will be available to employees under the legislation. 2

Readers are cautioned that the text reflects the Bill as introduced on 28 October 1993 and does not incorporate references to mooted Government amendments which may become available in the week commencing 15 November 1993.

Background

Australia's labour force exceeds 8.5 million or 63 percent of the civilian population aged 15 or more, with about 40 percent of employees being members of a trade union. Almost all employees receive at least four weeks paid annual leave. Paid maternity leave is a widespread condition of employment and an increasing number of workers are securing access to a guaranteed entitlement of 12 months unpaid parental leave. Most employers are also obliged to contribute to the provision of superannuation benefits of their employees.

The Australian Council of Trade Unions (ACTU) is the national peak body of trade unions and all major unions are affiliated. A number of bodies represent business and employer interests. These include the Australian Chamber of Commerce and Industry (formerly the Confederation of Australian Industry), the Business Council of Australia (BCA) and the Metal Trades Industry Association (MTIA).

The Australian Constitution divides responsibility for industrial relations amongst the Commonwealth and six State Governments. The powers of the federal government to set pay and conditions are limited to those specifically enumerated in the Constitution. State governments retain residual power over industrial relations within their own State boundaries.

Certain minimum conditions including maximum ordinary time hours of work, public holidays, superannuation entitlements, regulation of occupational health and safety have also been (at least in part) enshrined in legislation.

Until the 1980s, it was assumed that the Commonwealth could not intervene directly to settle industrial disputes or determine rates or pay or conditions of employment in the private sector, but could only establish tribunals to deal with industrial disputes that extend beyond the boundaries of any one State. State governments are not subject to similar constitutional limitations but may only deal with disputes within a single State.

In practice, however, governments both State and federal, have established tribunals to assist in the resolution of labour disputes and promote industrial peace by way of third party arbitration. The main tribunal in the federal arena is the Australian Industrial Relations Commission (AIRC).

The decisions of industrial tribunals are generally binding and guarantee minimum employment rights. Binding decisions of industrial tribunals are usually referred to as "awards" or "determinations". Non binding decisions are called "recommendations". Award conditions may be enforced through the courts and, in the federal jurisdiction, each award lists those parties (employers and unions) who are bound by it.

This Bill proposes a number of major changes to Australia's system of industrial relations, many of which are controversial and, in some instances, of a highly technical nature. Although a number of the proposed measures are not unconnected, the 'background' to each major initiative is located in the Main Provisions portion of this Digest.

Australia's system of industrial relations, itself a cross-Tasman transplant, has frequently been criticised as highly 'legalistic'. Moreover, the arrangements for setting he rights of employers and employees differ significantly from other OECD countries.

While the structure of this Bill reflects the existing division of responsibilities for industrial relations between the Commonwealth and the six State systems, it is founded (in large part) on more expansive interpretations of constitutional heads of power adopted by the High Court in recent times. Of particular note is the proposed reliance on the "corporations power" [section 51(xx) of the Constitution] and the "external affairs power" [section 51(xxix) of the Constitution] to supplement the traditional (but limited) power conferred on the Commonwealth by the "industrial relations power" [section 51(xxxv) of the Constitution].

The legislation also reflects the tension between the objective of retaining elements of compulsory third party arbitration of industrial disputes and the stated desire of most participants to 'lower the centre of gravity' of industrial relations. The course followed by the Bill leaves the future of third party compulsory arbitration as a central feature of bargaining arrangements. However, the Bill also confers on some workers a limited "right" to take direct industrial action in instances where the industrial "umpire" (the Commission) is no longer available to resolve disputes.

Despite, the division of industrial matters occasioned by perceived constitutional limitations on the Commonwealth's incapacity to enact a national industrial relations code, and the reluctance of the parties to move away from traditional forms of dispute resolution, the focus of Australian industrial relations is shifting slowly (if unevenly) to the individual enterprise. The institutions associated with national and industry level bargaining, however, remain steadfastly in place.

This Bill seeks to enhance flexibility within the system without changing the fundamental nature of the tribunal system itself. Whether a more flexible and less bureaucratic system of industrial relations can, or is likely, to follow the passage of such legislation is the key to debate on this Bill.

Australia's IR system is said to have failed to adapt to the demands of what is now a more "open" and internationalised economy. The system is said to be too "centralised", inflexible, to be in need of "de-regulation", to constitute a brake on individual rights and to be a significant cause of unemployment.

Defenders of the arbitral system argue that the apparent stasis in labour market institutions belies the degree of change that has occurred within the existing framework over the past decade. Declining levels of industrial disputation, prolonged periods of wage moderation, the growth in enterprise level bargaining, the decline in the number and significance of wage movements based on comparative wage justice (CWJ), maintenance of a relatively egalitarian wages structure and increased co-operation between federal and State tribunals, it is said, all show the adaptability and continuing relevance of the arbitral system.

Many of the above "tensions" are reflected in the official data and other survey material.

For example, whilst the tribunal system is frequently criticised as too centralised, dispute resolution machinery is predominantly federalist in nature with the majority of Australian workers not in fact covered by federal awards. The latest ABS Survey of award coverage (conducted in May 1990) revealed that approximately only 32 percent of workers were covered by federal awards or collective agreements, 48 percent were covered by various State awards and collective agreements and the other 20 percent were award free. 3

Whilst many business organisations were arguing that the award system was inefficient and an impediment to economic growth, 4 data compiled in the most substantial study of Australian workplaces, the 1991 Australian Workplace Industrial Relations Survey (AWIRS), 5 found evidence to the contrary. AWIRS, in a survey group of managers from over 2000 workplaces employing more than 20 workers, recorded that only 7 percent saw the award system as a constraint. 6

The OECD in its 1989/90 Economic Survey of Australia, reported something of a mixed result on the issue of flexibility noting that: 'Compared to other OECD countries, Australian labour markets are in some respects already flexible, real wages have adjusted fairly rapidly to changes in unemployment levels. Labour mobility and turnover between firms appears to be high by international standards suggesting, at first view, that relative wages are sufficient to bring about the necessary reallocation of labour. However, conditions inside enterprises are impeding their capacity to adjust to changes in their economic environment, and inadequate internal labour market flexibility may have been reflected in higher external flexibility just referred to.' 7

Since the publication of this report, further efforts have been made to promote greater labour market efficiency both through opening opportunities for enterprise level bargaining and by the elimination of restrictive workpractices and job demarcations.

"Pro-market" initiatives include the AIRC's adoption of principles for enterprise bargaining, 8 and amendments to the federal industrial relations legislation in 1988 and 1992 to facilitate enterprise bargaining. The last three years has also witnessed various changes to bargaining arrangements under most State laws. (The most radical of these legislative changes occurred in Victoria in 1992 and is occurring in Western Australia in 1993.)

Any positive effects of these changes have, of course, been to some extent masked by the government and commodity price induced recession that saw the seasonally adjusted rate of unemployment rise from 5.7% in August 1989 to a peak of 11.3% in December 1992. 9

The effect of the arbitral system on economic outcomes remains an open question. (Indeed, there has been a long-standing view, principally associated with former President of the Conciliation and Arbitration Commission, Sir Richard Kirby, that the industrial tribunals do not act as an arm of economic policy making, but function primarily to resolve industrial disputes.)

The AIRC and its predecessors, have been associated with a range of wage-fixing principles and an equally varied range of economic outcomes over the course of the last 89 years. The Commission's recent performance, though criticised in some quarters (especially following the April 1991 National Wage Case Decision), has on the "tests" of wage moderation and industrial harmony, been above average. Nominal wage increases in the award area over the past three years have very modest with the indices moving less than 2 percentage points in the past two and a half years. Concurrently, the rate of industrial disputation in terms of days lost per thousand employees is approximately 40% of the rate applying in 1982. Of this reduced figure, disputes over wages, hours of work and compensation represent a relatively small component. For example, in the 12 months to June 1993 disputes over money and hours of work represented less than 15% of the total days lost in industrial disputes. 10

Nonetheless, confidence in the tribunal system and the AIRC, in particular, is not high if opinion poll evidence is to be believed:

* a survey conducted in October 1984 should that 56% of persons were satisfied with the performance of the federal Commission in relation to wage-fixation; 11

* a Saulwick Poll published in September 1989 showed that the Commission was only preferred by a bare majority of respondents as the preferred option for setting wages and conditions, a fall from 69 (to 50) percent, from a similar survey conducted in 1981; 12 and

* a July 1992 Saulwick Poll recorded the somewhat startling result that only 22% of respondents thought that wages, working hours and conditions should be determined by the AIRC. 13

To restore public confidence in the tribunal system may, of course, require more than can be achieved by legislation alone.

Main Provisions

(a) Objects and the Award system:

Parts 2 and 3 of this Bill reflect proposed changes in the processes of dispute resolution and the reliance on Commonwealth powers other than the arbitral power at the core of section 51(xxxv) of the Constitution.

The industrial parties are to have more responsibility for their own affairs and the role of the AIRC in setting terms and conditions of employment is to be less pervasive. The AIRC's role in dispute resolution, however, is relatively unaltered.

Parts 2 and 3 also contain a number of changes consequential to the creation of what is now a three stream approach to federal industrial relations (ie the award system, certified agreements and the new enterprise flexibility agreements).

Section 3 of the IR Act is to be repealed and replaced by a new objects section ( clauses 4). Proposed section 3(d) makes it plain that the AIRC is to conciliate wherever possible, with arbitration becoming an option of last resort.

Clauses 10 and 11 provide for the repeal of section 94 of the IR Act and its replacement with a less prescriptive set of principles for guiding the AIRC in dispute settlement and award making. Section 94 provides that '[i]n determining an industrial dispute, the Commission shall, subject to section 95, provide, so far as is possible, and so far as the Commission considers proper, for uniformity throughout an industry carried on by employers in relation to hours of work, holidays and general conditions in the industry.' The section was a major bulwark of CWJ and (in theory) remains a significant impediment to the development of more flexible working arrangements. Proposed new section 90AA provides for "consistency" of outcomes as only one of a number criteria and specifically empowers the AIRC to make determinations which depart from the industry standard from time to time.

Clause 14 provides for the inclusion by the AIRC of "enterprise flexibility clauses" in awards. These flexibility clauses are not to be confused with enterprise flexibility agreements provided for in proposed Part VIB Division 3 of the IR Act. Flexibility clauses will be available to employees in the "award stream" and are to be a means of varying terms and conditions of employment of businesses covered by traditional (industry-wide) awards on a case by case basis. The AIRC may only refuse to include such a clause in an award where it is satisfied that the proposed variation would disadvantage the employees who would be affected by the proposed variation. The AIRC must give any union that is party to the relevant award the opportunity of being heard on the proposed variation. This right to be heard does not, however, amount to a right of veto [ proposed subsections 113B(4) and (5)].

Clauses 7, 8 and 9 have the combined effect of more closely defining the role of awards as minimum safety nets and impose on the AIRC an obligation to use conciliation in preference to arbitration wherever practicable. These formal shifts in emphasis have potential implications for employees currently covered by so called paid rate (actual rate) awards. This class of award, which is not presently the subject of separate treatment under the IR Act, is to be insulated from the proposed changes; at least in the short-run [see Clauses 6 and 15 and proposed subsections 170MD(3) and 170ND(7)].

The AIRC is also to be obliged to give speedy consideration to the making of interim awards where such an award will protect the minimum terms and conditions of employees ( clause 12).

Clause 17 provides for the automatic review by the AIRC of awards (excluding certified agreements and enterprise flexibility agreements). All such awards are to be examined at least once every three years and the AIRC is given a wide discretion to order the parties to remedy any deficiency found. "Deficiencies", for the purposes of the provision, include instances where the award is out of alignment with current industrial practice, contains obsolete provisions, is not expressed in plain English and any other "defect" prescribed by the regulations. It is not inconceivable that over a period of years the growth of certified agreements and enterprise flexibility agreements might allow this provision to be used to 'fillet' substantial parts of the existing award system.

(b) Minimum Entitlement - Use of International Labour Organisation (ILO) Conventions:

Part 4 of the Bill provides for amendments to the IR Act to give the AIRC enhanced powers in relation to the setting down of certain minimum conditions of employment, specifically:

* Minimum wages;

* Equal remuneration for work of equal value;

* Termination of Employment; and

* Unpaid Parental Leave.

Highlighting this new approach to the fixing of minimum conditions, Minister Brereton, in his Second Reading Speech, made it clear that:

* the proposed legislation on minimum entitlements would cover all employees including those employees not covered by federal awards;

* it is the Government's view that direct bargaining needs to be underpinned by certain minimum (non negotiable) entitlements; and

* the existence of such guaranteed minima will encourage a greater willingness on the part of workers to contemplate direct bargaining.

The measures to be enacted by this Bill, are advanced in reliance on the external affairs power of the Commonwealth. The proposed use of this head of power in the industrial arena is both controversial and unprecedented, although such a course has been averted to in the past. Indeed, in R v Burgess; Ex parte Henry (1936) 55 CLR 608 at p 687 two High Court judges ( Evatt and McTiernan JJ) were of the view that " . . . it is not to be assumed that the legislative power over 'external affairs' is to be limited to the execution of treaties or conventions; and . . . the Parliament may well be deemed competent to legislate for the carrying out of 'recommendations' as well as the 'draft international conventions' resolved upon by the International Labour Organisation or of other international recommendations or requests upon other subject matters of concern to Australia as a member of the family of nations."

The scope of the 'external affairs power has been subject to considerable attention and has formed the central issue in a number of High Court cases over the past decade. [Refer Koowarta v Bjeke-Petersen (1982) 153 CLR 168; Commonwealth v Tasmania (1983) 158 CLR 1 ("The Tasmanian Dam Case"); Richardson v Forestry Commission (1988) 164 CLR 261 ("the Lemonthyme Forests Case"); and Polyukhovich v The Commonwealth (1991) 65 ALJR 521.]

The gist of these cases is that the law, as presently declared by the High Court, allows the Commonwealth considerable scope for enacting domestic legislation on topics of international concern.

Whilst the issue is not entirely free from doubt, it appears that the existence of a genuine treaty giving rise to an obligation will automatically amount to a matter of "international concern" on which the Commonwealth may legislate.

The validity of domestic legislation may, however, be called into question where the law does not conform with the terms of the relevant treaty or where the law relies on non obligatory terms in an international instrument (ie some ILO "Recommendations"). It must be said, however, that the 'favoured' test for determining whether a law comes within the ambit of a particular treaty is a liberal one. That test seems now to accord with the judgment of Deane J in the Tasmanian Dam Case where His Honour observed: ' [t]he law must be capable of being reasonably considered to be appropriate and adapted to achieving what is said to impress it with the character of a law with respect to external affairs . . . Implicit in the requirement . . . is a need for there to be as reasonable proportionality between the designated purpose or object and the means which the law embodies for achieving or procuring it'( Commonwealth v Tasmania (1983) 158 CLR 1 at 260).

Similarly, it is by no means clear that the Court will invalidate any law based solely on a 'recommendation' rather than a treaty obligation. A 'recommendation' may evidence a specific or identifiable matter of 'international concern' and, as such, may (albeit indirectly) provide the basis for a valid Commonwealth law.

(i) Minimum entitlements:

Proposed sections 170AA - 170AG will, together with the AIRC's traditional powers in relation to federal workers, enable the Commission, where requested (proposed section 170AD), to set minimum wages for all employees.

The proposed legislation, however, does not permit the AIRC to determine such minimum wages where:(a) an employee is the subject of an award of minimum wages made by a State arbitrator; (b) a federal award already exists; (c) there are award making proceedings in train under the IR Act in relation to the relevant employees; and (d) a State employment agreement (enterprise agreement) sets minimum wages for the employee involved and the employee could have had access to a State arbitration system instead of entering that enterprise agreement.

In establishing minimum rates under the proposed provisions, the AIRC is obliged to take into account the views of the relevant parties including individual workers [ proposed subsection 170AE(4)] and must have regard to any national wage-fixing principles applicable at the time [ proposed section 170AF]. The needs of workers with family responsibilities must also be considered where relevant (see also clauses 11 and 19).

(ii) Equal remuneration for work of equal value:

Proposed sections 170BA - 170BH are to give a broad operation to the concept of equal pay for work of equal value. The provisions require the AIRC, in making comparisons concerning the content of jobs undertaken by men and women, not to confine its assessment to comparisons between workers employed in the same enterprise or occupation or performing the same duties or using the same skills or techniques.

Comparisons and appraisals are to be made, where appropriate, according to the intrinsic value of the work performed and not according to the existing hierarchy or structure of jobs or the division of labour within the economy.

Proposed section 170BD provides that the AIRC may only make an order under these provisions where it has been requested to do so by an employee, a relevant trade union or the Sex Discrimination Commissioner.

The proposed amendments may not be entirely free from legal controversy. In effect, the legislation seeks to provide a framework in which the AIRC is to make determinations in relation to issues of equal pay generally. One difficulty is that two of the six international instruments referred to in the Bill are merely Recommendations and may not provide the basis for enactment of valid legislation (see above).

(iii) Termination of Employment:

Proposed sections 170CA - 170JH seek to establish national minimum standards in relation to the termination of employment.

The legislation is founded on the ILO Termination of Employment Convention 1982 (No. 158), which was not ratified by Australia until February 1993 and therefore cannot come into force until 26 February 1994, and the associated Termination of Employment, Recommendation (No.166). (Again, the latter instrument may not provide the basis for the enactment of domestic law.)

The stated intention of the Government is that: '[t]he termination provisions will apply where employees have no protection that adequately meets our international obligations, such as the protection already widely available through the 1984 Termination, Change and Redundancy Test Case.'

Proposed section 170CC foreshadows that the scheme is not to be of universal application as the Government may make regulations excluding specified employees from the operation of parts of the Act. Such exclusions may be made only where they will comply with the terms of the Convention. Exclusions from the operation of the code are likely to be made in relation to the early termination of casual or fixed term employees and employees engaged for specific tasks.

Proposed section 170DB sets out minimum periods of notice that must be given to employees. These do not apply in cases where the employee is guilty of serious misconduct or has had the period of notice "paid out". Proposed section 170DC requires employers to afford workers "natural justice" in cases where a proposed dismissal is activated by perceived employee misconduct or poor work performance.

Proposed section 170DD requires employers to notify the Commonwealth Employment Service in cases where they decide to terminate 15 or more employees for reasons of an economic, technological, structural change or for reasons of a similar nature.

Proposed sections 170DE and 170DF set out instances where a dismissal may be judged to be unfair. Proposed sections 170EA - 170JH set out the arbitral and judicial remedies available for breaches of the proposed code and procedures established under the Convention. Proposed section 170HA provides that any award of the AIRC which is inconsistent with the terms of the ILO Convention shall, to the extent of the inconsistency, cease to apply from 26 February 1994 (see also proposed section 170JG).

Together, proposed sections 170HB and 170JH override any State laws or awards and determinations of State tribunals which provide a lesser standard than that provided under the Bill. More generous entitlements remain unaffected.

(iv) Parental Leave:

Proposed sections 170KA - 170KC and clauses 11, 19 (passim), 22-24 provide the basis for furthering the objects of ILO Convention on Workers with Family Responsibilities, 1981, (No.156) and associated Recommendation No.165.

Proposed section 170KA provides for the making of regulations to establish minimum entitlements to unpaid parental leave. In line with current award-based standards, proposed subsection 170KA specifies that the entitlement to unpaid maternity and paternity leave is a total of 52 weeks, following the birth of the child. No provision is made for the mother to take leave before the birth of the child for medical purposes.

In his Second Reading Speech, the Minister also undertook that regulations would be made to extend similar entitlements to adoptive parents.

(c) Promoting Bargaining: Enterprise Bargaining and (Non Union) Enterprise Flexibility Agreements

Although current emphasis is on greater flexibility and workplace relations, this is a relatively recent development and contrary to the approach favoured by policy-makers and the industrial parties for most of the past 85 years.

Collective or workplace bargaining has always taken place in the form of over-award agreements, single company awards and facilitative clauses in industry awards. On balance, however, it is probably correct to say, as did Sir John Moore, a former President of the then Australian Conciliation and Arbitration Commission (ACAC) in 1983, that any collective bargaining that does occur takes place "in the shadow of the arbitration system". 14

For much of the period from 1974, the focus of wages and industrial relations policy has been on restraining the growth in aggregate wages. Encouraging wage flexibility and productivity growth were accorded a lesser priority in official circles until the Commission's landmark "two-tier" National Wage Case decision in March 1987. These priorities are understandable. Since the Harvester decision in 1907, the Australian wages system has placed considerable weight on producing predictable, socially defensible and nominally 'egalitarian'. Departures from the "living wage" concept, such as those that occurred in the 1931 and 1953 cases, have been viewed with suspicion and generally regarded as unwelcome. Moreover, the wage explosions of 1974-75 and 1981-82, under conditions where the industrial tribunals had been largely 'sidelined', and the 'flow on' effects of 'work value' cases in the 1960s and the late 1970s were not good advertisements for a less centralised approach to wage-setting.

From the floating of the Australian dollar in December 1983, and with the progressive de-regulation of product and financial markets and the easing of import protection, pressure increased for what has, somewhat erroneously, been called the "de-regulation" of the labour market.

The focus of much of this attention has been the central roles in wage determination played by the AIRC and its predecessors and by the trade unions. Australia's uneven economic performance involving increasing rates of (what some economists refer to as) "natural" unemployment and the decreasing share of the workforce covered by the union movement have added to these pressures.

The response at the federal level has taken the form of: (a) a progressive liberalisation of the legislative constraints which formally inhibit the growth of enterprise and non-union bargaining; and (b) an increased willingness on the part of the AIRC to accommodate enterprise bargaining within its wage fixing principles. (Evidence of the latter may be seen in the October 1991 and October 1993 National Wage Case decisions.)

Amendments to the federal industrial relations legislation have also embodied an incrementalist approach. Following the Hancock Committee's 15 recommendation that a form of opting out of the award system be permitted, the Industrial Relations Act 1988 provided for the making of certified agreements under certain limited conditions. The relevant provisions, contained in what were sections 115-117 of the IR Act, however, proved too restrictive, in part, because the AIRC applied a strict public interest test to applications for certification.

With effect from July 1992, the legislation was amended by the Industrial Relations Legislation Amendment Act 1992 replacing the existing procedures with a new Division regulating the making of certified agreements. These agreements are commonly referred to as section 134A (or, more correctly, Division 3A) agreements.

The principal effect of the 1992 amendments was to lessen the supervisory role of the Commission by restricting its capacity to refuse certification of agreements. In particular, except in cases involving Ministerial intervention, the AIRC was generally precluded from examining 'single business' agreements or refusing to register them on the ground that they are contrary to the public interest.

Since July 1992 there has been a marked increase in the number of certified agreements. As at August 1993 there were an estimated 1,100 Federally registered enterprise agreements. In total these covered approximately 760,000 employees. Commenting on this trend, the Australian Centre for Industrial Relations Research and Teaching (ACIRRT) of Sydney University noted in its October 1993 Newsletter that:'It would appear that unions and employers have taken advantage of the flexibilities provided in the processing of such agreements to introduce innovative work arrangements. While some commentators have argued that the limited role of the AIRC in scrutinising section 134 agreements may have led to a proliferation of poor agreements the evidence does not suggest that this is the case. Indeed Federal Agreements remain, in general, more comprehensive than NSW registered agreements. Federal agreements are more likely to tackle complex issues such as training, work re-organisation and a range of productivity improvement plans'. (It may be added, however, that the majority of certified agreements are 'add ons' which do not replace existing awards.) 16

(i) Reform of Certified Agreements:

Clause 34 provides by way of Schedule 2 to the Bill for the repeal of Division 3A of Part VI of the IR Act - the existing certified agreements procedures. Transitional arrangements are provided for under clause 35.

Clause 31 of the Bill provides for the insertion of a new Part VIB into the IR Act. That part makes extensive provision for the making, regulation and enforcement of certified agreements and (the new) enterprise flexibility agreements.

The proposed amendments provide for certified agreements to be made under proposed Division 2 of (new) Part VIB. The core features of this proposal are the same as those contained in the IR Act as presently drafted. A number of significant changes may, however, be noted:

* Clause 28 extends the operation of the Act's conscientious objection provisions to protect non-unionists covered by certified agreements and enterprise flexibility agreements.

* The objects provisions and the substantive elements of the new Part are to include reference to the AIRC's power to prevent industrial disputes (see clause 26 and proposed section 170LA). These amendments seek to underpin the constitutionality of the provisions. This may be challenged on the basis that the amendments are not laws dealing with conciliation and arbitration and, therefore, do not come within the scope of placitum 51 (xxxv) of the Constitution. Indeed, the use of the "prevention" limb of the industrial power may itself be problematic unless the High Court, as appears likely, is prepared to directly overrule a number of its earlier decisions in this area.

* Parties will have the capacity to include in a certified agreement a term allowing them, under certain conditions, to vary the agreement during its operation ( proposed section 170MF).

* The Bill provides for new procedures for the variation of agreements after expiry, to increase certainty and provide an incentive for the parties to negotiate further workplace agreements ( proposed sections 170MH -170MK).

* Proposed Division 4 of this Part also provides for limited immunity for persons and organisations undertaking industrial action during the process leading to the making of a certified agreement. (See below in relation to sanctions generally.)

* A separate Bargaining Division headed by a second Vice President of the AIRC is to be created to perform the Commission's functions in relation to certified agreements and enterprise flexibility agreements (see proposed Division 5 of Part VIB).

Existing constraints and protections, including the no disadvantage test for single business agreements and the public interest test for industry agreements, are to be retained.

(ii) Enterprise Flexibility Agreements:

These are intended to provide an opportunity for non-union workplaces to make enterprise or workplace agreements that operate within the federal system. It may be noted, however, that under the existing provision of section 134E non union workplaces (principally "greenfields sites") may already enter into such agreements provided they wish to do so and meet the constitutional requirement for there to be a genuine interstate dispute.

The apparent reluctance of non unionised workplaces to enter into such agreements reflects not only such constitutional constraints but also: (a) the high transaction costs involved in enterprise bargaining; (b) the lack of familiarity of many non union workplaces with the bargaining process; (c) the complexity of the existing legislative provisions; (d) a degree of satisfaction with existing award-based arrangements; (e) some apprehension at possible union displeasure with such arrangements; (f) the widespread incidence of informal/unlawful enterprise flexibility arrangements; (g) the incidence of individual agreements and the award-free nature of growing areas of employment; and (h) existing flexibility within the award stream and the availability of State-based enterprise agreements.

The Bill seeks to overcome the Constitutional limitations referred to above by relying (in part) on the Commonwealth's "corporations power" and the "prevention" limb of section 51 (xxxv). To avoid conflict with State systems, only employees and workplaces covered by federal awards will have access to the new bargaining arrangements. Unincorporated business (sole traders and partnerships) may still have difficulties in gaining access to this mechanism.

The use of the 'corporations power' is not entirely untested in the industrial arena with a challenge to the use of the power in connection with the enactment of section 45D of the Trade Practices Act 1974 being substantially rejected in Actors and Announcers Equity Association of Australia v Fontana Films Pty Ltd (1982) 150 CLR 169. It is not absolutely clear to what extent the High Court will permit the power to be used to regulate all the activities of trading, financial and foreign corporations. However, the decision of the Court in the Tasmanian Dam case suggests that a broad view will be followed.

Proposed sections 170NA - 170NM provide for the making and regulation of enterprise flexibility agreements. Key elements of the proposal are:

* enterprise flexibility agreements are to have the status of awards, ie they are to be enforceable at law ( clause 26)

* there is to be no automatic flow-on of the terms of one enterprise agreement to another award or agreement ( clause 27)

* enterprise flexibility agreements are restricted to corporations within the meaning of the Australian Constitution [ proposed subsection 170NA(3)]

* agreements must cover all workers in the enterprise which is to be the subject of the agreement ( proposed subsection 170NC)

* the AIRC may refuse to approve implementation of enterprise flexibility agreements in exceptional circumstances where it believes that the agreement is not in the public interest [ proposed subsection 170ND(2)]

* in all cases AIRC approval is subject to a no disadvantage test (ie the agreement, when viewed in totality, must not make the workers involved any worse off than they would be under the terms of a relevant award or certified agreement). (See proposed section 170NC for details of no disadvantage test.)

* The terms of an enterprise flexibility agreement are to prevail (to the extent of any inconsistency) over the provisions of awards and certified agreements ( proposed section 170NK).

* If an enterprise flexibility agreement provides for any of its terms to be varied by a later agreement, such agreement only takes effect if approved by the Commission ( proposed section 170NL).

* The AIRC is to be able to use its powers of conciliation in relation to the making of enterprise flexibility agreements ( proposed section 170QC).

More generally, it is to be noted that the AIRC is to be empowered to make orders requiring the parties negotiating either a certified agreement or an enterprise flexibility agreement to bargain in good faith [ proposed subsection 170QE(2)].

Employers are not to discriminate between unionists and non unionists in making such agreements ( proposed section 170RA).

It may be noted that the procedures for making enterprise flexibility agreements do not attract the same immunities and protections from legal actions as those for making certified agreements (see below).

(d) Sanctions

The proposals for reforming the laws concerning industrial action are extensive but stop well short of providing a universal or guaranteed right to strike.

As was noted in the Government's Information Paper prepared for the Senate Standing Committee on Employment, Education and Training's Inquiry into the operation of sections 45D and 45E of the TPA:

'Three principal features of the Australian industrial relations system are:

- its federal structure; there are seven separate though interdependent systems, not one system as in the Great Britain or New Zealand;

- compulsory third-party arbitration has for most of this century been the central feature of the Australian system (but note the recent Victorian voluntarist approach); and

- the retention of the common law as an adjunct to direct bargaining and formal arbitration . . .

Much of the systems complexity can be attributed to the distribution of industrial powers under the Australian Constitution but other factors have also played a part including what has been recently described as the systems somewhat "paradoxical" approach to the question of whether workers should enjoy a right to strike . . .' 17

The fragmentation of law-making between the Federal and State Governments has, whatever its merits, been a recipe for complexity in many areas. In the industrial field, new industrial laws, do not generally take the form of an exclusive code but, instead, are added on to pre-existing statutory and common law remedies. For example, apart from the five common law actions brought against the Australian Federation of Air Pilots (AFAP) in the 1989 dispute with the airlines and the Federal Government, is also probable that an action lay against the union under section 45D of the TPA.

Put another way, one consequence of the hybrid nature of the system of regulation is that some forms of industrial action are outlawed by not one but a variety of laws. (It should be noted that registration under a the IR Act or its State equivalents does not confer immunity from legal action on unions, their officials or members from common law actions (industrial torts) or from actions based on other statutes.)

The Government's Information Paper listed the following restraints on strike activity:

- penalties under the Industrial Relations Act 1988 ;

- penalties under State arbitration statutes ;

- damages at common law;

- sanctions under State and Federal Essential Services legislation;

- sections 45D and 45E of the TP Act;

- State equivalents of 45D and 45E (NSW and Victoria only);

- de-registration;

- suspension and/or cancellation of awards;

- dismissal or termination of employment;

- penalties under grievance handling arrangements and other informal measures agreed by the parties themselves;

- informal sanctions imposed by the tribunals.

The AIRC has at its disposal a wide range of measures for curbing industrial action by informal and quasi administrative means including:

- conciliation [section 89];

- recommendations that industrial action either stop or not occur;

- the issuing of directions [section 111(1)];

- suspension or bans clauses [sections 113 and 125];

- cancellation or suspension of awards [section 187];

- award variation including the insertion of "stand-down clauses" [section 113];

- the issuing of orders in relation to public sector employment [section 127];

- the ordering of secret ballots [sections 135 and 136] and in connection with demarcation disputes [section 118A]; and

- a general prohibition on the incite to boycott awards [section 312]' 18

To this may be added various penalties and other sanctions under employment statutes such as section 66 of the Public Service Act 1922 (Cwlth).

Apart from being a source of continuing political and industrial contention, the sanctions provisions and compliance measures have also be the subject of criticism by the ILO for failing to comply with international treaty obligations.

In 1993, for the third time in four years, the ILO's Committee of Experts issued the Australian Government with a 'Direct Request' relating to Australia's compliance with ILO Convention 87 on the Freedom of Association and Protection of the Right to Organise, 1948. Concerns were again raised over the lack of protection of trade unions and their members against common law actions and over the scope of sections 45D and 45E. The Committee of Experts also raised questions concerning the compatibility with the Convention of:

- the boycott provisions of the Industrial Relations Act 1991 (NSW) mirroring sections 45D and 45E of the TPA;

- essential services legislation in New South Wales,the Northern Territory, Tasmania, Victoria, South Australia and Victoria; and

- other federal legislation (specifically section 66 of the Public Service Act 1922 which bans APS officers from taking part in industrial action) and section 30J of the Crimes Act 1914 which bans strikes where the Governor-General has proclaimed the existence of a serious industrial dispute prejudicing or threatening trade or commerce with other countries and among the States:

with Australia's ILO treaty obligations.

The present Bill addresses the majority of these concerns and seeks to limit and rationalise the operation of these compliance measures by:

* protecting certain forms of industrial action, where engaged in for the purposes of negotiating a certified agreement (a similar immunity is not extended to negotiations preparatory to the making of awards and enterprise flexibility agreements)

* reducing the operation of sections 45D and 45E of the TPA in relation to industrial matters to confine their operation to cases involving secondary boycotts affecting third parties

* repealing certain criminal sanctions in the Industrial Relations Act 1988

* repealing section 66 of the PSA ( clause 53); and

* increasing some penalties under the IR Act for unlawful industrial action.

(i) Immunities and Certified Agreements:

Proposed sections 170PA - 170QE provide for the granting of immunity to parties engaging in bargaining preparatory to entering into a certified agreement. The Government has sought to justify the immunity on the basis that it is necessary to provide for the right to strike where the strike is related to enterprise bargaining. (Ex Memo p. 61.)

The immunity is only available where: the negotiations relate to conditions of employment in a single business [ proposed subsection 170PA(2)] and the AIRC has that an industrial dispute exists ( proposed section 170PC).

The bargaining period is initiated by the initiating party giving a written notice to the employer and a copy to the AIRC ( proposed section 170PD) with the bargaining period commencing 7 days after the day on which the notice was given ( proposed section 170PF).

Protected action is defined in proposed section 170PG and includes "lock-out" action taken by an affected employer during the bargaining period [ proposed subsections 170PG(3) -(5)]. Action taken under proposed section 170PG is not protected unless 72 hours notice is given ( proposed section 170PH).

Industrial action is not protected where it has not been proceeded by a genuine attempt to resolve the dispute by negotiation ( proposed section 170PI) and, in cases where the AIRC has ordered an indicative ballot in relation to the industrial action, the ballot has not been taken or the result ignored ( proposed section 170PJ).

Industrial action is only protected when it has been properly authorised under the rules of the relevant organisation ( proposed section 170PK), although technical breaches of union procedures for authorising industrial action will not exclude that action, where taken in good faith, from protection.

Immunity operates in respect of bans clauses, orders in relation to public sector employment under section 127 of the IR Act, and laws in force in a State or Territory (including common rights of action). Industrial action involving violence to persons or property, reckless conduct, other criminal activity and defamation are not protected ( proposed section 170PL).

The AIRC has power to suspend or end the bargaining period and during the period that the bargaining process is suspended nothing done by anyone in connection with the industrial dispute is protected ( proposed section 170PN).

In a measure akin to essential services legislation but of wider import, the AIRC also retains power to suspend or terminate the bargaining period where industrial action is on foot or impending where that action is threatening to cause significant damage to the Australian economy or poses a threat to the life, the health, safety or welfare of any member or part of the Australian population ( proposed section 170PN).

(ii) Secondary Boycotts:

The following extracts from the Government's Information Paper for the Senate Standing Committee on Employment Education and Training, provide useful background on the history, use and implications of the boycott provisions of the TPA. (For the sake of brevity relevant footnotes contained in the text have been deleted.)

(a) Overview

'Sections 45D and 45E were inserted into the Trade Practices 1974 ("the TP Act") in 1977 and 1980 respectively. Whilst forming part of the Commonwealth statute targeting anti-competitive conduct and outlawing deceptive business practices, the sections have most often been used to restrain industrial action by trade unions.

The sections are controversial and complex, forming part of a mosaic of laws which render unlawful virtually all forms of industrial action by trade unions and workers individually.

The sections have produced a steady, though fluctuating, stream of litigation. Their constitutional validity has been challenged and, substantially, upheld. [Ref. Seamen's Union of Australia v Utah Development Co (1978) 144 CLR 120 and Actors and Announcers' Equity Association of Australia v Fontana Films Pty Ltd ( " the Fontana Films Case") (1982) 150 CLR 169]

Actions taken under the boycott provisions of the TP Act have been associated with some of the most widely reported industrial confrontations of the past two decades. These include a 1980 dispute in New South Wales involving Leon Laidley Pty Limited and some members of the Transport Workers' Union ("TWU") over job security and management rights concerning the sale of discount petrol; a protracted dispute in the mid 1980s in the Northern Territory over work practices at the Mudginberri Abattoir; and, more recently, the use of contract labour occasioned by the activities in Victoria of the labour hire firm, Troubleshooters Available. Apart from attaining a degree of notoriety, each dispute and subsequent legal proceedings have reinforced conflicting views on the efficacy and significance of the provisions.' 19

Such high profile industrial disputes and court actions, allied with regular political debate at the Federal and the State level over the use of sections 45D and 45E, have formed part of a larger and long-running debate over the use of legal sanctions to restrain strike activity and other forms of industrial action.

The controversy over sections 45D and 45E is perhaps unsurprising, arising, to some extent, from the difficulty in reconciling the principles of the right to strike with the protection of third parties from deliberate harm in the course of industrial disputes.

'The use of the sections has been notable for several reasons including the following:

- relatively few of the actions have proceeded to trial or led to an award of damages;

- the sections may and have been used to limit most forms of industrial action not just secondary boycotts;

- the sections have on occasion been employed outside the industrial arena for the purpose of inhibiting the activities of public interest groups and stifling political action;

- the matters dealt with in the sections have a different character from the types of anti-competitive commercial conduct proscribed by Part IV of the TP Act; and

- in practice, sections 45D and 45E have rarely been used to deal with anti-competitive conduct and the overwhelming majority of actions taken under the sections have been to stop strikes, pickets or boycotts associated with industrial action.

There is also a question of whether the economic and industrial significance of the sections and their actual application may have been somewhat overblown. By any measure, the number of workers involved has not been large, the total number of working days lost (in the national context) minimal, and the direct effect on national economic welfare, transitory. On the other hand, it is clearly arguable that the full impact of the sections goes well beyond the actual cases where they have been employed.' 20

Sections 45D and 45E are now seen as a key point of differentiation in approaches to industrial relations, marking something of a watershed in the development of Australian industrial law and practice. Some see the sections as making a substantial contribution to a positive shift in Australian workplace culture. Others see them as hindering improved industrial relations and a continuation of an approach which seeks maintenance of industrial harmony through resort to legal sanctions and state intervention.

(b) Terminology

'In common parlance, sections 45D and 45E are frequently referred to as the "secondary boycott provisions" of the TP Act. This, however, is a misnomer and reflects a widespread misunderstanding of the scope of the provisions and the conduct that they seek to constrain. Another source of confusion arises from the usage by some Australian and foreign commentators of a range of expressions including "secondary action", "solidarity action" and "sympathy strikes" when referring to the various types of boycott activity. Sometimes the phrases are used as synonyms and on other occasions they are not.

In reality, the provisions, principally sections 45D(1) and 45D(1A), prohibit primary as well as secondary boycotts.

The confusion over the scope of the provisions is understandable given their complexity and the degree of controversy their use has generated. It is also partly explained by the fact that the provisions have been seen by some as having their genesis in the Report of the Swanson Committee.

The principal concerns of the Swanson Committee were that the then law did not provide a direct means of restraining certain anti-competitive conduct when engaged in by trade unions, and particularly that the existing legislative machinery did not deal adequately with secondary boycotts.

Sections 45D and 45E, however, go well beyond what was envisaged by the Swanson Committee; a fact which is frequently overlooked in public debate.

Fundamental to any understanding of the provisions, and the differences between the form of regulation envisaged by the Swanson Committee and the legislative scheme ultimately adopted, is the distinction between "primary" and "secondary" boycotts.

When a group of workers take direct strike action against their own employer they may be said to be engaging in a primary boycott.

Sometimes, however, workers in dispute with their employer will ask workers engaged by a business which deals with that employer to disrupt the flow of goods and services between the two firms. Such concerted action for the purpose of achieving an industrial or other objective is referred to as a secondary boycott or secondary action. The same result may occur where a union seeking to improve or protect working conditions for its members or their job security interrupts or prevents the supply or requisition by a third party of goods or services to or from a "target" firm.

In many cases then, the distinction between a "normal" strike ( primary boycott) and a secondary boycott is not the so called target of the industrial action but the tactics adopted by the workers and their union in achieving their principal aims. Primary boycotts involve direct action against the target

employer; secondary boycotts seek to "get at" the target by putting pressure on the target's business associates.

Relatively neat legal classifications can, of course be difficult to sustain in practice. In some instances, the "third party" firm may itself become a direct target of union action as in cases where it is actively assisting the principal target or deriving a benefit from the principal target's refusal to bargain or accede to union demands. Indeed, the "third party" may simply be one corporate entity in a more elaborate structure of inter-related companies. In other cases, union tactics may be to spread the dispute to as many targets as possible in order to speed resolution of the dispute. In a third set of cases, sympathy action, employees of third party firms take industrial action simply to express support for, and their solidarity with, the employees embroiled in the primary dispute. These employees may be members of the same union or another union.' 21

(c) Incidence

'From 1977, when section 45D came into operation, up to and including 1 July 1993, 206 court actions have been commenced involving the use of both or either sections 45D and 45E.

Of these 206 cases:

- 40% of applicants obtained an interim injunction (80)

- 4% of applicants obtained a final injunction (8)

- 1% of applicants obtained an award of damages (3)

- 59% of applicants received no remedy (121)

- no application was made for a penalty under section 76 of the TP Act.

Of the 206 actions, 18 cases have involved the use of 45E which came into effect in 1980.

Of the 18 applications under section 45E:

- 8 also involved applications under 45D; and

- 13 were rejected or not proceeded with.

Of the 8 actions brought under both sections, in only 2 cases was the 45E based claim separately successful in obtaining relief.

Of the 10 instances where section 45E was resorted to on its own, only 1 case led to relief being granted by the Court.

It is evident . . . that there has been a slight, though marked, decline in the number of actions brought under sections 45D and 45E since the beginning of 1991. Of the 23 cases brought before the Federal Court in that period:

- 25% of applicants attained an interim injunction

- 6% of applicants obtained a permanent injunction

- only one applicant obtained am award of damages

- no applications were proceeded to the granting of a statutory penalty under section 76 of the TP Act.

A small number of actions have also been recorded involving the use of the sections against businesses, ie, actions in which unions have not been the defendant.

What is also apparent is that unions have generally not sought to make use of the authorisation mechanism provided for under section 88 of the TP Act. Research done by staff of the TPC revealed that no authorisations have been granted. A search of the relevant journals etc shows that only one application for a section 88 authorisation was made and that application was rejected on public interest grounds.

There has been one case of a trade union seeking to bring an action against another union in connection with a demarcation dispute [ Federated Ironworkers of Australia v BWIU (1989) AILR 322].

Limited use also seems to have been made of the "lessening of competition" limb of subsection 45D(1) which has not assumed great significance both for practical and evidentiary reasons. It is harder to prove a "substantial lessening of competition" than "substantial loss or damage" to an individual or limited number of businesses. Moreover, there will be few cases (if any) where there has been a substantial lessening of competition but no loss or damage to a business. A somewhat cursory examination of actions commenced since 1991 showed that, in actions brought against unions under section 45D, the "substantial damage to a business" limb was in all cases either the exclusive, or substantive basis, for the action brought. Subsection 45D(1)(a)(B) ("substantial lessening of competition"), by contrast, was either not relied on at all or apparently included in the statement of claim for the purpose of covering all possible options.

A preliminary analysis was also undertaken of the number of actions coming before the AIRC under Part VI Division 7 of the Act. These actions come about as a result of applications made following an approach to the Federal Court to restrict boycott activity covered by sections 45D and 45E. A number of post 1989 cases appearing to disclose parallel action in the Federal Court and the AIRC were discovered. In most instances, however, it was shown that action had already commenced in the AIRC before injunctive relief was sought through the Federal Court. This suggests that the secondary boycott handling procedures established under the two relevant Acts are not always followed. This phenomena is explicable, however, given the likelihood one dispute giving rise to both primary and secondary boycotts. The former finding their way into the AIRC and the latter initially (at least) coming before the Federal Court.' 22

(d) Senate Report

Reporting in October 1993, the Senate Standing Committee Inquiry into the operation of sections 45D and 45E divided along party lines. The majority concluded, inter alia, that:

* the use of section 45D and 45E, as a response to industrial action is unduly harsh, and in conflict with Australia's obligations under ILO conventions on freedom of association;

* it is not appropriate to deal with the issue of the right to withdraw labour within trade practices legislation;

* the fundamental principle of the right of a worker to withdraw labour should be enshrined within industrial relations legislation, and any qualifications attached thereto should be articulated within the legislative framework;

* the legitimate rights of business to trade in goods and services without interference should be properly secured by trade practices legislation but that sections 45D and 45E, as they currently stand, achieve this result at an unacceptable cost with respect to the rights of citizens to take legitimate industrial, protest and other social action;

* that while employers have used, or threatened the use of, sections 45D and 45E to bring about cessation of industrial action, these are not a satisfactory means of preventing and settling disputes;

* that a mechanism must be available under industrial relations legislation to provide for the speedy resolution of industrial disputes where the primary issue is one of substantial damage to an enterprise as opposed to substantial lessening of competition in the market;

* where a dispute has been dealt with by industrial relations mechanisms, and a speedy result has not been effected, a certificate should be issued enabling the matter to be dealt with in the civil jurisdiction; and

* section 45D constitutes an impediment to the exercise of legitimate protest and other social action by citizens.

The minority, comprised of Senators Crane and Tierney, were of the view that:

* the provisions are a useful device for preventing and settling industrial conflict and are predominantly used by employers as a "last resort";

* the provisions do not encourage a disregard for the processes of arbitration;

* defences available under section 45D(3) of the TPA are adequate to protect employees rights;

* ILO Conventions should not be employed as a "benchmark" for Australian domestic law and practice;

* the availability compulsory conciliation and arbitration should make all strikes unnecessary;

* the high costs that can be imposed on business, even by relatively short strikes, must be avoided;

* the Government had not accurately indicated the nature of the relevant ILO Conventions;

* section 45D is no more expensive than other civil remedies and is used by innocent employers the target of boycotts including companies of all sizes; and

* boycott action must be restricted and employers provided with a remedy which is quick, immediate and as effective as section 45D.

(e) Major elements

Clauses 36 - 54 encompass the proposals flowing from the Government's intention to revise the boycott provisions in the TPA and related parts of the IR Act.

In essence, the amendments will:

- transfer sections 45D and 45E, in so far as they deal with industrial matters, from the TPA to the IR Act;

- section 45D of the TPA is to be repealed and replaced by a new provision prohibiting collusive conduct which hinders or prevents the supply or acquisition of goods or services and has the effect of reducing competition and is engaged in for that purpose ( clause 43); the effect this provision is to exclude political boycotts and environmental boycotts and various forms of protest action from the scope of the TP Act except where they are engaged in with the intention of lessening competition;

- section 45D is to be limited to genuine secondary boycotts [present section 45D(1A) dealing with ordinary strikes is to be abolished and provisions equivalent to 45D will recast the law so as not to cover primary boycotts and sympathy action];

- section 45E will be abolished as the provision will be redundant under the new legislative scheme ( clause 44);

- existing defences under section 45D(3) are significantly expanded [ proposed sections 162(4) and 163(4)];

- pecuniary penalties will no longer be available ( clause 46) and criminal proceedings may not be brought in respect of boycott action ( proposed section 163F);

- injunctive relief ( proposed section 163G) and actions for damages ( proposed section 163H) will still be available;

- proposed section 162A will exempt from the prohibition on boycotts picketing which does not involve obstruction, molestation or intimidation;

- clause 39 makes it plain that it is the intention of the Commonwealth to "cover the field" thereby, by virtue of section 109 of the Constitution, rendering inoperative any State legislation imposing additional restraints or sanctions on relevant boycott activity; and

- the proposed Industrial Relations Court will have jurisdiction, exclusive of any other court (excepting the High Court of Australia), in relation to boycott disputes under the IR Act ( proposed section 163P) but the Industrial Relations Court can only exercise jurisdiction under these provisions where the AIRC has given a certificate under proposed section 163D.

Secondary boycotts with an industrial character must first be brought to the AIRC which will attempt to resolve the underlying dispute by way of conciliation only ( proposed section 163D). The AIRC is required to act quickly ( proposed section 163B) and as soon as the Commission comes to the view that it will not be able to resolve the dispute, it must issue a certificate allowing the matter to proceed to the Court. The Commission may issue such a certificate under its own initiative or on the application of one of the parties.

No matter can stay before the AIRC for a period exceeding 72 hours without the consent of all the parties and in some cases may be removed to the Court even where 72 hours has not elapsed [ proposed subsection 163D(3)]. There is nothing in the legislation to prevent an injured party recovering damages for losses suffered during the period that the matter is before the AIRC.

Problems of providing standing to those affected by boycott activity that arose in the celebrated Laidley Case (see above) appear to have been addressed ( proposed section 163A).

Clause 51 provides that secondary boycotts in relation to industrial matters will not be able to be cross-vested but other matters arising under (the revised) section 45D retained in the TPA will now be able to be heard by State and Territory Courts.

(iii) Other compliance measures:

Apart from the immunity conferred on parties during the bargaining phase leading to the making of certified agreements, a number of measures are to be enacted affecting the legal status and regulation of industrial action.

Clause 40 largely follows from obliging the parties to seek resolution of industrial conflict (initially) through the industrial tribunals rather than the Courts. Clause 40 also limits access to the industrial torts by using the same mechanism (certification procedure) that limits access to secondary boycott action through the Industrial Relations Court (see above). The rationale for this restriction is twofold. First, in relation to boycott activity, given that all remedies available under statute are also available at common law, it is necessary to achieve the Government's objective to restrict the alterative common law and statutory remedies. Second, the argument for obliging the parties to at least attempt conciliation applies equally (if it applies at all) to both forms of relief.

The provision may be subject to constitutional challenge as it seeks to limit the operation of State and Territory laws and restricts access to State Courts. A further potential problem for the Commonwealth is that the law may be difficult to characterise as a law concerning the resolution of interstate industrial disputes by way of conciliation and arbitration.

Sections 311 and 312 of the IR Act which make industrial action a criminal offence are to be repealed ( clause 41). Nonetheless, contravention of an award including a bans clause will continue to be subject to a pecuniary penalty under section 178 of the IR Act.

Clause 33 extends provisions prohibiting forms of discrimination and victimisation to instances involving the making of certified agreements and enterprise flexibility agreements.

New penalties for award breaches are to be specified breaches of certified agreements and enterprise flexibility agreements. The effect of these amendments ( clause 32) is to provide penalties for breaches

of certified agreements and enterprise flexibility agreements of $5000 for the first day and $2500 for each successive day. Penalties for breaches of "ordinary" awards have not been increased.

As at time of writing, the Government does not appear to have proceeded with an earlier proposal to protect employees from dismissal or discrimination in employment by reason only of engaging in industrial action.

(e) Institution Changes

(i) The Industrial Relations Court of Australia

Professor James Crawford has summarised the history of what is presently the Industrial Division of the Federal Court of Australia in the following terms:

'The federal arbitration system was established soon after federation, in 1904. The Commonwealth Court of Conciliation and Arbitration, the principal organ, was presided over by a High Court Judge until the 1920s, and thereafter by judges specifically appointed. But in the Boilermaker's case in 1956 [ R v Kirby Ex parte Boilermakers' Society of Australia (1956) 94 CLR 254] the High Court held that the Court could not exercise both the 'quasi-legislative function of making awards and the judicial functions of interpreting and enforcing them. Two new bodies resulted: to exercise the non-judicial power of conciliation and arbitration, the Australian Industrial Relations Commission (before 1989 the Australian Conciliation and Arbitration Commission) and for strictly judicial functions, the Industrial Division of the Federal Court (which in 1977 replaced the Australian Industrial Court).' 23

In 1987, the Hawke Government proposed sweeping changes to Australia's industrial laws including the creation of a separate Labour Court: the Industrial Relations Bill 1987 and the Industrial Relations (Consequential Provisions) Bill 1987. These Bills broadly reflected the recommendations of the tri-partite Committee of Review into Australian Industrial Law and Systems under the Chairmanship of Professor Keith Hancock (the Hancock Committee).

The most controversial aspect of the 1987 legislation was the so called 'compliance package" which sought to codify a number of common law and statutory restraints on industrial action, transfer jurisdiction for sections 45D and 45E of the TPA from the Federal Court to a (new) Labour Court, and establish a procedure under the IR Act for securing dispute resolution and compliance with Commission decisions and directions.

On 26 May 1987, Minister Willis announced that the Government had decided to defer debate on the Bills until the 1987 Budget Session. On the following day, Prime Minister Hawke, secured a simultaneous election for the House of Representatives and the Senate for 11 July 1987. The 1987 Bills lapsed with the issuing of the writs for the double dissolution and, on 6 June 1987, the Government announced that it considered it impractical to proceed with the proposed compliance measures.On 28 April 1988, the Hawke Government introduced a re-modelled set of proposals based on its 1987 Bills: the Industrial Relations Bill 1988 [Act No.86 of 1988] and the Industrial Relations (Consequential) Provisions Bill 1988 [Act No. 87 of 1988] (" the 1988 Acts").

The 1988 Acts, which came into effect on 1 March 1989, did not retain the compliance package put forward as part of the 1987 Bills including the proposal to create a separate Labour Court.

Criticism of the Labour Court centred on provisions permitting members of the proposed Court to hold concurrent commissions as members of the Industrial Relations Commission. The 1993 Bill has not persisted with this proposal.

Nonetheless the present legislation has not escaped criticism. In a Media Release issued on 25 October 1993, the Law Council of Australia commented:

'There are at least two major areas of concern. First, the setting up of a new specialist court in the context of the resolution of a political impasse between powerful forces in society gives rise to the apprehension . . . that the court will not be perceived as intended to administer impartial justice independently and fearlessly according to the rule of law.

The Law Council is not aware of any problems or shortcomings in the way in which our industrial laws are administered by the Federal Court, which is, after all, the superior trial court in the federal jurisdiction. That the Government should consider it necessary in these circumstances to establish a new specialist court makes one wonder whether a different kind of justice is there to be dispensed according to special rules.

. . . the second problem is that, where a new specialist court is established by a particular Government for a particular social purpose, a subsequent Government with a different agenda might remove the court's jurisdiction or even abolish it.'

Part 7 of the 1993 Bill provides for the creation of the Industrial Relations Court of Australia.

Proposed section 361 provides that the Court is to be a superior court of record and to be comprised of a Chief Justice and as many other Judges as may be appointed from time to time. The provisions of proposed section 370 suggest that the Court will have a minimum membership of 3 including the Chief Justice.

Minimum qualifications for appointment to the Court are described in proposed subsection 362(3) with only persons who are, or who have been, a judge of a prescribed court and persons who have been a legal practitioner for a period of at least five years being eligible for appointment.

Members of another court (but not the AIRC) may hold joint commissions but are not eligible for double pay ( proposed section 366).

Proposed sections 375 - 388 make provision for the appointment of "Judicial Registrars" to the Court. Proposed section 376 allows the Court to delegate any of its functions to Judicial registrars in relation to proceedings involving small claims and matters of alleged wrongful dismissal. A matter that may be delegated to the Registrar of the Court, may also be delegated to a Judicial Registrar ( proposed subsection 376(2)].

To ensure that only appropriately qualified persons exercise the powers of the Court, the qualifications for Judicial registrars are the same as for Justices of the Court ( proposed section 381).

Proposed section 389 makes the Chief Justice responsible for the management of the Court. He or she is to be assisted by a Registrar to be appointed on the nomination of the Chief Justice of the Court ( proposed sections 390 and 391).

The Court's jurisdiction is dealt with in proposed sections 412 - 432 with the original jurisdiction of the Court encompassing:

- applications under the Act;

- questions referred to under the Act;

- appeals from State and Territory Courts;

- suits for recovery of penalties; and

- prosecutions for offences under the Act ( proposed section 412).

Proposed section 413 allows the Court to interpret an award of the AIRC (including certified agreements and enterprise flexibility agreements) when requested to do so by a party or the Minister.

Certain matters are reserved to a Full Bench for consideration including: (a) questions of law referred by the AIRC or the Industrial Registrar; (b) applications concerning the validity of State laws or awards; and (c) applications for the registration of an organisation ( proposed section 415).

Specific provision has not been made for matters relating to the unfair contracts review procedure ( sections 127A - 127C of the IR Act) to be dealt with by the Court rather than by the AIRC as (somewhat controversially) is the case at present.

Proposed Division 6 of this Part provides for the bringing of representative actions in the Court.

Of some note are the arrangements for dealing with unfair dismissals ( proposed sections 170EA - 170EF) which will allow the Court to grant conclusive relief in respect of individual cases of unfair dismissal. (It is likely that this jurisdiction will, for the most part, be exercised by Judicial Registrars of the Court.)

Contrary to existing practice, applicants must first approach the Court before seeking to have the matter resolved by the AIRC ( proposed sections 170EA - 170ED).

Though present processes (involving the AIRC in the use of a so called "defacto" jurisdiction) may be cumbersome, they often produce relatively cheap and effective results. The new procedures potentially introduce elements of expense and legalism.

(ii) National Labour Consultative Council:

The NLCCA is to be amended to reduce the membership of the National Labour Consultative Council from 18 to 11. The Australian Chamber of Commerce and Industry (formerly the Confederation of Australian Industry) is now only to have one member as of right. A further two employer representatives are to be drawn, one each, from the Australian Chamber of Manufactures and the Metal Trades Industry Association of Australia. Remaining employer representation (excluding the Commonwealth which is not represented in its capacity as a major employer) is to consist of two representatives nominated by employer bodies chosen by the Minister ( clause 77).

The NLCC is also to be required to meet twice a year instead of four times ( clause 81).

(f) Union Registration requirements

In the mid 1980s, the leadership of the Trade Union Movement became increasingly concerned about the relative decline in union membership and the inefficient use of union resources (refer: ACTU, Future Strategies for the Trade Union Movement, September 1987).

One strategy put forward for securing the future of unionism was an ACTU proposal for unions to amalgamate to form "larger and more efficient units" with the "most appropriate bases for each rationalisation" being groupings based on "broad industry categories".

One cause of what the ACTU leadership saw as the problem of "too many (under-resourced) unions" was the federalist nature of the industrial relations system, another was the minimal controls on registration imposed by the (then) Conciliation and Arbitration Act 1904.

The Industrial Relations Act 1988 raised the requirement for union registration from 100 to 1000 and also provided that, unless special circumstances existed, an applicant union must be industry-based rather than craft-based (section 189). Secondly, the registration of employee organisations with a membership of 1000 (the Government had originally proposed a figure of 3000) was to be reviewed by the AIRC in the 12 month period commencing 1 March 1992. In February 1991, the IR Act was amended by the Industrial Relations Legislation Amendment Act 1990 which provided for a further review; on this occasion involving federally registered unions with fewer than 10,000 members (section 193A). (The Government has originally proposed a threshold of 20,000 for the "stage two" review.) The second stage review was to be conducted in the twelve month period commencing 1 March 1993.

In November 1990, the Confederation of Australian Industry lodged a complaint with the Committee on Freedom of Association of the ILO alleging that the changes to registration requirements and the proposals to increase the threshold for registration infringed the principles of freedom of association. In 1992, the Committee on Freedom of Association indicated that it would invite the ILO's Governing Body to ask the Australian Government to abolish the 10,000 member threshold for union registration.

The Government indicated that it would abide by the ILO's recommendation: hence the present amendments restoring the former threshold of 100 and terminating the existing review proceedings before the AIRC ( clauses 72 and 73).

In December 1989, there were 142 federally registered unions. At present there are only 62; 33 of these have fewer than 10,000 members.

Remarks

The Industrial Relations Act 1988 was described by one academic commentator (Andrew Stewart), at the time of its passage, as amounting to "a tidying up of [to use Justice Deane's words] 'the out-moded patchwork that is the Conciliation and Arbitration Act 1904'".

Not including the two substantive Government Bills presently before the Parliament or Minister Cook's aborted legislative proposals from late 1991, the IR Act has been amended on 17 occasions since May 1989 and now contains some of the more complex, lengthy and confusing provisions to be found in any Australian statute (see, for example, present section 134E and proposed sections 170MC and 170NC).

Some of this complexity is due to the limits placed on the Commonwealth by the Constitution. Other causes of complexity and change arise from the desire of the Government to reflect more expansive interpretations of constitutional powers.

Nonetheless, constant changes to the legislation (for example, three sets of major changes to the law regulating workplace bargaining arrangements in five years) produces uncertainty and provoke institutional inertia. There is a considerable risk that where legislative change becomes the norm, the parties will seek to achieve their strategic goals through the legislative route rather than by working co-operatively or imaginatively with the law as it stands.

The time table for consideration of the present legislation, a matter not entirely within the Government's control, and the large number of "technical" amendments to be moved by the Government during the course of debate, are also a cause for concern.

In relation to the substance of the Bill, it may be observed that the legislation is directed to providing adequate remedies and compliance measures within the scope of the IR Act. The adequacy of these statutory (IR Act) remedies has always been a cause of considerable controversy.

In the case of the present Bill, the quantum of penalties for industrial action involving breaches of agreements has been increased but only by a small amount. Penalties for breaches of ordinary awards including breaches of bans clauses remain untouched.

Penalties for award breaches have remained at their present level basic levels of $1000 and $500 per day for at least 20 years and may be regarded as inadequate given the growth in the average size of unions registered under the Act.

The possible re-birth of small/workplace-based bargaining units also suggests that penalties should not be assessed according not only to the nature of the offence but according to the size of the group, or organisation involved. A sliding scale has much to commend it whatever one may think is the appropriate base rate for such penalties.

The decision not to extend immunity to the negotiation phase preparatory to the making of non union enterprise flexibility agreements seems at odds with other tendencies in the Bill.

The use of what the Hancock Committee referred to as "exotic" heads of constitutional power ('corporations power', the 'dispute prevention power' and the 'external affairs power') raises a number of interesting legal and political questions. The likelihood of further challenges to the Commonwealth Act is, in the short-term, a potential source of considerable uncertainty and difficulty. Should the legislation and the Commonwealth's use of the above powers be substantially upheld, the consequences may also be quite profound, opening the way for a single national system of industrial relations based solely on Commonwealth law.

Endnotes

1. Second Reading Speech, Hansard, pp 2777-2784, p 2779.

2. ABC Radio, News Broadcast, 4 November 1993.

3. ABS, Award Coverage, Cat No 6315, 28 June 1991.

4. BCA, Avoiding Industrial Action, 14 August 1991. (Hilmer et alia). BCA, Working Relations, 1993. (Hilmer et alia)

5. DIR, Industrial Relations at Work, 1991, (Callus et alia)

6. ibid p 98.

7. OECD, pp 57-81, p 57.

8. October 1991, National Wage Case Decision.

9. ABS, The Labour Force, Australia. Cat No. 6203.0. various issues.

10. ABS, Industrial Disputes, Cat No.6321.0. various issues.

11. Report of Committee of Review, Australian Industrial Relations Law and Systems, volume 3, 1985, pp 207-245.

12. SMH, 5 September 1989.

13. SMH, 13 July 1992.

14. Submission to Hancock Inquiry, December 1993, p 4.

15. op cit, April 1985.

16. Ross Gittins, SMH, 13 November 1993.

17. DIR, Information Paper, August 1993, pp 68-69.

18. ibid, pp 73-74.

19. ibid, p 1.

20. ibid, pp 1-2.

21. ibid, pp 19-20.

22. ibid, pp 109-112.

23. Australian Courts of Law, 3rd edit., 1993, pp 256-57.

R. Bennett (Ph. 06 2772430)

Law and Public Administration Group 12 November 1993

Parliamentary Research Service

This Digest does not have any official legal status. Other sources should be consulted to determine the subsequent official status of the Bill.

Commonwealth of Australia 1993.

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Published by the Department of the Parliamentary Library, 1993.