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National Library of Australia Cataloguing-in-Publication entry

Creator: Abbott, Keith, 1956- author.

Title: Understanding employment relations / Keith Abbott,

Bruce Hearn Mackinnon and Paul Fallon

ISBN: 9780195588002 (paperback)

Notes: Includes index.

Subjects: Personnel management.

Industrial relations.
Work environment.
Labor unions.

Other Creators/Contributors: Mackinnon, Bruce Hearn,

author. Fallon, Paul, author.

Dewey Number: 658.315

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 BRIEF CONTENTS
Figures
Tables
List of Primary Examples and Case Studies
Abbreviations
About the Authors
Preface
Acknowledgments
 Theories and Concepts
 The Context of Employment Relations
 Trade Unions
 Employers and Employer Associations
 The State and Employment Relations
 Making Agreements
 Wage Determination
 Conflict and Negotiation
 Employment Relations and Diversity
 Workplace Health and Safety
 Industrial Relations and HRM
 Engaging Labour in the Workplace

Glossary
Index
 EXPANDED CONTENTS
Figures
Tables
List of Primary Examples and Case Studies
Abbreviations
About the Authors
Preface
Acknowledgments
 Theories and Concepts
Introduction
Defining employment relations
The legitimacy of workplace authority
Frames of reference
Unitarism
Pluralism
Radicalism (or Marxism)
Postmodernist theories
The role of theory
 The Context of Employment Relations
Introduction
The Australian ‘context’
Internal context
External context
Stability and predictability
Uncertainty and transition
Dynamism and unpredictability
 Trade Unions
Introduction
What is a trade union?
Theories of trade unionism
Pluralist
Marxist–Leninist
Syndicalist
Organicist
Authoritarian
Trade unions by membership type
A brief history of Australian trade unionism
Trade union structure
Trade union membership
Why do workers join trade unions?
 Employers and Employer Associations
Introduction
Defining employer associations
History of employer associations in Australia
Types of employer associations
Craft employer associations
Industry associations
Peak associations
Employer association structure
Employer association governance
Why do employers join employer associations?
Theories of employer associations
Laissez-faire
Pluralist associations
Authoritarian
Australian employer association strategies
The future of employer associations
 The State and Employment Relations
Introduction
Defining the ‘state’
The rationale for state intervention in employment relations
Theories of the state
Pluralism
Neoliberalism
Corporatism
Marxism
The state and employment relations
The Australian state and employment relations
Common law
The multi-factor test
Master and servant
From obligation to contract
Constitutional law
Industrial power, section 51 (xxxv)
Incidental power, section 51 (xxxix)
Trade and commerce power, section 51 (i)
Defence power, section 51 (vi)
Exclusive (or absolute) power, section 52 (ii) and territorial power section
122
Corporations power, section 51 (xx)
Referral by states power, section 51 (xxxvii)
Statute law
Evolution of the federal system
The Fair Work Act 2009
The Fair Work Commission
Fair Work Divisions
The Fair Work Ombudsman
Modern awards
Enterprise bargaining
 Union right of entry
Workplace determinations
Unfair dismissal
Transfer of business
General protections
Building industry legislation
Other legislation
The common law
Looking ahead
 Making Agreements
Introduction
Concepts of agreement-making
Types of agreement-making
Awards
Coverage and types
Content
Disputes about the application of an award
Enterprise agreements
Coverage and types
Content
Initiating a bargaining period
Bargaining stage in ‘good faith’
Taking protected industrial action
Workplace approval of a draft agreement
Legal ratification of an agreement and the ‘better off overall test’
Current debates about agreement-making
 Wage Determination
Introduction
Types and determinants of wages
Historical wage determination
The Harvester Judgement (1907–1983)
The Accord (1983–1996)
Under Coalition governments (1996–2007)
Under the current Fair Work Act 2009
Australian wage statistics
Critical issues in labour relations
The minimum wage
Centralised and decentralised bargaining
Gender pay inequality
 Conflict and Negotiation
Introduction
Types of conflict
Overt forms of industrial action
Covert forms of industrial action
Theories on conflict
Industrial conflict in Australia
How disputes are resolved
Covert activity
Dispute resolution in Australia
The Fair Work Act 2009
Dispute resolution
The role of the Fair Work Commission in disputes
Employment dispute resolution
 Employment Relations and Diversity
Introduction
The diversity of the Australian workforce
Migrants
Women at work
Age
Indigenous Australians
The laws and diversity
Equal Opportunity for Women in the Workplace Amendment Act 2012
At the workplace: The role of employers
Diversity and employment relations
Sexual harassment
Maternity leave
Flexible work arrangements
Work–life balance
 Workplace Health and Safety
Introduction
What is health and safety?
Federal and state legislation
Robens and safety
A new direction for health and safety in Australia?
Duties of employers to employees
Regulations
Codes of Practice
OHS agencies and inspectorates
Prevention
Regulation
Unions and health and safety
The scale of the problem
Occupational disease
Emerging and current issues in health and safety
Bullying
Stress
Health at work
Workers’ compensation
The workers’ compensation process
Return to work plans
 Industrial Relations and HRM
Introduction
The emergence of HRM
The role of HRM
The HR professional
Distinguishing HR and IR
Together or apart: A new direction for IR and HRM?
HRM and IR: A new alliance?
Trade unions
Measuring HR policies
 Engaging Labour in the Workplace
Introduction
Distinguishing employee participation and employee involvement
Employee participation
Employee involvement
Perspectives held towards employee participation and involvement
Unitarist perspective
Pluralist perspective
Radical perspective
Frames of reference: Summing up
Employee participation and involvement in practice
Employee participation practices
Employee involvement practices
The legal requirements of employee participation in Australia

Glossary
Index
FIGURES

1.1 The employment relationship

3.1 Australian trade union organisational structure
3.2 Trade union membership (in thousands)
3.3 Trade union density (percentage of employees in a union)
6.1 Centralised and decentralised bargaining and agreement-making
6.2 Required elements of a dispute resolution clause in modern awards
6.3 Current agreements and employee coverage by quarter
6.4 Process of enterprise bargaining under the Fair Work Act 2009
7.1 Average weekly total cash earnings: Employment status, May 2014
7.2 Method of setting pay: All employees, May 2014
7.3 Average weekly total cash earning: Method of setting pay, May 2014
7.4 Average weekly total cash earning: Industry, May 2014
7.5 Real minimum wages: International comparison
7.6 Unemployment rate and minimum wage: Selected countries
7.7 Gender pay gap: 1980s–2014
9.1 Female labour force participation
9.2 Labour force participation of people aged 55 years and over 1980–2010
9.3 Reasons for requesting flexible working hours 2010
10.1 Codes of Practice and Compliance Codes: The WHS Act, regulations and
compliance codes
10.2 Typical workers’ compensation process in Australia
11.1 The Harvard model of human resource management
11.2 Balanced Scorecard Strategic Management System

12.1 Degree of employee participation

TABLES

1.1 Three levels of industrial relations activity

3.1 Trade unions: Interests, purposes and functions
3.2 Types of trade unions
3.3 ACTU-affiliated unions
4.1 BCA members
5.1 Alternative theories of the state and employment relations
8.1 Persons who ceased a job during the year (February 2008–February 2013)
8.2 Number of applications for industrial action 2011–14
8.3 Fair Work Commission dispute applications—lodgments 2011–14
10.1 Australian workplace safety regulators
11.1 Typical activities in a large HRM department
11.2 Comparing IR and HRM
12.1 Categories and forms of employee involvement
12.2 Dimensions of employee participation and involvement
LIST OF PRIMARY EXAMPLES AND CASE
STUDIES
Chapter 1
Primary example 1.1: Power and authority at work
Case study 1.1: Understanding frames of reference
Case study 1.2: Managerial strategic choice

Chapter 2
Primary example 2.1: Sham contracting
Case study 2.1: The Accord between the Australian Labor Party and the ACTU
Case study 2.2: Retail giant underpays migrant workers

Chapter 3
Primary example 3.1: Charter of workplace union delegates’ rights
Case study 3.1: Unions win asbestos case against James Hardie
Case study 3.2: Public transport union wins better wages and conditions

Chapter 4
Primary example 4.1: The Master Plumbers Association
Case study 4.1: Business Council of Australia pushes for one universal award in IR
reform
Case study 4.2: Impact of CFMEU paid meetings claim ‘impossible to predict’: MBA

Chapter 5
Primary example 5.1: State intervention in Pig Out restaurant chain
Case study 5.1: CFMEU to pay up to $9m to settle Boral action
Case study 5.2: The role of the state in the 1998 waterfront dispute

Chapter 6
Primary example 6.1: Conciliation at the waterfront
Case study 6.1: Penalties for union breaches paid to employer
Case study 6.2: Employee entitled to penalty rates for RDO worked
Chapter 7
Primary example 7.1: Coffee franchise fined for underpaying staff
Case study 7.1: Business rejects Australian unions’ push for minimum wage rise
Case study 7.2: Young workers and the minimum wage

Chapter 8
Primary example 8.1: Mediating a resolution
Case study 8.1: Paramedics reach pay deal after years of dispute
Case study 8.2: Mediation helps resolve workplace disputes early

Chapter 9
Primary example 9.1: A sporting chance for promotion
Case study 9.1: Government must do more to stop fraud and rorting of 457 visas
Case study 9.2: When is a workplace not a workplace?

Chapter 10
Primary example 10.1: The Bernie Banton story
Case study 10.1: Brodie’s death a warning to small business
Case study 10.2: Folstaff storage facility

Chapter 11
Primary example 11.1: HR/ER Manager
Case study 11.1: When push comes to shove
Case study 11.2: Trouble at Freshly Brewed coffee group

Chapter 12
Primary example 12.1: Back to the future on the waterfront
Primary example 12.2: The staff perks keep workers happy
Case study 12.1: Section 205 of the Fair Work Act 2009
Case study 12.2: All worked up about work
ABBREVIATIONS

ABS Australian Bureau of Statistics

ACCI Australian Chamber of Commerce and Industry
ACTU Australian Council of Trade Unions
ADR Alternative Dispute Resolution
AFPC Australian Fair Pay Commission
AHRC Australian Human Rights Commission
AHRI Australian Human Resources Institute
AIG Australian Industry Group
AIRC Australian Industrial Relations Commission
ALP Australian Labor Party
ASX Australian Stock Exchange
AWA Australian Workplace Agreement
BCA Business Council of Australia
CEO Chief Executive Officer
CIPD Chartered Institute of Personnel and Development
CPI Consumer Price Index
EEO Equal Employment Opportunity
EFA Enterprise Flexibility Agreement
EO Act Equal Opportunity Act
ER Employment Relations
FIFO Fly-in, Fly-out Workers
FW Act Fair Work Act 2009
FWBC Fair Work Building Commission
FWC Fair Work Commission
GFC Global Financial Crisis
H&S Health and Safety
HR Human Resources
HREOC Human Rights and Equal Opportunity Commission
HRM Human Resource Management
HSC Health and Safety Committee
HSR Health and Safety Representative
ILO International Labor Organisation
ITUC International Trade Union Confederation
IWW Industrial Workers of the World
MUA Maritime Union of Australia
MWP Minimum Wage Panel
NES National Employment Standards
NFF National Farmers Federation
OECD Organisation for Economic Cooperation and Development
OH&S Occupational Health and Safety
PCBU Person Conducting a Business or Undertaking
RDO Rostered Day Off
VCAT Victorian Civil and Administrative Tribunal
WGEA Workplace Gender Equality Agency
WHS Act Model Work Health and Safety Act
WR Act Workplace Relations Act 1966
ABOUT THE AUTHORS
Dr Keith Abbott (Cantab) is a senior lecturer at Deakin University, where he is the unit
chair of employment relations. He has worked in mining, manufacturing and
construction, and been involved in undertaking research for the Australian Human
Resource Institute, the Australian Federal Parliament and various trade unions. His
published research has focused on Australian workplace laws, international trade
unionism and the politics of contemporary labour management.

Dr Bruce Hearn Mackinnon PhD (Melb), M.Com (Melb), B. Ec (Mon), LLB (Macq)
is a senior lecturer in employment relations at Deakin University and a highly
recognised researcher and writer in this field, drawing on his multi-disciplinary
academic background in economics, law and strategic management. His research in
employment relations is also informed by his career—prior to academia—as an
organiser with the Building Workers Industrial Union and later as a senior economist at
the Commonwealth Treasury and Industry Commission.

Paul Fallon M.Bus (RMIT), Grad Dip IR/HR (RMIT), BA (La Trobe) has been a
practitioner in the field of human resource management and industrial relations for 25
years. He has worked in a variety of roles, including as trade union official, health and
safety trainer, workers’ compensation advocate, ministerial corporate affairs advisor,
media advisor, Industrial Relations Court of Australia associate, consultant and
employee advocate in a number of tribunals. Most recently, Paul has been a lecturer at
several universities, both in Australia and overseas.
PREFACE
As academic researchers, writers and teachers of employment relations, industrial
relations and human resource management, we recognised that there was a need for a
textbook focusing on both the theory and practice of employment relations in Australia.
And, as former industrial-relations practitioners, we understood the need for a book
that was intellectually rigorous as well as being grounded in real-world practice. This
necessitated a book that is academically challenging, drawing on national and
international theoretical scholarship, while also providing the practical and applied
content demanded by employment relations and human resource management
professionals.
In writing a book about Australian employment relations, we deliberately set out to
provide more in-depth analysis than is usual in textbooks of this type, and to explain
more about our unique regulatory environment—particularly the procedural and
substantive rules that govern the conduct and outcomes of employment relations in
Australia. Hence, employment law features prominently throughout this book, in
recognition of the uniquely high level of regulation of employment relations in this
country.
Understanding Employment Relations sets out both the theoretical and contextual
background for the conduct of Australian employment relations. Hence, there is a clear
historical analysis, both describing and explaining how and why Australian
employment relations have evolved the way they have. The analysis of the evolution of
employment relations in Australia is also linked to the economic and political forces of
globalisation, which have changed the landscape, rationale and effectiveness of
national regulatory systems, including those pertaining to employment relations.
Although globalisation has forever changed the socio-economic-politico-legal
environment for employment relations, the customs, history, culture and political
realities of Australian society continue to weigh heavily on the national regulatory
framework that informs how employment relations are conducted.
While outlining roles of the major players in employment relations—trade unions,
employers and employer associations, and the state—Understanding Employment
Relations analyses these players at both the macro/national level and the
micro/workplace level. Although the reasons for the historical decline in trade union
membership rates in Australia is discussed, the unions’ role is still crucial in the
conduct of employment relations because of their power to set the benchmark for
enterprise bargaining, as well as their pivotal role in representing employees in
hearings about changes to awards. Thus, trade unions have a power and influence on
employment relations that far exceeds what their raw membership numbers might
otherwise suggest.
Understanding Employment Relations also provides detailed analyses of the
intersection of employment relations and human resource management, which often
present unique challenges to HR professionals tasked with managing the vast array of
regulatory and compliance issues related to the management of employees in the
workplace.
Finally, Understanding Employment Relations is intended to provide a clear
program of study suitable for undergraduate and postgraduate courses in employment
relations, employee relations or industrial relations. The 12 chapters have been written
as stand-alone topics for a standard 12-week university semester. Each chapter contains
case studies, practical examples and review questions that are designed to assist
teaching in tutorials and seminars.

January 2016
Keith Abbott
Bruce Hearn Mackinnon
Paul Fallon
ACKNOWLEDGMENTS
We would like to acknowledge our colleagues at the Department of Management at
Deakin University, especially our new department head, Amanda Pyman, for supporting
and encouraging this project.
We also wish to thank the staff at OUP, especially Karen Hildebrandt and Shari
Serjeant, for their patience with us over the long journey to bring this book to
completion. Many thanks to Philip Bryan for a terrific editing job. Importantly, we wish
to thank our families and loved ones for their ongoing support.
Further to this, the authors and the publisher wish to thank the following copyright
holders for reproduction of their material:
Reproduced by permission of the Australian Broadcasting Corporation–Library
Sales © 2014 ABC, 242–3; Article, ‘Coffee franchise fined for under-paying staff’ by
Nick Toscano, The Age, 2 February, 2015, 193–4; Article, Sexual Harassment ruling a
warning for employers’ by Nick Toscano, The Age, 13 August, 2014, 274–5; Article,
‘Business Council of Australia pushes for one universal award in IR reform’ by Ewin
Hannan, Australian Financial Review, 20 May, 2015, 97–8; © Australian Human
Rights Commission 2015, 265; © Commonwealth of Australia 2014, 284–5; This
legislative material is reproduced by permission, but is not the official or authorised
version. It is subject to Commonwealth of Australia copyright, 125, 155, 156, 159, 160,
152, 164, 228, 223–4, 354; Fair Work Commission, 163, 192–3, 211, 234–5; Article,
‘The staff perks keep workers happy’ by Leanne Edmistone, Courier Mail, 28
September, 2015, 349–50; © Fair Work Ombudsman, 224–5, 240–41, 243–4;
Reproduced by permission of Flight Centre, 262-4; Getty Images/Geoff Brightling,
cover (bee); Reprinted with permission from Advance Australia … Where? By Hugh
Mackay, Hachette Australia, 2007, 270; Shutterstock, cover (background); Article,
‘Back to the future on the waterfront’ Sydney Morning Herald, 19 November, 2015,
346; Article, ‘All worked up about work’ by James Adonis, Sydney Morning Herald,
18 March, 2011, 354–5; Article, ‘Business Rejects Australian Unions’ Push for
Minimum Wage Rise’ by Nick Toscano, Sydney Morning Herald, 27 March, 2015,
209–210; Article, ‘Brodie’s death a warning to small business’ by Jen Vuk, Sydney
Morning Herald, 24 December, 2009, 300–302.
Every effort has been made to trace the original source of copyright material
contained in this book. The publisher will be pleased to hear from copyright holders to
rectify any errors or omissions.
 Chapter One
THEORIES AND CONCEPTS

INTRODUCTION
Industrial relations and human resource management (HRM), although related,
constitute quite distinct approaches towards the management of labour. Their
differences, both as practices and as academic fields of inquiry, revolve around
alternative perspectives on the nature of work and workplace relations.
Modern workplaces often contain HRM practitioners with some industrial relations
responsibilities, as well as specialists solely responsible for industrial relations. The
term employment relations has come to prominence over the past decade or so, within
academic circles as well as among practitioners, in recognition of the institutional and
regulatory processes that impinge on most HRM activities.

Employment relations
A catch-all phrase covering the areas traditionally known as industrial relations, as
well as the field of HRM. It covers individual, collective and institutional aspects of
management/labour relations.

While most HRM literature is concerned with the discipline’s various functional
areas—such as recruitment, selection, training, development, remuneration and
performance management—employment relations extends the focus to include the
institutions and processes of industrial relations and how they impact on the
management of labour.
But why are employment relations important? To answer this, we must understand
why work is important, to both employees and employers. Human beings as a species
are social beings, and nowhere is this more evident than in the world of work. While
there are obviously examples of individuals working in isolation from others, the vast
bulk of work the world over is carried out as a collective activity. Work generally
involves numbers of people working together, ranging from a handful of people in small
businesses to many thousands in large corporations. How we work, where we work,
and whom we work with and for, are important factors determining our sense of self.
When meeting someone for the first time, it is common to ask ‘What do you do?’ This
innocuous question reveals the extent to which our work is vital for our identity. In
addition to the role of work in forming our identity, work is also vital for employees as
a means to financial reward, providing access to the material necessities of life, as
well as to the array of cultural phenomena pertaining to the advantages and
achievements of civilisation.
For employers, with technology and capital readily available (to a greater or lesser
extent), it has become increasingly recognised that a firm’s competitiveness largely
depends on its ability to harness the knowledge and skills of its employees (Wernerfelt
1984). This resource-based view of the firm has been taken up by the HRM and
employment-relations literature, arguing that ‘distinctive human resources’ are the core
resource (Cappelli & Crocker-Hefter 1996). This human resource, or labour power, is
unique: it cannot be separated from the people in which it exists. The employment
relationship is concerned with utilising or harnessing the labour power of workers to
fulfil the productive aims of the firm in a way that satisfies (at least in part) the aims of
employees. This relationship, because of the diverse objectives of the parties
(management and labour), is necessarily ambiguous, open-ended and a ‘blend of
inherently contradictory principles concerning control and consent’ (Edwards 2003: 4).

Labour power
The combined set of skills, abilities, and physical and mental energy that workers
bring to a job. It is workers’ capacity to work.

Therefore, how work is allocated, organised, managed and rewarded is very

significant, and how these activities are undertaken reflect on the views and values that
we hold as a society. What levels of unemployment are tolerated or considered
acceptable, how work is undertaken, and how conflicts between management and
labour are resolved are matters giving rise to an array of opinions, variously shaped by
prevailing cultural expectations, economic conditions and political understandings
related to our engagement with the world of work, and to society more generally
(Thomas 1999: v).
Attitudes towards work—and especially to the management of labour—have
undergone major change in recent decades in response to massive technological and
structural change but, perhaps most importantly, in response to the rising dominant
forces linked to globalisation. This has required managers to become more
sophisticated in attempting to better organise and allocate work and, crucially, in how
to more efficiently utilise and direct those in their charge.
Management thinking in these areas can take place in two ways. First, managers can
rely on intuition or experiential understandings to guide or determine the way they go
about managing labour. While such an approach has some merit in limited situations, it
often results in sub-optimal performance and practices, stemming from personal
prejudices, misguided or crude assumptions, or simple wishful thinking. Second,
managers can instead apply theoretical and conceptual frameworks in an attempt to
construct coherence from the various disconnected aspects of labour management. This
approach offers the only credible means by which the management of labour can be
undertaken purposefully and systematically. With this in mind, the remainder of this
chapter sets out the most commonly used theoretical and conceptual tools used to
analyse the interactions between employees (workers) and employers (or managers).

DEFINING EMPLOYMENT RELATIONS

Employment relations is a term commonly used to designate the study and practice of
HRM in combination with industrial relations. With HRM focusing more on the
individual aspects, and industrial relations focused largely on the collective aspects of
management/labour relations, employment relations encompasses both individual and
collective aspects of the management of labour. Despite this broad perspective, there
has long been considerable academic debate over the meaning of employment relations.
Part of the ambiguity over its meaning stems from the multi-disciplinary nature of its
subject matter, attracting scholars from various fields of research, including labour
economics, industrial sociology, industrial psychology, labour history and labour law.
Thus, employment relations is a term that can be used in a variety of ways and contexts.
American scholars have tended to use the term employment relations rather vaguely,
viewing it as identical with the thrust of HRM practices and related interactions
concerned with individual employees and employers (or managers) at the workplace
level. In this way, it typically describes something quite distinct from traditional
notions of personnel management and industrial relations (see, for example, Beardwell
& Holden 1994). A wider meaning of employment relations is generally provided by
the British literature, which incorporates interactions beyond the individual workplace
level, including the state, employers and organised labour. So where the US literature
focuses on the micro-relations between employers and employees at the level of the
workplace, the British perspective also includes a macro-level analysis incorporating
interactions between the institutions established to govern and regulate such relations
(see, for example, Gennard & Judge 2002).
The incorporation of the wider institutional settings in the British usage of
employment relations amounts to the inclusion of areas typically considered the
province of industrial relations. The British approach thus uses the term employment
relations in two senses. First, it employs a unitarist concept when describing HRM.
(The terms unitarist and pluralist are elaborated on later in this chapter.) In doing so, it
adopts the mainstream US usage, with employment relations synonymous with the sum
of prescribed HRM activities and interactions, assumed to find expression through
collaborative relations between employees and employers (and their managers), in the
skill, loyalty and flexibility of employees, in a union-free environment, in the high
performance outcomes of firms, and all occurring in the absence of workplace conflict.
Second, the term can be used in its pluralist sense, describing the institutional and
regulative settings overseeing the functional operations and interactions of HRM. Used
in this way, employment relations acknowledges the plurality of group interests and the
inherent nature of workplace conflict, requiring dispute settlement and negotiation
procedures that determine formal rules and regulations, customs and practices
governing management/labour relations.
The use of the term employment relations in this book closely follows the British
approach, recognising that Australia’s system of industrial (or workplace) relations is
overseen by relatively extensive regulative and institutional settings. In this sense,
employment relations is something of a ‘catch-all’ phrase covering the areas
traditionally known as industrial relations, as well as the field of HRM (see Bamber &
Lansbury 1998; Keenoy & Kelly 1998).
Employment relations is used to describe all aspects of the interactions and
relations between employers (or managers) and employees, as individuals, as
collectives, at the workplace, industry, local, regional, national (or even international)
level, and all the while cognisant of the regulatory and institutional settings that oversee
such relations.

FIGURE The employment relationship

1.1

Source: Edwards (2003: 9)

The employment relationship, while obviously a relationship between an employer

and an employee, is a relationship often mediated by the state—through laws,
regulations, tribunals, etc.—and trade unions, or other forms of worker representation.
The role of the state and that of trade unions is discussed in later chapters.

THE LEGITIMACY OF WORKPLACE AUTHORITY

Having discussed the meaning of the term employment relations and some key aspects
of the nature of the employment relationship, we now turn our attention to one of the key
components underpinning the employment relationship: the legitimacy of workplace
authority.
Whether viewed from an economic, legal or moral perspective, the employment
relationship is one whereby the employer is generally viewed as legitimately
exercising power over the employee. What influences the legitimacy of such power? In
one sense, the power of an employer (the owner of the means of production) to deny the
employee (those who only have their labour power to sell) a means of earning a
livelihood, gives effect to the golden rule: ‘Them that’s got the gold makes the rules.’
But such an explanation does not explain why most people willingly subject themselves
to the authority of others. More so, they generally do not do so begrudgingly or
reluctantly; if that was the case, most workplaces would suffer from poor productivity,
as willing labour is generally more productive than labour conscripted under duress.
So there seems to be something in our collective psyche and social values that leads us
to work together willingly in an organised fashion to achieve goals collectively that
would be unattainable if pursued individually.
Achieving economic goals generally requires some division of labour and
responsibility. Once divisions of labour occur, whether formally or informally, they
require some people to have authority over others in order to ensure coordination and
direction. In the Middle Ages, this division of labour was upheld by a social system
and culture based on status and obligation. A person’s ‘station in life’ was determined,
more often than not, at birth. The authority of employers over employees was upheld,
not by employment contracts as is the case today, but by the subjugation of the servant to
the unchallenged authority of the master. This system, rooted in an agricultural and
household stable economic structure, reinforced by custom, law and religion, was
based on a clearly defined set of mutual obligations: the obligation of the servant to
serve the master faithfully, and the obligation of the master to care for the welfare of the
servant. These mutual obligations were generally deemed as permanent for the life of
the parties. Such a stable and self-replicating system could be thought of as constituting
‘a place for everyone and everyone in their place’. The authority of one party over the
other was determined by their status in the social order. This conservative social order
prevailed for many centuries in societies that fixed people’s locality and occupation,
and from a social consensus that upheld existing class divisions between landowners
and rural serfs, masters of trades and their apprentices (Tannenbaum 1966).
 The stability of this medieval system, based on a predictable, technologically
stagnant agricultural economy, remained largely unchallenged until well into the
nineteenth century, and only began to unravel with the onset and spread of the Industrial
Revolution. Industrialisation required the movement and flexibility of labour,
particularly away from rural settings towards the cities where large-scale
manufacturing began to take place. In order to get people ‘off the land’, the centuries-
old system of obligations based on status was replaced with obligations based on
contract. New notions of ‘freedom of choice’ and ‘managerial prerogative’ replaced
notions of status-based obligations. Employees were ‘free’ to negotiate a work contract
to their liking, while accepting the prerogative of employers to organise and remunerate
employees to their liking (Fox 1974).
This historical basis of the legitimacy of workplace authority demonstrates that it is
not based on subjective notions of personality or prestige (i.e. status), but on the formal
obligations set out in employment contracts designed to satisfy the needs of the firm.
These obligations—written or unwritten, formal or informal—are underpinned by a
complex array of often dynamic, economic, social, political and cultural influences.
Accordingly, they are somewhat of a ‘moveable feast’.

FRAMES OF REFERENCE
Understanding or making sense of this ‘moveable feast’ depends in part on your own
individual perspective. Each person’s view of the world is shaped by their background,
friendships, age, gender, family, religion, politics, education, economic circumstance
and general life experience. This leads to diverse opinions and intense debates, clearly
manifested when it comes to opinions on the nature and governance of work. Debates of
this sort are often ‘framed’ in terms of the assumptions people use as reference points
when conceptualising the nature and governance of work. Thus, the term frames of
reference was devised by Alan Fox (1966, 1974) to categorise the opinions held by
people on such workplace issues. Fox argued that there were broadly three such frames
of reference, which he categorised as unitarist, pluralist and radical (or Marxist). What
follows is an exposition of these frames of reference and a discussion of the types of
theories of employment relations they inform.

Frames of reference
The outlook or perspective people apply in framing the way they interpret issues
around employment relations.

Unitarism
Unitarists believe that cooperation and harmony constitute the natural order, rather than
conflict. The intellectual roots for this perspective can be traced to a particular social-
philosophical view of society as a kind of super organism, with the various components
of civil society interdependent, in similar fashion to the way organisms combine to give
life to the human body (see Ely 1890; Carlyle 1911; Hobson 1920; Hayek 1960;
Tawney 1961). Accordingly, there is a common interest for all individuals and groups
to contribute to the survival and wellbeing of society. This harmony of interests
overrides any self-interest, and concern for the common interest prevails.

Unitarism
A view of workplace relations that assumes employees and managers have a
common interest in the success of their organisation, and that collective bargaining
and trade unions create conflict in a relationship that would otherwise be peaceful.

Unitarists’ starting position is that conflict is not an inevitable characteristic of the

employment relationship. If conflict between managers and employees does occur, it is
viewed as an aberration that is perhaps the result of poor communication, poor
recruitment or promotion practices, personality disorders, or the result of outside
trouble-making. Such conflict, to the extent that it occurs, is explained away as ‘the
result of misunderstanding or mischief; in other words as pathological’ (Crouch 1982:
18). At its heart, unitarists consider the employment relationship to be a site of
cooperation. In this schema, both managers and employees share a joint interest in the
success of the firm. Any conflicts that arise, if handled appropriately by managers, are
likely to be short lived. Internal ‘dissidents’, in particular, need to be either suppressed
or jettisoned from the organisation. Therefore, unitarists place great stock on the
importance of good recruitment, selection and promotion practices. Communication
systems are also important to alert, educate and remind employees where their true
interests lie. For this reason, management is promoted as the single unchallenged source
of authority, requiring trade unions to be either marginalised, bypassed, excluded or
suppressed (Fox 1966; 1974).
There are three broad management theories that reflect a unitarist frame of
reference: scientific management theory, human relations theory and human
resource management theory.

Scientific management
A model of process engineering based on making workers’ tasks as routine and
simple as possible so as to maximise productivity, enhance managerial control and
reduce workers’ scope for initiative. Also known as Taylorism.
 Human relations theory
The theory that tension and conflict in the workplace is best reduced by the creation
of an appropriate organisational environment, giving employees greater autonomy
and control over how they work, thus making their jobs more fulfilling.

Human resource management

Systematic program of labour management that is linked to strategic business plans
in a manner that benefits both employees and the organisation.

Scientific management theory

Unitarist assumptions underpin Taylor’s (1911) theory of scientific management. As a
management practice, this theory holds that the employment relations choices of
managers must start with the assumption that workers are selfish, lazy, immature in the
ways of work (which they are prone to avoid whenever possible), and have limited
time-horizons. As this is in conflict with the time-horizons and aspirations of firms,
managers are required to impose direct and highly rigid control mechanisms.
The task of management is to demonstrate rational leadership when recruiting,
selecting, promoting or directing employees, to have clear understanding of the tasks
required of employees and to have unrestricted managerial prerogatives to control the
manner, pace and processes of work. Firms adopting scientific management theory in
practice should re-engineer work processes to simplify employees’ tasks to simple,
repetitive processes that require little skill and enable easy management surveillance
and control. By maintaining control and superior knowledge of the overall productive
process, management authority is enhanced and entrenched, with employees simply
working as directed.

Human relations theory

Human relations theory is derived from the discipline of industrial psychology,
specifically the so-called human relations school (Maslow 1954; Mayo 1933: Child
1969). The theory initially grew out of a series of studies conducted by researchers at
the Western Electric Company in the United States, who conducted numerous
experiments and observations on work group behaviour (Mayo 1933). The basic
premise of human relations theory is that tension and conflict in the workplace is best
reduced by the creation of an appropriate organisational environment, enabling
employees to pursue and achieve self-actualisation through their work. Workplace
conflict can be significantly reduced by allowing employees greater autonomy and
control over how they work, thus making their jobs more fulfilling. In this sense, it
offers a critique of the scientific management approach, which emphasises tight control
and reducing employee autonomy.
The principal task of management—according to human relations theory—is to
provide an environment where employees feel valued and where they have a say in
how work is to be performed. Management should also demonstrate their commitment
to their employees’ wellbeing by taking an active interest in developing their
employees’ skills. This approach emphasises teamwork and group cohesion as the best
ways to motivate employees (rather than pay incentives). Such an approach is expected
to engender greater commitment by employees towards organisational goals, thus
leading to greater efficiency and productivity (see Rose 1988).
A glaring omission in the Mayo studies was any analysis of the contested power
relations within the firm, and the role of trade unions (Bramel & Friend 1981). This is
quite surprising, given that Western Electric had spent significant amounts of money
paying spies to report on and undermine pro-union tendencies among its workforce. In
the early post-World War II period, human relations theory began to fall into disrepute
because of a series of mixed practical results and theoretical inconsistencies.
Nevertheless, it soon gathered a new lease of life under the banners of ‘neo-human
relations’ or ‘behavioural theories’ (Maslow 1943; McGregor 1957; Herzberg 1966;
Roethlishberger 1965). Providing a more sophisticated approach, these theories
nevertheless remained focused on employee satisfaction and motivation, including the
need for ‘self-actualisation’ through a ‘hierarchy of needs’. The notion that high job
satisfaction led to high worker motivation, which in turn led to high productivity
eventually led to the development of an array of techniques aimed at ‘job enrichment’.
Both human relations and neo-human relations theories share the same unitarist
assumptions. In particular, they ignore the role of trade unions and the nature of
workplace conflict. Nevertheless, they have been quite influential in identifying the link
between employees’ work efforts and the nature of the ‘psychological contract’ they
have with managers (see Huczynski 1993).

Human resource management theory

Human resource management theory (Stone 2008) can be distinguished from the
previous two unitarist theories by the premise that workplace conflict and
organisational tensions can be completely resolved by nurturing a ‘psychological
contract’ based on cooperation. It is the task of management—according to this schema
—to provide strong leadership and to develop a culture of teamwork and collaboration
for the common good. A clear vision of organisational goals is essential so that
employees can ‘buy in’ to the culture. Some of the features of collaborative HRM
practices include workplace teams, performance appraisals, performance-related pay
and individual contracts (Hearn Mackinnon 2007). Trade unions are an anathema, since
they represent a barrier to the full employee adoption of the firm’s—i.e. management’s
—organisational goals.

Pluralism
Pluralists commence with the assumption that workplace conflict is inevitable. Systems
of employment (i.e. businesses and other organisations) are complex social
constructions with divergent interest groups. The chief groups, being management and
employees, have different interests because they generally subscribe to different values
and objectives. Furthermore, the more complex an organisation is, the more likely there
are divergent interests among parts of the organisation, if only because of the different
sources of authority. In all organisations, large or small, there is likely to be conflict
over the organisation of work and the allocation of rewards.

Pluralism
A view of workplace relations that assumes inherent conflict between employees
and managers, which is best managed and mediated through the agencies of trade
unions and collective bargaining.

By recognising the inevitability of workplace conflict, the task then becomes one of
managing this conflict in a way that leads to the resolution of tensions and the
improvement of workplace practices. Rather than viewed as a purely negative
phenomenon, workplace conflict provides an opportunity for the identification of
issues, enabling the organisation to learn and improve. Conflict can itself become the
spur for workplace innovation.
Acknowledging alternative sources of authority, especially that of shop stewards,
job delegates and trade unions, a pluralist approach by managers allows organisations
to deal with workplace issues on a collective basis. Allowing employees to organise
collectively in trade unions enables employees to counteract the employers’ power in
negotiating of employment contracts. The rights of trade unions and workers to bargain
collectively is a hallmark of the pluralist position on employment relations.

Systems theory
Dunlop’s (1958) systems theory remains the most influential pluralist theory of
industrial relations. Employment relations under this schema is a subsystem of the
wider social system. This subsystem includes a complex set of formal and informal
‘web of rules’ and regulations for governing the workplace. The actors—employers
and their associations; employees, shop stewards and trade unions; labour lawyers;
government agencies, tribunals and labour courts—are motivated to operate within
these rules under the influence of the wider economic, technological, social and
political environment. Finally, a ‘binding ideology’—or set of common beliefs and
understandings held by the parties—is essential for the system to promote compromises
on the part of each actor, to ensure the system remains operable. This framework
conceives the industrial relations system as self-adjusting towards equilibrium.

Systems theory
Dunlop’s (1958) systems theory consists of a set of informal and formal ‘rules’ for
governing the workplace, with all parties operating under the influence of a broader
economic, social, political, technological and cultural environment.

Strategic choice theory

Kochan, Katz and McKersie’s (1986) strategic choice theory is a more recent theory
based on pluralist assumptions and building upon—while departing from—Dunlop’s
(1958) seminal work. Whereas Dunlop’s systems theory was largely a static theory,
strategic choice theory offers a framework for incorporating the dynamic changes to
employment relations that have taken place particularly since the 1970s. Three changes
in particular are considered to have been major drivers for shifts in the way employers
deal with employment relations. First, the decline in trade union membership and the
growth of non-union sectors of the economy. Second, changes in collective bargaining
structures and outcomes involving trade unions. And third, the emergence of new
managerial attitudes, values and approaches, particularly evidenced by the influence of
new human resource strategies with a far stronger unitarist bent.

Strategic choice theory

Kochan, Katz and McKersie’s (1986) alteration to systems theory, taking into
account the decline in trade union membership; changes in collective bargaining
structures; and new human resource strategies with a stronger unitarist bent.

The net result of these changes is that employers (and their managers) can no longer
be considered as passive actors, simply responding to trade union demands. Instead,
managers are making their own strategic choices, thus seizing the initiative in
employment relations. In the face of a decline in trade union membership and influence,
coupled with the growing influence of managerialist ideologies—whether framed in
terms of adherence to neoliberalism, HRM or strategic management—the ‘binding
ideology’ or ‘glue’ that previously held industrial relations systems together has been
seriously weakened and, in many instances, abandoned.
This strategic choice theory, drawn from an examination of workplace relations in
the United States, distinguishes three levels of decision-making for the parties:
employers, unions and government. One of their key conclusions is that employers have
taken the initiative by making long-term strategic choices, increasingly assisted by the
retreat of government from providing balance to the industrial relations system.

Table 1.1 Three levels of industrial relations activity

Level Employers Unions Government

Long-term strategy and Business Political Macroeconomic

policy-making strategies strategies and social
Investment Representation policies
strategies strategies
HR strategies Organising
strategies
Collective bargaining Personnel Collective Labour law and
and personnel policy policies bargaining administration
Negotiation strategies
strategies
Workplace and Supervisory Contract Labour standards
individual/organisation style administration Worker
relationships Worker Worker participation
participation participation Individual rights
Job design and Job design and
work work
organisation organisation

Source: Kochan, Katz & McKersie (1986: 17)

Radicalism (or Marxism)

The radical or Marxist frame of reference is largely based on the writings of the
nineteenth–century German philosopher, economist, sociologist and political activist
Karl Marx (1950; 1967; 1978). Marx argued that capitalist societies—market
economies based on the private ownership of the means of production—are subject to
the perpetual struggle between competing classes: the bourgeoisie (capitalist class, or
owners of businesses) and the proletariat (working class). The skewed distribution of
wealth and power in the hands of the few capitalists contrasts with the vast bulk of
society, the working class who, with only their labour power to sell, are subject to
exploitation and inequality. The interests of capitalists and workers are diametrically
opposed, and can never be reconciled under capitalism. Only the revolutionary
overthrow of capitalism and its replacement with a socialist (and eventually
communist) system based on the common ownership of the means of production can end
class conflict, by ending the classes themselves.

Radicalism/Marxism
A view of workplace relations that assumes conflict between employers and
managers reflects wider social conflict between competing economic classes, and
that conflict can only be eradicated by overturning the capitalist mode of economic
organisation.

Contrary to what is often thought, Marx did not consider capitalists to be bad
people or even particularly greedy. Rather, capitalist competition forced businesses to
squeeze labour costs and to intensify work processes, lest they lose market share and
were ultimately forced out of business. Marx was also in awe of the dynamism of
capitalism as an engine for rapid technological change. Furthermore, around 150 years
before its popular recognition, Marx predicted the globalisation of capitalism because
of its insatiable need for growth, through the development of and search for new
markets.
The key contribution of Marxism to employment relations is that (unlike pluralism)
it offers an explanation for the root cause of workplace conflict. The interests of
employers and employees are diametrically opposed. Competition forces businesses to
suppress wages growth and to continually find new ways to intensify work in order to
protect or grow profits. Similarly, workers will always try to protect or increase their
wages, and resist efforts at work intensification. Such conflict is part of the class
struggle between the two main classes in society: the capitalist and working classes.
Class struggle is a permanent feature of capitalism, which takes place at the workplace
level, as well as in national and even international politics. Workplace conflict is
therefore just a part of the society-wide class struggle endemic to capitalism.
Some twentieth-century variants of Marxist analysis also provide explanations for
the ongoing power and authority of managers over workers. The Italian theorist Antonio
Gramsci (1971) argued that the ruling class (i.e. capitalists) did not maintain their
authority and power primarily through the use of force (although this was always an
option), but rather through the maintenance of ideological hegemony. Thus, the ruling
class ruled by having its ideology—values, customs and ideas—accepted by the
majority of society. While key institutions such as the church and, more recently, the
media, were responsible for maintaining this hegemony, Gramsci famously wrote that
‘hegemony begins in the factory’ (1971: 85). In the workplace, this would be achieved
by managerial prerogative or authority being accepted by workers as being natural and
normal. Similarly, the popular 1960s French Marxist theorist, Louis Althusser (1969),
argued that such hegemony was achieved by interpellation: a process whereby workers
came to accept their subordinate status as subjects.

Hegemony
Process where the ruling class maintains power and authority by having its ideology
—values, customs and ideas—accepted by the majority of society, without having to
resort to or threaten the use of force.

Interpellation
A process where workers come to accept their subordinate status as subjects. A
concept posited by the French Marxist Louis Althusser (1969).

These ideas of hegemony were at the core of the American academic Michael
Burawoy’s (1979) seminal work Manufacturing Consent, in which he argued that
management techniques, now known as human resource management, had resulted in a
transformation of managerial authority from a despotic to a hegemonic regime; from
extracting effort through coercion and fear to extracting effort through the manufacturing
or organising of consent.

Labour process theory

Braverman’s (1974) labour process theory builds on the Marxist tradition, but focuses
on the workplace where employers (or managers) utilise a range of processes and
technologies to control employees in order to convert the capacity of employees to
work (i.e. labour power) into actual work effort (i.e. labour). It is only through this
conversion of employees’ capacity to work into actual work that profitable production
and capital accumulation and growth can take place.

Labour process theory

Where employers or managers use a range of processes and technologies to control
employees in order to convert employees’ capacity to work (i.e. labour power) into
actual work effort (i.e. labour).

As a result of technological innovations and the adoption of scientific management

techniques—including the deployment of sophisticated forms of workplace surveillance
—managers have re-engineered production processes so that employees have been de-
skilled and their work tasks so fragmented and simplified that virtually all meaning and
satisfaction from work has been removed. This de-humanising results in deepening
worker alienation and ever greater levels of exploitation. In keeping with Marx’s
standpoint, labour process theory posits workplace conflict as not just the result of
competing interests in the workplace (as do pluralists), but the result of the very nature
of capitalist development itself.

PRIMARY EXAMPLE 1.1

Power and authority at work
Gizmo Auto, a US multinational corporation, is a long-time car manufacturer operating
a plant in Broadmeadows, on the northern outskirts of Melbourne, Australia. Since
beginning its Australian operations in the late 1950s, it has become one of the leading
automotive manufacturers in Australia. Its production methods follow the Fordist model
of intense assembly-line techniques, combined with relatively low-skilled workers
completing simple and repetitive tasks. This production method has proven successful
in the car industry—and in the manufacturing industry the world over—leading to high
levels of productivity, above-average wages and good profits. By all accounts, it seems
to have produced a win-win outcome for both employees and employers.
Employing a largely newly arrived migrant workforce from non-English speaking
backgrounds, Gizmo’s managers have maintained a disciplined managerial style, in part
by placing workers from different ethnic and language backgrounds alongside each
other to minimise worker-to-worker communication. The company operated a strong
system of workplace surveillance with video cameras, as well as a foreman walking
the floor to ensure that all workers were focused totally on their allocated tasks. A
feature of this surveillance system has been to restrict any stop in production to the
designated morning tea and lunch breaks. No other breaks are tolerated.
Despite Gizmo Auto’s strong managerialist style, the company recognised that trade
unions have statutory representation rights in Australia, and so Gizmo regularly
negotiate an enterprise agreement with the Victorian branch of the Vehicle Builders
Union (VBU). For over two decades, this recognition of the legitimate role of trade
unions has delivered increases in real wages for the workers, as well as an industrial
relations climate relatively free of disputation.
For some time, however, murmurings of resentment among workers at the constant
surveillance and management unwillingness to allow workers to take ‘unscheduled’
toilet breaks, has been festering. The language and cultural barriers to better
communication among the workers at the plant seems to have contributed to an inability
by the workforce to even get their complaints addressed by their own union. The VBU
officials, based 25 kilometres away in Melbourne, seemed oblivious to these
grassroots concerns, assuming that the delivery of good wages and reasonable working
hours were good achievements by the VBU, especially considering the ‘hard-nosed’
negotiating tactics employed by senior management at Gizmo.
Early one morning, an assembly line worker, Mazhoor Fariq, was desperate to take
a toilet break, but his foreman refused to allow it. Finally, Fariq could wait no longer;
he abandoned his post on the line and headed to the toilets, 100 metres away from his
spot on the line. As he walked past the line towards the toilets, his foreman was
following, berating him and ordering him to return to his work position and wait
another 25 minutes until the official morning tea break. Gradually more and more of
Mazhoor’s fellow assembly-line workers turned around with their backs to the line and
began cheering on Mazhoor as he continued down the line, completely ignoring the
screams of his foreman. Finally the foreman shouted ‘You’re sacked, towel head.’
Hearing this verbal abuse and the sacking of their fellow worker, the other workers
began walking off the assembly line and shouting abuse at management. Finally, one
worker grabbed a nearby forklift vehicle and drove it straight at the management office
at the end of the line, smashing a door and windows. Soon a full-blown riot was in
place, with hundreds of rampaging workers demolishing management’s office and part
of the plant itself.
Soon mounted riot police were called up from the city to quell the riot, and in
desperation, company management pleaded with VBU officials from Melbourne to talk
with the workers to try to calm them down and resolve the dispute.
In the week that followed, the company and the VBU agreed to establish a site
works committee, comprising representatives from the various parts of the assembly
line. This Works Committee (WC) was to meet regularly, on the company’s time, to
discuss issues and hear complaints from workers at the plant. The WC would attempt to
resolve issues directly with Gizmo management but, failing that, they would call in state
officials from the VBU to resolve the matters with management.
As an immediate response to the violent outburst at the plant, the company also
announced that all workers would be entitled to two additional 10-minute toilet breaks
per day. If another break was needed, a worker would have to let their foreman know
and they would attempt to get another worker to cover for them for the few minutes they
were on a break. Furthermore, two extra toilet blocks were to be built, so workers
would not have to walk so far to get to a toilet.
Postscript: This Primary example is based on real events that took place at a car
manufacturing plant on the outskirts of Melbourne in the 1970s. A few months after the
dispute someone who bought a new car that had been built at the plant returned it
because it had a rattle, the source of which could not be identified, despite several
inspections. Eventually the manufacturer completely stripped the car apart and found a
small Coke bottle inside a door panel; a note inside it read, ‘I bet it took you a long
time to find this, you bastards’.
Questions
1. What frame of reference would you ascribe to Gizmo management?
2. What frame of reference best explains the outbreak of intense conflict at this
workplace?
3. Who should have the power and authority to decide how and under what
circumstances people work?

POSTMODERNIST THEORIES
Postmodernist theories struggle to sit under any defined ‘frame of reference’, as they
range over all manner of social phenomena beyond the world of work. Furthermore,
postmodernism has tended to criticise any attempt to uncover theories or ‘meta-
narratives’ as explanations for anything; arguing instead that all attempts at explaining
the world in terms of a singular rationale or ‘systematised’ set of understandings is
doomed to failure, if not downright dangerous. Rather, there are many rationales, as
individuals will attach meaning to their day-to-day lives, making generalised
explanations useless. Instead, people construct their own ‘truths’ and find the ‘reality’
of the world through language or discourse, based on their own values and experiences.
No one’s ‘truth’ is more valid than anyone else’s.

Postmodernism
A catch-all descriptor for a range of non-structural theories of society. Generally,
postmodernist theories emphasise the role of language and discourse in providing
meaning, as ‘truth’ itself is a subjective phenomenon.

Nevertheless, there are some postmodernist theorists, of a more radical persuasion,

who acknowledge the existence of systems of power and domination in society. These
theorists, while not always acknowledging it, owe something of a debt to Marxism (see,
for example, Derrida 1978; Lyotard 1986–87; Baudrillard 1981).
These theorists generally focus on the use of language and discourse to condition
workers into accepting their fate and position of subservience in the employment
relationship. The language of ‘enterprise’, ‘productivity’, ‘teamwork’, ‘flexibility’,
‘efficiency’, ‘commitment’, etc., draws workers into a set of meanings that serve to
justify the unequal position they hold within the industrial process. Sophisticated
techniques employed by modern HRM use symbols, myths and language to develop
cultures aimed at manipulating employees’ behaviour and thinking. Management
employs these techniques to promote managerial prerogatives and authority, while
simultaneously demonising alternative sources of authority, particularly trade unions.
Postmodern theories, while useful in focusing attention on the use of language and
discourse by employers (or managers) to maintain their hegemony in the workplace,
offer little in the way of explanations for workplace conflict.
A variant of postmodernism with some specific contributions to understanding
modern (or perhaps postmodern) employment relationships in the emerging ‘risk
society’ is to be found in the work of Beck (2000), Beck and Beck-Gernsheim (2002),
Giddens (1999), Bauman (2001; 2005) and Mythen (2005). Their work highlights the
structuring or ‘institutionalised individualism’ (Beck & Beck-Gernsheim 2002) that
contribute to shaping individual, group, community, national and international
relationships and transactions. In brief, this literature explores the way that late
capitalism is breaking down all common bonds and leading (or forcing) individuals to
assume individualist positions as contractors, casual workers, self-insurers, etc., thus
assuming more and more ‘risk’ and consequently becoming further removed from the
traditional protections of collectivism, particularly trade unionism. As an observation
of actual trends, this literature is novel and insightful, but its value is less obvious as an
explanation for most employment relationships.

THE ROLE OF THEORY

Theories are ‘an attempt to bind together in a systematic fashion the knowledge that one
has of some particular aspect of the world of experience’ (Ruse, cited in Honderich
1995: 870). Theories are only useful if they help us make sense of the world. If a theory
is to offer some predictive or explanatory value, there must be a relationship between
the statements or understandings arrived at, the methods used to reach such
understandings, and the frame of reference relied upon to inform such methods. It’s
important to be aware that the different conclusions that can be reached when analysing
employment relations depends on the frame of reference adopted.
Often the presentation of these frames of reference and their associated theories
makes it appear that they are mutually exclusive and cannot be compared. Instead, this
book argues that each frame of reference offers its own insights, and an appreciation of
its associated theories, strengths and weaknesses is valuable in attempting to make
sense of employment relations.
Unitarism, for instance, by emphasising the commonality of interests between
employees and employers, provides a useful explanation for the day-to-day high level
of cooperation that takes place in most workplaces around the globe. The identification
of many (if not most) employees with their organisation or workplace suggests that
there are clearly some common or shared interests between employees and employers
(or managers). What cannot be denied is that if businesses fail, the interests of both
employers and employees suffer.
Even when evaluating the worth of scientific management or Taylorism, it is worth
recalling that none other than Vladimir Lenin, the leader of the Bolshevik (communist)
revolution in Russia, was full of praise for Taylor’s management theories, and set about
implementing them throughout industry in revolutionary Russia.
Pluralism, once the favourite frame of reference for most industrial-relations
academics, has suffered in prestige, as trade union membership and strike activity has
declined and collective bargaining has receded in importance in most advanced
economies. Nevertheless, since the onset of the global financial crisis (GFC), as firms
downsize (i.e. sack workers) and whole economies restructure, throwing entire sectors
of the economy on the scrap heap, it should be clear that workers have their own
particular interests, as do employers and managers.
Radicalism, and Marxism in particular, is often viewed as an anachronism, a
hangover from the 1960s era of liberation movements and revolutionary fervour. Surely,
since the collapse of the Soviet Union and other socialist systems in 1989 and the early
1990s, it should be apparent that Marxism is a dead end? It is worth reminding
ourselves that Marx had very little to say about possible socialist or communist
societies. Instead, he was preoccupied with analysing the logic and workings of
capitalism. On a world scale, the gap between rich and poor has never been greater.
Even within individual societies, such as the United States and Australia (see Wicks
2005), this is increasingly apparent. Witness the ‘Occupy Wall Street’ movement and its
many variants around the world, proclaiming the rights of the 99 per cent against the
super rich 1 per cent. Even those committed to the advantages of capitalism may find
Marx’s analysis insightful and ‘on the money’. Some years ago an investment banker
told New Yorker magazine that ‘Marx’s approach is the best way to look at capitalism’
(Wheen 1999: 5).
As for postmodernism, since this term covers a wide range of perspectives and
theories, it is the hardest approach to evaluate. Its contribution to understanding
mechanisms of domination and power relationships through sophisticated use of
language, symbols and discourse is certainly insightful. However, in the face of factory
closures, wage cuts and high unemployment in most developed economies, it is hard to
accept the notion that all that matters are individuals’ own understandings and
meanings. Quite clearly there are structural factors at play that postmodernism does not
even attempt to explain.

SUMMARY
Any understanding of employment relations must begin with an appreciation of the
nature and role of work in modern society. Work provides a means of self-actualisation,
fulfilment and identity for many people, as well as the means of providing a livelihood.
For employers, work is a means of generating wealth via production and exchange
through applying human labour to technology and raw materials, whereas for
employees, work is a means to earn an income.
Employment relations is the study of the relations between workers and
employers/managers at the individual, workplace, industry and national level.
Employment relations incorporates the field of study traditionally called industrial
relations, as well as modern human resource management. Owing to Australia’s unique
system of regulation, the term ‘employment relations’ is used in this book to cover the
micro focus of workplace issues as well as the macro analysis.
The field of study of employment relations is contested terrain, as there are no right
or wrong ways of analysing this multidisciplinary area. Importantly, explaining the
outcome of employment relations depends crucially on your frame of reference,
perspective or value system. The main frames of reference identified in the study of
employment relations are unitarism, pluralism and radicalism/Marxism. The unitarist
framework assumes that the existence of workplace conflict is evidence of a failure of
management to weed out trouble-makers, enforce managerial prerogative or maintain
effective systems of communication and workplace authority. Pluralists accept
workplace conflict as the natural and inherent outcomes of the complex array of
relationships and interests within all organisations. The challenge for pluralists is to
manage conflict effectively, enabling it to lead to improved outcomes. The radical
frame of reference, often linked to the Marxist outlook, considers workplace conflict to
be the result of the class conflict inherent in capitalism itself. For such radicals, only
the replacement of capitalism—a system that depends on the exploitation of labour—
with a classless communist (or at least socialist) society can lead to an end to
workplace conflict.
In more recent years, there have emerged other perspectives or theories, which seek
to explain workplace conflict. These postmodern approaches shift the focus away from
structural factors—such as notions of class—and turn their attention towards the use of
language, symbols and discourse as a means of maintaining power, including at the
workplace. The lack of a coherent analysis of employment relations by postmodernists
has led us to simply note their contribution to theory, but not to place much emphasis on
them throughout this book.

REVIEW QUESTIONS
1. How do employment relations relate to industrial relations and human resource
management?
2. What is the source of managerial authority or managerial prerogative?
3. What is meant by obligations based on status, as opposed to those based on
 contract?
4. What are the main features of a unitarist, pluralist and radical frame of reference?
5. What frame of reference underpins scientific management and human resource
management?
6. What frame of reference underpins Dunlop’s systems theory?
7. What frame of reference underpins labour process theory?
8. Given the dismal failure of socialist societies in the twentieth century, why might
Marx’s analysis remain useful in understanding employment relations?
9. Why does postmodernism tend to reject structural explanations?
10. What roles do language, myths and symbols play in legitimising managerial
authority?

Visit Oxford Ascend for
further revision material

CASE STUDY UNDERSTANDING

1.1 FRAMES OF
REFERENCE
Management from a large telecommunications company running a call centre in
Melbourne notified their employees that the centre would be closing down in six
months, as the work would be subcontracted to a call centre in India. The
telecommunications union called a lunchtime meeting at the call centre to consider
what action, if any, the workers could take in an attempt to protect their jobs. At
the meeting there were four main opinions expressed by workers.
First, some workers were willing to accept management’s decision, arguing
that it was management’s right to make investment and business decisions, so the
employees should just begin looking for other jobs. They were not happy with the
decision, but argued that there was nothing they could do about it, and it was not
their job to be telling management how to run the business.
Second, the overwhelming majority argued that the company should have
involved the workforce and their union in discussing the company’s options and
future planning, and that by their unilateral decision-making they had made it clear
that they had no concern for the welfare of their staff, many of whom would now
face severe financial hardship, trying to pay off mortgages with few job prospects.
Workers argued this case strongly, wanting their union to initiate immediate strike
action to pressure the company into reconsidering its decision.
Third, a small group of workers was critical of both their colleagues and their
union officials for being so naïve as to trust company management. They argued
that big business will always ‘screw us over’ given the chance and, while they
also supported the proposed strike action against the company, it was important
that all workers learnt from this experience that the interests of big business and
workers are diametrically opposed.
There was also one person at the meeting who disagreed with everyone else.
He said that he was glad the call centre was closing because he never liked the job
anyway, so now he would ‘get off his bum’ and find a better job. Trying to make
himself heard among the boos and hisses from his colleagues, he left the room
shouting, ‘It’s just how you all decide to look at it. Consider this an opportunity,
not something bad’.

Questions
1. How do the alternative opinions expressed by workers at the union
meeting relate to the main frames of reference?
2. Why might different workers at this call centre have different opinions on
this dispute?
3. What theoretical approach would best explain the last person’s lone
view?

CASE STUDY MANAGERIAL

1.2 STRATEGIC
CHOICE
Much of the mining industry today—particularly the non-coal sector—operates
non–union workplaces, with management authority reigning supreme. But this was
not always the case; up until the 1990s, mining was virtually 100 per cent
unionised throughout Australia.
The company that led the way in first marginalising and then jettisoning trade
unionism from much of its operations was the multinational corporation Rio Tinto.
Its iron-ore mining operations were carried out under the banner of Hamersley
Iron, in the remote Pilbara region of Western Australia.
Hamersley Iron had traditionally operated as a 100 per cent unionised
operation, with the company ensuring that all its employees were union members.
In mid-1992, an organiser for the Metal and Engineering Workers Union (MEWU)
discovered there was a worker, Philip Beales, who was refusing to join the union.
The organiser contacted company management and asked them to ensure Beales
joined the union or else take appropriate action against him. By this time,
however, a new direction was being led by company management, keen to restore
what they perceived to be a loss of managerial authority on site. Breaking with
custom and practice, the company refused to discipline Beales or ask him to join
the union. On 17 June 1992, around 2000 workers went on strike, effectively
closing down Hamersley’s mining operations.
On Monday 29 June the company filed a writ against the unions and their
officials for $49 million, as well as unspecified damages, representing the largest
common law action ever taken against unions in Australia’s history. They also
sought an injunction against further threatened industrial action. The unions and
their members were faced with the option of defying the courts and risk massive
financial ruin, or cease their strike and return to work. They chose the latter.
Having ‘stared down’ the unions, management then set about weakening and
marginalising unions altogether. They broke off all formal communications with
unions, instead establishing a system of direct communication between
management and employees. They dismissed several union activists for
‘harassing’ non-unionists, and then set about a major restructuring, reducing their
workforce by about 15 per cent. Union activists and militants were ‘encouraged’
to accept redundancy packages, recognising that they would have difficulty
working in the new environment. Furthermore, Hamersley Iron offered significant
salary increases for workers prepared to accept new (non–union) staff contracts.
The unions were exposed as being impotent to offer any meaningful resistance to
the management’s new strategic direction. Within a matter of months, this former
100 per cent unionised operation was completely devoid of any real union
presence.
The result was a company operating in an effective union-free environment,
able to enforce its managerial power and authority at will without any resistance.

Questions
1. How would you characterise the ‘frame of reference’ dominating
employment relations at Hamersley Iron, before and after the de-
unionisation?
2. How did Hamersley Iron defeat the unions?
3. What mistakes, if any, did the unions make in responding to the company’s
tactics?

FURTHER READING
Budd, J.W., & Bhave, D. (2006). Values, ideologies and frames of reference in
employment relations. In N. Bacon, P. Blyton, J. Fiorito, & E. Heery (Eds.),
Sage handbook of industrial and employment relations. University of
Minnesota, Minneapolis, MN: Industrial Relations Center.
Cradden, C. (2011). Unitarism, pluralism, radicalism and the rest? (Working paper
No. 7). Department of Sociology: University of Geneva. Viewed at
<www.unige.ch/ses/socio/>.
Godard, J. (2005). Industrial relations, the economy and society. 3rd edn. Concord,
Ontario: Captus Press.
Kaufman, B. (2008). Paradigms in industrial relations: Original, modern and
versions in-between. British Journal of Industrial Relations, 46(2): 314–39.
Slade, P. (2002). What is employment relations? International Employment
Relations Review, 8(2): 49–59.

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 Chapter Two
THE CONTEXT OF EMPLOYMENT
RELATIONS

INTRODUCTION
In Chapter 1 we examined a number of analytical and conceptual tools relevant to the
study of employment relations. These tools were introduced to assist in systematising
what might otherwise appear as an array of disconnected facts somehow related to
employment relations. Such tools, theories or approaches, however useful, only make
sense when we take account of the context in which employment relations takes place.
The parties to employment relations—be they employers, managers, employees, unions,
employer associations, industrial tribunals, courts—are made up of people with
motives, interests and behaviours. These motives, interests and behaviours are all
influenced by the contexts in which they operate. If we are to make sense of the
behaviours of the parties to employment relations, it is necessary to undertake a careful
examination of the context in which Australian employment relations occurs. Crucial to
a contextual analysis is some historical understanding of Australian employment
relations. Only by understanding the past can we truly make sense of the present.
If context is important for understanding, then so too is generalisability. Put simply,
the value or generalisability of any theory, tool or concept, depends on the
generalisability of the context in which it is applied. For instance, organisations are
generally made up of complex political and social arrangements, which are difficult to
accurately capture relying solely on the array of concepts or theories of employment
relations. Each organisation is unique. They can be small, big, hierarchical,
bureaucratic, democratic, organic, rigidly structured, with differing elements of
authority and control mechanisms. They may contain cultures that are more consensual
or authoritarian. Their technologies may be ‘cutting edge’ or ‘out of date’. In addition,
the gender, ethnicity, age profile and skill composition of the organisation can vary
immensely. All of these factors, plus others, constitute the internal context of an
organisation, which impacts on the formation and operation of practices and policies
governing the conduct of its employment relations.
 Internal context
The combined structure, size, technology, people, purpose, objectives and culture
relating to an organisation.

As well as the internal contextual factors, we must also be cognisant of the external
context which, despite being beyond the immediate organisational environment, can
impact greatly on the way in which employment relations are conducted. The external
context comprises the forces and influences beyond the organisation that are capable of
shaping the organisation’s behaviour and conduct. It is useful to think of these external
factors as constituting layers of influence. They include broad economic, political,
legal, social and cultural factors, operating either regionally, nationally or globally.

External context
The broader political, economic, legal, social and cultural environment operating
externally to the organisation, but nevertheless impacting on it.

In order to understand employment relations in any organisation, it is necessary to

take account of both the internal and external contexts. Furthermore, we need to analyse
how both sets of contexts interrelate and how they influence and are influenced by the
employment relationship. The employment relationship itself does not exist in a
vacuum; it is an historical artefact, born of experiences, events, ideas, ideologies and
practice. The world of work, which is the bedrock of employment relations, does not
consist of isolated discrete facts waiting to be uncovered and explained. Instead, it is a
dynamic system of complex relationships, constantly influencing and affecting each
other, feeding back and reconstituting itself in forever different ways. It is the
interconnectedness between this complex array of factors that influences employment
relations, making it such a rich and challenging subject for analysis (see Beardwell &
Holden 1994, Chapter 2).
To understand employment relations, we need to think broadly and reflexively,
drawing on experiential intuition, some occasional clues and hard facts, in order to
obtain some ‘tacit knowledge’ about the interwoven contextual circumstances relating
to any given employment relationship. If the tacit knowledge surrounding the
circumstances of such a relationship is consistent with the key elements of a theory or
concept, then the generalisability of its predictions or analyses are more likely to help
understand a given employment relations problem or issue. Put simply, taking a broad
view that incorporates the interwoven internal and external contextual situation of an
organisation, will enable the selection and application of the most appropriate concepts
and theories which, in turn, should inform the development and implementation of more
meaningful employment relations practices and policies.

THE AUSTRALIAN ‘CONTEXT’

Understanding the context of Australian employment relations necessitates the use of
some broad categorisations to assess a firm’s internal and external contexts. So it is
useful to compare and contrast the three main key contextual periods that have shaped
employment relations in Australia since World War II; first, from the mid-1940s to the
late 1960s; second, the early 1970s to the late 1980s; and third, the period from the mid
1990s until the present. This first period may be thought of as constituting a period of
stability and predictability in terms of the way employment relations were conducted;
the second period was characterised by more uncertainty and transition; while the third
period has been one of significant and ongoing change in Australian employment
relations. Contrasting employment relations in these periods provides useful insights
into the dynamic nature of today’s employment relations, and how they interact with
wider historical trends in the social, political and economic development of Australia.
Given the impossibility of capturing all the possible contextual permutations that
might impact on employment relations, it is helpful to use categorisation to assist in
understanding these contextual influences. With this in mind, the following
categorisations from Stone (2002, Chapter 2) provide a good framework.

Internal context
Structure
We can distinguish between vertical and horizontal structural divisions within an
organisation. Vertical divisions refer to the upward and downward lines of authority
and control. Such authority and control can be based on varying degrees of centralised
or decentralised forms of decision-making; can be more or less authoritarian or
consensual; and can range from organic to linear in the manner control and authority are
ordered. Horizontal divisions refer to the delineation of functional roles and activities.
These activities can range from highly specialised to more broadly and highly
integrated tasks, and from batch production to mass production modes of organisation.

People
The people within an organisation comprise the technical, personal and relational
characteristics of employees, owners and managers. It includes features of leadership,
business know-how, technical skill, experience and interpersonal relations.

Size
An organisation’s size comprises both the number of employees as well as the breadth
and scale of its operations; the latter can range from very small to very large, from
stand-alone operations to subsidiaries of larger entities, and from local to multinational
operations.

Technology
The state of an organisation’s technology refers to its use of quality enhancing or
labour-saving capital equipment. Such technology can range from very simple to very
complex and advanced; from outdated to state-of–the-art; and from capital intensive
(where capital equipment is widely used) to labour intensive (where little capital
equipment is used).

Purpose
The purpose of an organisation is its reason for existing, which can range from a public
to a private purpose; from manufacturing purposes to service provision; and from
exporting to importing purposes.

Objectives
The objectives are an organisation’s goals. These can range from short- or long-term
profit maximisation to market share, or from selling quality items to selling
competitively priced products or services.

Culture
An organisation’s culture is made up of its norms, values, ideologies and mythologies,
which then guide individual behaviour and interpersonal relations. As such, an
organisation’s culture can be adversarial, consensual, individualistic, collectivist,
competitive or cooperative, and any range in between.
Considering this array of internal contextual factors, we can see how they can
impact on an organisation’s employment relations. An organisational purpose requires
carrying out particular tasks in order to achieve given goals or objectives. Depending
on the complexity of such tasks—type of technology, nature of leadership, application
of technical know-how, business acumen, and the skill set of the people involved—the
tasks may be combined or split into numerous sub-tasks. This involves a horizontal
division of labour, while its allocation and management will be subject to vertical
divisions of authority and control. The latter division represents the hierarchical or
bureaucratic structure of organisations where the owners and their managers maintain
and exercise authority and control over employees (subordinates), carrying out the
various organisational tasks. Given such a structure, there are often tensions and
conflicts of interests and competing perspectives within and between these divisions in
an organisation. These tensions and the way they are resolved or mediated (or left
unresolved) are often revealed in the culture of an organisation, which is made up of the
values, norms, ideologies and mythologies held by the various interests, the
interpersonal relationships and understandings they hold towards each other and
towards the organisation’s objectives, and how these objectives are to be achieved and
rewarded. It is this myriad factors that impact the employment relationship, requiring
people management to be a major focus of all management. The prevailing contextual
‘mix’ within an organisation has a major impact on whether such people relationships
are more or less combative, congruent, complex, simple, informal or formal.
Employment relations are also subject to an array of external contextual factors.

External context
Political
The political context is made up of the structures, processes, ideologies and cultures
governing a country or region’s economic and social exchanges. It includes the nature of
the system of governance, the type of parliamentary system, roles and powers of the
legislature and its component houses of parliament, the executive, judiciary, the tiers of
federal, state and local government, and the way public officials are appointed and the
authority they are bestowed with. The political context also covers the nature and roles
of political parties and the strength of competing attitudes within society to political
ideas and principles, including those relating to democracy, capitalism, socialism,
conservatism, liberalism, trade unionism, minorities, religion, class, work, equality,
individualism, collectivism, power, authority, gender and sexuality.

Economic
The economic context refers to the structures, processes, ideologies and cultures
governing a country or region’s economic exchanges. It includes the distribution of
labour and capital across the various sectors of manufacturing, agriculture, mining and
services, as well as the state of technology, overall standard of living, distribution of
wealth, rate of unemployment and labour force participation, inflation, economic
growth, level of imports, exports, monopoly power, international competitiveness,
local competition, exchange rate, wage dispersion, role of government intervention,
extent of centralised planning, rates of union membership, industrial disputes, the
mechanisms for settling industrial disputes and, importantly, people’s attitudes, values
and beliefs about each of these factors.

Social
The social context refers to the structures, processes, ideologies and cultures that (in
part) determine people’s identity and standing within a region or country. Such a broad
category covers the basis of social status, degree of social mobility, demographic
make-up and geographic distribution of the population, the evenness of social wealth
distribution, literacy rates, the commonality of language, and the multicultural mix of the
population, as well as the regulations, institutions and laws that mediate social conflict.
It also includes the attitudes, belief and values people hold towards a broad range of
issues, including class, trade unionism, religion, power and authority, business,
management, the law, the environment, gender and sexuality.
These categorisations of internal and external contextual factors, broad as they are,
cannot accurately describe the detail of everything impacting on employment relations,
but they can influence the choosing of a theory or concept to apply to a particular
employment relations issue or problem. For instance, consider a large firm with an
adversarial culture, an autocratic managerialist structure and mentality, a low-skilled,
poorly paid but highly unionised workforce, carrying out highly specialised tasks. If
this firm were also operating in a highly competitive market with small profit margins
during an economic recession, then it is unlikely it would concede to wage demands
from its workforce. Such a rejection, would, in all likelihood, further entrench the
adversarial culture of this company’s employment relations. In light of these contextual
factors, pluralist and radical theories would best explain the basis of this adversarial
culture—as these approaches are both premised on the existence of conflict being
inevitable in the employment relationship. The unitarist frame of reference is unlikely to
provide much insight in this instance, as it is based on the premise of congruent
interests between workers, owners and managers. However, the unitarist perspective
may provide insights into how a more consensual culture could be promoted through
better communication and other changes to the firm’s internal contextual situation.
Having discussed the nature of the contextual factors that impact on an
organisation’s employment relations, we now examine these against the background of
the three broad time periods referred to earlier.

STABILITY AND PREDICTABILITY

A period of stability and predictability in employment relations began with the so-
called ‘Australian settlement’, established in 1904, and lasted until the 1960s. The
industrial relations system over this long period was built on two mutually supportive
pieces of legislation. The first was a system of compulsory conciliation and arbitration,
premised on the legitimacy of trade unions to represent and bargain on behalf of
workers. The second was a system of trade protection that insulated Australian
businesses from international competition. By protecting Australian businesses from
international competition, they were more able to accede to trade-union wage demands,
knowing that their domestic competitors would be incurring similar costs. The award
system encouraged industry-wide wage settlements, effectively taking wages out of
calculation in relation to domestic competition. Trade unions were granted a legitimacy
and stature within the system by being registered but, in return, they were obliged to
adhere to the rulings of the compulsory conciliation and arbitration system, on the
proviso that the system ensured that all received a ‘fair go’ (Kelly 1992: 2–3). From the
late 1930s, this system was also reinforced by government commitments to Keynesian
economic policies, based on government fiscal and monetary policy regulating
aggregate demand to ensure full employment. To smooth the effects of business cycles,
governments adhered to the use of automatic stabilisers (particularly unemployment
benefits) and ‘pump-priming’ where necessary to fill the void when private sector
investment was insufficient to ensure continued economic growth (Keynes 1936).

AUSTRALIAN SETTLEMENT
A period of stability and predictability in employment relations from 1904 until the
1960s. The industrial relations system over this period was built on a system of
compulsory conciliation and arbitration, and trade protection.

CONCILIATION
A process where a grievance or dispute between two parties is resolved by a third
through its provision of informal advice and assistance. The Fair Work Commission
is empowered to facilitate the resolution bargaining disputes through this type of
provision.

Award
A legally enforceable labour contract containing the terms and conditions of
employment that are the result of determinations made by federal or state industrial
tribunals; an award is applied to employees engaged in a particular industry or
occupation.

These policies delivered a measure of industrial peace, profitability and economic

prosperity. They were given a further boost by the commitment of governments in the
years post-World War II to policies of building and nurturing a strong manufacturing
sector to reduce the economy’s reliance on agriculture and mining. Massive
infrastructure projects such as the Snowy River Hydro-Electric Scheme were built by
government, and large-scale subsidies were granted to mass manufacturing operations,
particularly the newly established car industry. Foreign direct investment was
encouraged by both direct and indirect forms of industry subsidisation, the granting of
monopoly and duopoly rights and the maintenance of high rates of tariff protection. As
well as policies to attract capital, the post-war period saw the economy boosted by
large-scale immigration from Europe, thus ensuring labour supply for these new
expanding manufacturing enterprises and infrastructure works. The compulsory
conciliation and arbitration system provided stability and predictability to the industrial
relations system, while enabling unions to achieve moderate wage increases for their
members without the need for long drawn-out strikes. For the most part, these broad
policy settings were supported by both major political parties.
The Liberal and National (formerly Country) parties, which were in power
federally from 1949 to 1972, supported the conciliation and arbitration system as the
basis for nation building, and viewed the stability and predictability of the industrial-
relations system as important for capital investment. Having strong business and rural
links, these parties were ideologically conservative and generally distrustful of ‘the
masses’ to do the right thing. Therefore, rules and conventions were required to
maintain order and stability in the economy and social life generally. The compulsory
conciliation and arbitration system provided the rules and regulations to maintain such
ordered social and economic life.
The Labor Party, motivated more by values of equality, supported an institutional
regime that gave recognition and status to trade unions and provided a means of evening
up the bargaining power disadvantage that workers had compared to employers,
especially big business (Aitkins & Jinks 1989, Chapter 8). Throughout this period,
although never holding office nationally, the Labor Party also supported public
ownership of major utilities such as electricity, gas, water and telecommunications, as
well as in areas of health, education and public transport. A vigorous and strong public
sector was seen as necessary to dampen the inevitable inequality resulting from
unfettered capitalism. Promoting a mixed economy was also in sync with the Keynesian
economic policies, based on demand management, that were popular throughout most of
the Western world during this period, especially Europe.
The decades immediately following World War II, although producing great
economic change, nevertheless were dominated by social conservatism. While it had
long been practice (out of necessity) in many working-class communities for women to
work, particularly in the textile and clothing trades, this practice was considerably
rarer in ‘middle Australia’. Among the growing middle class, males were considered
to be their family’s main ‘breadwinners’, with women mainly consigned to the role of
‘homemakers’. Immigrants were initially greeted with some suspicion and considered
as ‘outsiders’, often labelled as ‘wogs’ or ‘dagoes’, until they eventually became
accepted into mainstream society. The onset of the Cold War meant that anti-communist
hysteria was at its peak during this period, with the right-wing Catholic ‘movement’
engaged in a battle to rid the Labor Party and trade unions of communist influence. In
the 1950s the Catholic movement eventually broke away from the Labor Party to form
the Democratic Labor Party, and helped to keep the Labor Party out of office for 23
years. This period was also one dominated by attitudes of cultural inferiority in
literature and the arts towards anything Australian, and reverence for culture emanating
from ‘the old country’. Issues around Aboriginal disadvantage, female equality, and
minority or youth rights were consigned to the fringe, while the dominant—particularly
middle-class—cultural ethos promoted the notion of Australia as the ‘lucky country’,
with home ownership on a quarter-acre block in leafy suburbs, along with car
ownership and annual holidays to the beach, constituting the ‘great Australian dream’
(Murphy 2000; Horne 1980).
To make this ‘dream’ possible, there was broad social consensus that government
had a duty to promote full (or close to full) employment, to provide an extensive social
security safety net, and to provide an environment conducive to business prosperity and
profitability, thus enabling businesses to be able to meet the wage demands of the highly
unionised workforce. This resulted in a labour market dominated by full-time male
employment, a highly unionised workforce, and an economy increasingly focused on the
growth of mass production of consumable goods to satisfy the demands of mass
consumption. This was also supported by a growing and benevolent welfare state, a
strong public sector and an institutionalised system of employment relations delivering
steady real wage increases to most Australian workers.
During this period of sustained economic growth, the new expanding manufacturing
sector lent itself to the adoption of scientific management techniques and processes.
Work tasks became increasingly narrowed and specialised, leading to a general de-
skilling of workers, as routine ‘Fordist’ production systems became standard practice.
Workplace authority systems were hierarchical, with managerial prerogative
considered the ‘norm’, with managers assuming their ‘right to manage’ meant their
unfettered ‘right’ to hire and fire. The burgeoning new manufacturing sector was
supplied with an influx of immigrant workers, who soon became highly unionised in the
face of autocratic management methods widely used in manufacturing plants across the
country. In large part, however, the institutional system for regulating employment
relations effectively maintained a relatively stable and predictable environment for
business.

Fordism
The assembly-line type production method, first associated with the US Ford motor
plant in the 1920s, but which came to dominate factory manufacturing methods the
world over.

Managerial prerogative
The ‘right’ to manage. The legitimate authority of management to direct how, where
 and when work is to be carried out. It may also extend to management’s ‘right’ to
determine the wages and conditions of employment of their employees.

All of these contextual factors proved themselves to be successful in providing high

rates of employment, high profits, steady economic growth, steady growth in real
wages, and relatively stable and predictable industrial relations. Tariff protection
allowed for high domestic incomes which, when combined with high immigration,
welfare support and Keynesian–demand management policies, resulted in a sustained
period of economic growth and general prosperity. While there were at times
significant instances of industrial unrest, the industrial relations regulatory regime was
generally able to resolve such disputes in a timely fashion, and there was little support
for any change to the fundamentals of the country’s system for regulating employment
relations.

UNCERTAINTY AND TRANSITION

By the early 1970s it became apparent that key components of the ‘Australian
settlement’ were coming under severe stress in the face of growing international
competition. The emerging industrial economies of Asia, in particular, were rapidly
expanding their manufacturing bases, geared for export, thus putting Australia’s heavily
protected manufacturing sector under severe stress. The world’s economy was rapidly
changing and Australia, being a relatively small economy, was being swept along by
those changes. The cost of continually subsidising domestic manufacturing began to
become unsustainable. Australia’s heavy reliance on agricultural and commodity
(mining) exports resulted in several economic shocks as international prices plummeted
following the expansion of the European Economic Community (the forerunner to the
European Union).
As well, Australia faced increased competition for mining and agricultural exports
with the emergence of new suppliers from new producers in Africa and South America
(INDECS Economics 1986, Chapter 14).
This changed international economic environment profoundly affected the
Australian economy, which was a small economy heavily reliant on agricultural and
commodity exports. Australia suffered foreign-exchange and interest-rate problems,
putting stress on farmers and manufacturers. The long period of sustained growth and
profitability began to unwind, and with it the political and industrial order it had
underpinned. The combined effects of the Middle East oil crisis—when an
Organisation of Arab Petroleum Exporting Countries (OAPEC) oil embargo in 1973–
74 caused the price of oil to increase by over 400 per cent in eighteen months—rising
interest rates and higher prices for imports, falling immigration, lower population
growth, declining capacity utilisation and rate of capital accumulation in manufacturing,
all led to a crisis, particularly in manufacturing. The high inflation, caused by the dual
effects of employers acting to maintain profits by raising prices (price inflation) plus
the ability of unions to gain wage increases over and above the capacity of industry to
pay under existing cost structures (wage inflation), created a cycle of ever increasing
wage and price inflation. Unusually, compared to the more common occurrence of
economies experiencing either inflation or unemployment, this inflationary period also
witnessed increasing unemployment, a dual scenario known as stagflation. In part,
stagflation resulted from employers attempting to reduce production costs in the face of
wage inflation by shedding labour (Englander & Mittelstadt 1989).

Stagflation
The simultaneous occurrence of high inflation and high unemployment. This
phenomenon emerged in a number of developed economies in the 1970s following
the oil price shocks of the period.

With labour and capital both engaged in a fierce competition to protect their
interests—labour through union campaigns for wage increases, and capital through
businesses raising prices and laying off workers—the consensus around both economic
and industrial relations policy began to break down. In particular, agreement on the
need for a central role for government in aggregate demand management
(Keynesianism) and in regulating employment relations came under serious question
(Head 1986).
Beside these developments, the late 1960s and 1970s gave rise to significant social,
political and cultural unrest. Opposition to Australia’s involvement in the Vietnam War
and conscription was part of a general ‘cultural revolution’, particularly among youth,
with many young people becoming increasingly concerned with broader issues,
including women’s rights, Aboriginal rights and gay rights. Overall, there was a general
questioning of authority and many traditional social norms and values. Respect for
many traditional authorities, such as churches, mainstream political parties, business
leaders, government, the police and judicial system, came increasingly under question
from this ‘youth culture’. New notions of ‘fairness’ emerged, in contradistinction to that
provided by traditional patriarchal, Anglo-Saxon, Protestant corporate power
structures.
By the mid-1970s, these socio-politico-cultural concerns were in addition to
worries about rising divorce rates, growing youth unemployment, disenchantment with
educational institutions, an ageing population placing strain on public finances to fund
pensions and health services, plus increasing demands for infrastructure spending to
meet the needs of Australia’s growing cities. These public pressures were calling for
more public spending at a time of falling taxation revenue because of unemployment
and lower profit rates. This resulted in a new questioning about what role the state
should play in society.
By the early 1980s, the role of the state was under question not only in Australia but
abroad, especially in Britain under the Prime Ministership of Margaret Thatcher and a
few years later in the United States under President Reagan. Thatcherism and
Reaganism, as these political/economic philosophies became known, represented a
fierce rejection of the Keynesian demand-management role of government, instead
arguing for a diminishing role for government and a reliance on the ‘free’ market. In
theory, it represented a return to nineteenth-century laissez-faire capitalism, but in
practice few markets were ‘free’ because of the market dominance of multinational
corporations.
In Australia, this neoliberal challenge to the role of the state came from adherents
of monetarism, an economic philosophy emanating from the work of Milton Friedman
and others at the University of Chicago. Monetarists argued that government attempts at
regulating aggregate demand to reduce unemployment through fiscal and monetary
policy was futile. Instead, they argued, beating inflation should be the target of
government policy and this could only be achieved by maintaining appropriate levels of
the monetary supply. Monetarists were joined by ‘supply-siders’, who argued that
getting rid of government intervention in the economy by eliminating regulations and
privatising the public sector was necessary to remove market imperfections and lead to
a better functioning market economy with better information flows, greater incentives,
higher employment, more investment and improved productivity (Manning 1988, pp. 5–
11). According to this neoliberal view, the problem with the economy was the state
itself.

Neoliberalism
The ‘free’ market policies adopted by many Western governments since the 1980s,
based on the privatisation of state assets, the imposition of constraints on trade union
activities and a reduced role for the state in economic affairs.

The conservative intellectual policy thrust of Thatcherism and Reaganism was

tempered considerably in Australia, as a Labor Government was in office from 1983 to
1996. Nevertheless, the Labor Government ushered in a series of radical reforms,
overturning previous accepted orthodoxies. On one hand, Labor ushered in a process of
market liberalisation: freeing up Australia’s exchange rate, opening up financial
markets to overseas competition, reducing tariffs, establishing competition policy and
privatising several key public assets, such as the Commonwealth Bank and Qantas. On
the other hand, they introduced a neo-corporatist model of accord between government
and the trade union movement. Technically, it was a two-way accord between the
political and industrial wings of the labour movement, the Australian Labor Party and
the Australian Council of Trade Unions (ACTU) (ALP/ACTU 1983). In practice,
however, it was a corporatist three-way or tripartite accord, since the Labor
Government spent much time talking to and engaging with big business to keep them ‘on
side’.

Neo-corporatism
A two-way or bipartite national agreement between one of unions or big business
and government on economic policy, but one in which the missing party (unions or
employers) has some informal input.

This social partnership between the two wings of the labour movement resulted
(under Accord I and Accord II) in the union movement committing themselves to
accepting wage restraint in return for government support to maintain the ‘social wage’
via tax cuts and improvements in social infrastructure, including the introduction of
universal health care. The result was a dramatic reduction in industrial disputation as
unions reined in their wage demands, a growth in profits for business (as wage share of
GDP fell under the various accords), and an increase in the real social wage for
workers (factoring in tax cuts and improvements in health, education and welfare
programs). This neo-corporatist model, strongly influenced by corporatist models
practised for many years in Scandinavian countries, was a collaborative framework
between big capital and the state, but one that allowed the union movement to have a
seat at the table formulating public policy and influencing government policy on the
restructuring of the Australian economy.
Arguably, by the late 1980s, latter versions of the Accord (Marks III through IV)
became more conservative in their tenor, reflecting a tendency toward neoliberalism,
focusing on micro-economic reform to open up markets and reduce state intervention in
the economy and adopting managerialism, replacing its previous consensual approach
to policy formulation (Petzall, Timo & Abbott 2000).

Accord
The Prices and Incomes Accord was an agreement between the federal Labor
Government and the ACTU that operated in several formulations between 1983 and
1996.

DYNAMISM AND UNPREDICTABILITY

By the early 1990s, even with a Labor Government still in power, the previous
‘Australian settlement’ had been abandoned. With the opening up of the Australian
economy to international competition, a new mantra of ‘labour market flexibility’ was
adopted by both major political parties. Governments, both Labor (until 1996) and then
Liberal, began the process of unravelling Australia’s century-old system of compulsory
conciliation and arbitration, arguing that the labour market had to respond more
directly to the vagaries of the ‘free’ market, with less state intervention. The shift
towards market fundamentalism was promoted as the surest route to improved
productivity, efficiency and general economic prosperity.

Arbitration
Process where a grievance or dispute between two parties is resolved by a third
imposing a binding settlement. The Fair Work Commission has the power to impose
binding ‘orders’ on parties to settle a bargaining dispute.

Despite the global financial crisis of 2008 and the sluggish worldwide recovery
since then, there remains broad consensus between the major political parties in
Australia on reducing the role of the state and ‘freeing up’ markets, including the labour
market. The Labor Party, having shifted to a more centrist position, is no longer wedded
to serving the sectional interests of working people and unionists in particular, having
sought to broaden its electoral appeal by building links with the business community.
Although the Labor Party maintains a commitment to serving the interests of working
people (‘working families’ has become the latest catchcry), the once great ideological
divide between the major political parties has diminished considerably, with the Labor
Party now accepting the neoliberal ideology that market forces, not state intervention,
produce optimum social and economic results (Hughes 1998).
The conservative parties in Australia, both Liberal and their coalition partners the
Nationals, have also changed. Under the Liberal/National Government (1996–2007),
Prime Minister John Howard successfully appealed to ‘Howard’s battlers’, particularly
‘aspirational’ voters in previously solid Labor electorates. Under Howard, the Liberal
and National parties abandoned the traditional conservative values of paternalism and a
belief that public institutions should be supported to uphold rules and conventions to
sustain social and economic wellbeing for the public good. Rather, this traditional
conservative view was now ridiculed as being out of date and positively detrimental to
sustained economic progress. Interestingly, the record of the previous Fraser-led
Liberal Government (1975–83), rather than being celebrated, was rejected with disdain
as a lost opportunity. The modern Liberal and National parties have come under the
influence of hard–right wing elements such as the shadowy HR Nicholls Society, whose
antipathy towards trade unions is matched only by their enmity towards industrial
tribunals. Their view is that the labour market should be rid of ‘outside third parties’
(i.e. unions and tribunals) to allow workers and employers to determine their own
affairs, establishing employment arrangements such as pay and conditions as they suit,
without external interference. Like Labor, only more so, the Liberal and National
parties now adopt the neoliberal position that the market is much more effective than
the state in ensuring optimum economic and social outcomes (Hughes 1998).
Well into the second decade of the 21st century, the policy agenda of both major
political parties in Australia is very similar; embracing ongoing corporatisation and
privatisation of the public sector and ongoing liberalisation of private sector
transactions, with each being justified by their supposed contribution to increasing the
country’s domestic and international competitiveness. At both federal and state/territory
levels, governments from both sides of politics have acted to reduce the role of the
public sector, especially by contracting out of service delivery to private providers. As
well as allowing private education to grow relative to public education, governments
have contracted out employment provision, the construction and running of prisons, and
even the management of refugee detention centres to private providers. Such economic
liberalisation (often termed microeconomic reform) has aimed at increasing
competition for public providers wherever possible, in addition to deregulation of
labour markets. Regarding labour market reform, the most radical reforms were enacted
under the Howard Liberal Government, chiefly the Workplace Relations Act 1996 and
its amended form known as Work Choices 2005. Central to these reforms to
employment relations was the weakening of union rights and collective bargaining and
the promotion of individual contracts. Although the Rudd/Gillard Labor governments
(2007–2013) rolled back some of the anti-union provisions of these laws, the Turnbull
Coalition Government, at the time of writing, has flagged a further series of labour
market reforms.

Collective bargaining
Negotiations between employers and employees (or their representatives),
undertaken through legal or agreed procedures, to settle the substantive terms and
conditions of employment.

This new context has resulted not only in a changed regulatory regime governing
employment relations, but in the strategies and agendas of businesses in the way they
engage labour. Responding not only to the changed policy settings of government, but
also to an economy more exposed to international competition, business strategies are
increasingly designed around more flexible modes of production and organisation. This
is highlighted by the changed patterns and conditions of employment. Full-time
permanent employment has shrunk in proportion to the growing trend towards part-time,
contract and casual employment. This has given rise to a decentralisation of authority
structures, as firms rely more and more on outsourcing. There has also occurred a
destandardisation of work tasks and labour contracts, a growing dispersion of work
through electronic networking, a shift from large-scale mass production to small-scale
batch production, and a shift from relatively secure employment (often with
expectations of a job for life) to insecure and more precarious underemployment
(Abbott & Kelly 2000).
The result of these changes to the structure of industry and employment has given
rise to two quite distinct classes of workers: a core and a growing peripheral
workforce (Atkinson 1985). Those in the core are typically male, skilled, full-time,
and engaged in challenging and technically complex work requiring specialist
expertise. Rather than rely on previous methods of scientific management to oversee
such workers, organisations are increasingly utilising more ‘sophisticated’ human
resource management, total quality management and quality of life techniques, in order
to build ‘psychological contracts’ between the organisation and its core workers.
Such workers often have considerable autonomy over their work and are empowered
with decision-making authority. They also tend to have access to workplace training
and career path development programs. Peripheral workers, on the other hand, are
more likely to be subject to scientific management techniques and powerful systems of
workplace surveillance and authoritarian forms of management control. Such workers
are generally low paid, are precariously employed and have little or no access to
workplace training or career path development programs. Peripheral workers are
typically tasked with doing routine and monotonous low-skilled work.

Peripheral workforce
Workers who are generally low paid, precariously employed and have little or no
access to workplace training or career path development programs; they are
typically tasked with routinised and monotonous low-skilled work.

Psychological contract
The expectations that employers and employees have of each other when entering
into an employment relationship, beyond the explicit terms of an employment
contract.

Core workers
Core workers are typically male, skilled, full-time, and engaged in challenging and
technically complex work that requires specialist expertise. They often have
autonomy over their work and decision-making authority.
 PRIMARY EXAMPLE 2.1
Sham contracting
In mid-October 2015, cleaners working in Melbourne for the retail giant Myer claimed
they were being grossly underpaid, through a scheme known as sham contracting. Myer
contracted their cleaning to Spotless, who engaged sub-contracting companies,
including INCI Corp, who engaged about 60 cleaners and requested they sign on with
ABNs as contractors instead of as employees. This practice is illegal when the sole
purpose of using ABNs is to avoid paying legal entitlements to employees. As casual
employees, the cleaners were entitled to around $23–25 per hour, plus penalty rates for
night, early morning and Sunday work. Instead, these workers were earning a flat $20
per hour.
This practice of requiring cleaners—all of whom were newly arrived migrants and
among the lowest paid workers in Australia—to work with ABNs instead of as
employees, so as to underpay them, was revealed by a ‘whistleblower’ named Raphael
Colobon. Colobon raised his concerns with his union, United Voice, who informed the
ABC, who publicly exposed this practice on air on 22 October 2015.
Five days later, Raphael Colobon, the whistleblower, was sacked, apparently for
‘poor performance’. His union took his case to the Federal Court and he was reinstated
on 30 November. United Voice claimed he was underpaid at least $7000 over a period
of three months working at Myer Melbourne.
Questions
1. Why might migrant workers be more likely to become part of the ‘peripheral’
workforce?
2. Why might ‘peripheral’ workers be hesitant to speak up, even when they know they
are being underpaid?
3. Should Myer, the company benefiting from the work performed, take ultimate
responsibility in ensuring these workers are paid their legal entitlements?

This growing bifurcation of the labour market has both costs and benefits. The
benefit for many businesses has been their ability to recruit or lay-off workers more
easily in response to changed market conditions. Outsourced or casual workers are
easily dispensed with and just as easily taken on in response to changed market
conditions. In doing so, firms have effectively passed on risk to workers through
underemployment, enabling firms to intensify work systems and operate over a longer
spread of hours. In retail, this has taken the form of late-night and all-weekend
shopping. In mining, it is common to have 24-hour operations, often manned by fly-in
fly-out (FIFO) workers employed on 12-hour shifts. Overall, it has enabled businesses
to maximise capacity utilisation, encouraging greater capital accumulation. This has
caused a significant intensification of work, resulting in dramatic improvements in
productivity and profitability. Profit share (at the expense of wages) is at an all-time
record, real-unit labour costs have fallen, as has industrial disputation. Australia’s
economy has never been more open and exposed to international competition. Relative
to most other industrialised economies, Australia has had lower inflation and
unemployment, and achieved ongoing economic growth even through the GFC when
much of the world suffered a dramatic and serious recession.

Bifurcation of the labour market

The growing and increasingly permanent division between the core and peripheral
segments of the labour market.

The costs of these new employment arrangements are equally apparent. The
growing peripheral workforce represents a large component of the labour force ‘locked
out’ of the benefits of full-time, secure, skilled, rewarding, highly paid employment.
Instead, more and more workers find themselves ‘locked in’ to part-time, contract or
casual conditions of employment, more often non-unionised, in low status and low paid
jobs, without access to training or career path development opportunities. As more of
the risks associated with work become privatised, so too do the costs of social
protection once afforded by public institutions. The end result has been a diminution of
the protections once provided by institutions, including government, industrial
tribunals, welfare agencies and trade unions (Abbott & Kelly 2000).

SUMMARY
This chapter should have demonstrated the folly of trying to understand employment
relations by examining the interactions between individuals in organisations. People’s
behaviours, motivations and actions within organisations are subject to a complex and
dynamic array of contextual factors that operate internally and externally to the
organisation. These ever-changing contextual factors need to be considered when
choosing or applying the theories or concepts of employment relations outlined in
Chapter 1. For instance, postmodernist, post-Fordist and Marxian theories will provide
more analysis of the influence of wider historical change and changing power structures
impacting on employment relations than the narrower frames of reference represented
by pluralism or unitarism. The former group of theories offer explanations for the
impact on employment relations of globalisation, technological change, and the role of
the state, as well as changing social values, norms, and political and business attitudes.
Analyses based predominantly on notions of pluralism or unitarism tend to ignore these
broader issues, focusing instead on interactions at the level of the firm. For a full
understanding of employment relations it is therefore advisable to make use of both
types of theoretical constructs, as they each offer insights and useful tools of analysis
for explaining and understanding employment relations. As theories are always
changing, developing, adapting or being replaced by new ways of thinking, it is
important to keep abreast of new theoretical developments, be they generalist or
dynamic in nature.
The approach of this chapter to analysing and explaining Australian employment
relations has focused significantly on the changing role of the state. This is because the
institutional, regulatory and legal environment plays such a crucial role in determining
much of the parameters for the conduct of employment relations. Understanding the
changing role of the state necessitates an appreciation of evolving social and political
attitudes, beliefs, values and norms. With this in mind, it is worth recalling a point
made at the opening of this chapter: when choosing appropriate theories or conceptual
tools of analysis for understanding employment relations, it is advisable to seek
generalisability, in the reality of a context that best fits the causal premises of a
particular theory or concept. In all likelihood, no single theory or concept will suffice.
Rather, a number of concepts or theories might provide particular insights which, when
taken together, provide a rounded and broad understanding of the complex and dynamic
nature of employment relations.

REVIEW QUESTIONS
1. Distinguish between the internal and external context for employment relations.
Why are they important?
2. Why is generalisability an important attribute of any theory?
3. What were the main features of the ‘Australian settlement’?
4. What role did post-World War II Keynesian economic policies play in
Australia’s employment relations?
5. Why did the ‘Australian settlement’ consensus begin to break down by the early
1970s?
6. What were some of the wider changing social and cultural factors that led to a re-
evaluation of the role of the state by the 1970s?
7. What were the main features of the Accord?
8. What are the main features of neoliberalism?
 9. What do you think is meant by labour market flexibility?
10. What is meant by the growing bifurcation of the labour market?

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further revision material

CASE STUDY THE ACCORD

2.1 BETWEEN THE
AUSTRALIAN
LABOR PARTY
AND THE ACTU
(Excerpts from a paper delivered by The Minister for Industrial
Relations in the Hawke Labor Government, in a 1991 London
address.)
The stairs were aflame in Australia in 1983, when the Hawke Government won
office. The Australian economy had been deteriorating since the late 1970s. By
1983, it was in recession: negative growth; double-digit unemployment; double-
digit inflation. A wages breakout in 1981–82 had been followed by a wages freeze
engineered by the previous government. Any lifting of the freeze created the
prospect of catch-up and accelerated wage pressure by unions with industrial
muscle. The primary reason why these acute economic difficulties were tackled so
successfully lies in the Accord between the Australian Labor Party (ALP) and the
Australian Council of Trade Unions (ACTU). This, as it turned out, was more than
the prices and incomes policy that was promised when it was first discussed. It
was in effect a living standards policy. Both wings of the Australian labour
movement appreciated the reactions which such incomes policies have often had
on the Left. We appreciated on the one hand the wide acceptance of incomes
policies in Continental Europe and, on the other, the negative experiences in (for
example) Britain and Holland. In Australia, as elsewhere, incomes policies have
been opposed as just another form of wage restraint. They have been criticised as
a ploy to limit the influence and independence of unions or to protect the economic
and social status quo …
 It seemed obvious in the Australia of 1983 that drastic conditions called for
drastic remedies. Despite the traditional reservations, the Australian labour
movement chose the Accord as the key to recovery in both the short and longer
term. In the event, it has been proved right. The Accord has set the foundation and
built the structure for the most extensive recovery and reform program seen in
Australia since World War II. With its help and under its auspices, the ALP has
won the past four national elections. Two factors have been critical in the success
of the Accord. One has been the unions’ commitment throughout the process not to
push wage claims outside agreed Accord quantums. The other has been the
adaptability of the process, allowing (for instance) wage increases to be bought
out by tax cuts to deal with inflation. The unions have kept their ‘no extra claims’
commitment, virtually every six months, for eight years. Though the system has
often been strained, and the Accord has had to evolve to accommodate the strain,
the commitment has been consistently honoured …
The foundations for the long-term success of the Accord process can be seen
in the wide ranging nature of [Accord] Mark I. The ALP and the ACTU agreed that
the basic principles governing wage fixation would be that wage justice would be
protected and that wage movements would help employment growth and reduce
inflation. There would be no wage claims outside agreed Accord targets except in
‘special and extraordinary circumstances’. In order to improve the industrial
relations system for the benefit of all the community, a number of legislative and
administrative reforms to the system were agreed. The pricing authority would be
given legislative criteria by which it would assess whether or not price increases
sought by certain corporations and public authorities were valid. Since the
Australian Government has limited direct constitutional power over non-wage
incomes, various indirect measures were agreed to ensure that non-wage incomes
would not move out of line with those of ordinary workers. Urgently needed
improvements in the social wage would be achieved through more government
expenditure on essential services and the social infrastructure. Personal income
tax scales would be restructured to ease the tax burden on lower-income earners.
These scales would be reviewed regularly to prevent bracket creep. New
measures against the tax avoidance industry would be implemented, including the
use of retrospectivity against avoidance schemes, which were flourishing at the
time. In other words, Accord Mark I was not just focused in a classic way on
wages, incomes and prices. It also concentrated on improving living standards. It
recognised that many factors affect living standards other than simply higher
nominal wages. The unions were willing to give the ‘no extra claims’ commitment
and to allow the balance between wages and profits to be shifted in return for a
package of wage rises, tax cuts and improvements in the social wage. The process
has also proved to be very adaptable. It has evolved to deal with massive swings
in Australia’s terms of trade, associated changes in the exchange rate and very
strong economic growth and recession. Moreover, it has grown into being the
engine room for labour market reform. An important early stage in the Accord
process was that the new Government set up a wide-ranging inquiry into the
capacity of the industrial relations system to cope with the international and
domestic economic change taking place. As a result, legislative reform has (among
other things) made the conciliation and arbitration mechanism more effective and
more influential in this changing environment. For the first time in at least 50
years, a serious effort has been mounted to rationalise and make less incoherent
the complex and tortuous constitutional relationship on industrial relations
between the Australian Government and the States …
The Accord agreement has been adaptable in its ability to respond to
macroeconomic developments and to pressure for greater flexibility in the labour
market. It has underpinned a major shift in wages policy from highly centralised
arrangements in which wage movements were closely linked to prices to a system
where the central element is a focus on productivity, flexibility and a degree of
‘managed’ decentralisation. In addition to wages, the Accord framework has
encompassed a broad agenda, including active labour market policies to support
the Accord, industry policy to underpin economic restructuring, a more equitable
approach to retirement incomes, increased expenditure on public housing, a long-
term strategy for improving and extending superannuation coverage, the
establishment of a national health insurance system funded through a proportional
levy on taxable income, maintenance of family income support and the further
development of child care, as part of an overall government commitment to
ensuring greater equity in the workplace. The Accord is based on the premise that
economic policies need to be comprehensive and equitable, based on cooperation
not confrontation. Each successive Accord agreement has been characterised by
agreement between the parties rather than policies being imposed by Government;
comprehensive coverage of prices, wages, non-wage incomes, taxation and the
social wage; and concern with the equitable redistribution of income as well as
basic economic objectives.
Source: Cook (1991)

Questions
1. Was the Accord an example of corporatism? Why or why not?
2. How did the ALP convince the Australian trade union movement to
moderate their wage demands?
3. What is meant by the ‘managed-decentralism’ of the Accord?
 Corporatism
A three-way or tripartite national agreement on economic policy between peak
unions, big business and government.

CASE STUDY RETAIL GIANT

2.2 UNDERPAYS
MIGRANT
WORKERS
In August 2015, a joint ABC Four Corners and Fairfax media investigation
revealed widespread underpayment of wages by management of the retail chain 7-
Eleven, which was operating 620 stores across Australia, generating $3.6 billion
in sales a year. The investigation exposed systematic underpayment of wages, as
well as the doctoring of payroll records in an attempt to hide the exploitation.
The company, 7-Eleven Australia, owned by Russ Withers and his sister Bev
Barlow, is reputedly worth around $1.5 billion. Withers and Barlow also control
the Starbucks chain and 300 Mobil stores.
Employing predominantly young Asians on student visas, the company was
accused of routinely paying them around $10 per hour, less than half the legal
award rate of $24.50 an hour. This illegal underpaying of wages was a deliberate
management policy, achieved through the use of intimidation and fear. It was
claimed that workers were warned that if they complained about underpayment of
their wages, they would be reported to authorities for working longer hours than
their visa allowed and would most likely be deported. The fear of deportation was
sufficient to silence these underpaid and vulnerable workers.
Days after the media uncovered this shocking practice at 7-Eleven stores
(which are operated as franchises), the company’s head office announced an
‘independent review’ of wages paid to its employees. The company’s head office
then attempted to pin the blame on the franchisees, but this was soon ridiculed by a
company whistleblower, who told the media:
Head office is not just turning a blind eye, it’s a fundamental part of
their business. They can’t run 7-Eleven as profitably as successfully as
 they have without letting this happen, so the business is very proud of
itself and the achievements and the money it’s made and the success it’s
had, but the reality is it’s built on something not much different from
slavery.
Source: Fergusson & Danckert (2015)
Newlywed Sam Pendem has three degrees, including an Advanced Masters in
IT, and oodles of ambition to build a life as a professional in Australia. A former
7-Eleven store manager, Sam worked at three different stores under four
franchisees in the Gold Coast region and was underpaid at each. He was part of
the ‘half-pay scam’, where franchisees pay half the award rate. Sam was required
to work longer hours, shifts of up to 18 hours straight, without breaks. He was
doing the job of two people, having to watch petrol pumps (if someone drove off
without paying for petrol, he footed the bill), serve customers, clean the store and
stock shelves in a busy store all on his own. The long hours put him in breach of
his visa conditions. It gave the franchisees leverage to threaten to go to the
authorities to have his visa cancelled if he complained about his salary or working
conditions. He has four separate Fair Work claims seeking unpaid wages in total
of $140,000. Sam still has nightmares about 7-Eleven when he was robbed twice
in the space of 18 hours. After each robbery, his boss yelled at him and said he
should have fought the robber instead of letting him steal money from the till.
Despite his poor treatment at the hands of 7-Eleven, Sam says he loves
Australia and has applied to become a citizen. ‘I’m very outgoing. The lifestyle
here suits my personality,’ he says.
Source: Fergusson & Danckert (2015)

Questions
1. How is it that a company can get away with paying its employees less than
half their legal entitlement under the award?
2. Why might those working in Australia on student visas be particularly
vulnerable to exploitation?
3. What does this case reveal about the growth of a peripheral workforce in
Australia?

FURTHER READING
Bray, M., Waring, P., Cooper, R., MacNeil, J. (2014). Employment relations:
 Theory and practice. 3rd edn. North Ryde: McGraw-Hill.
Bryan, D. (2000). The rush to regulate: The shift in Australia from the rule of markets
to the rule of capital. Australian Journal of Social Issues, 35(4): 333–48.
Cole, K. (2007). Workplace relations in Australia: A practical guide to Work
Choices. Frenchs Forest: Pearson.
Cooper, R. (2009). The ‘new’ industrial relations and international economic crisis:
Australia in 2009. Journal of Industrial Relations, 52(3): 261–74.
Teicher, J., & Bryan, R. (2006). The Australian state and the global economy. In J.
Teicher, P. Holland, & R. Gough, Employee relations management: Australia
in a global context. 2nd edn. Frenchs Forest, NSW: Pearson.

REFERENCES
Abbott, K. (1999). Lessons for the Australian trade union movement from the
industrial relations policy experiences of Britain and New Zealand. Policy,
Organisation and Society 18(Winter): 39–58.
Abbott, K., & Kelly, P. (2000). Theorising industrial relations in the ‘risk society’. In
J. Burgess & G. Strachan (Eds.), Research on work, employment and
industrial relations 2000: Proceedings of the 14th AIRAANZ Conference, Vol.
1, February, Newcastle.
Aitkins, D., & Jinks, B. (1989). Australian political institutions. 4th edn.
Melbourne: Pitman.
ALP/ACTU. (1983). Statement of accord by the Australian Labor Party and the
Australian Council of Trade Unions regarding economic policy. Canberra:
Australian Government Printing Service.
Atkinson, J. (1984). Flexibility, Uncertainty and Manpower Management, Institute
of Manpower Studies Report, No. 89. Brighton: Institute of Manpower Studies.
Atkinson, J. (1985). Flexibility: Planning for the uncertain future. Manpower, policy
and practice, 1: 26–9.
Beardwell, I., & Holden, L. (1994). Human resource management: A contemporary
perspective. London: Pitman.
Cook, P. (1991). The accord: An economic and social success story. Centre for
Economic Performance Occasional Paper No. 1. London: Centre for
Economic Performance.
Englander, S., & Mittelstadt, A. (1989). Total factor productivity: Macroeconomic
and structural aspects of the slowdown. OECD Economic Studies, No. 10,
Spring.
Fergusson, A., & Danckert, S. (2015). How 7-Eleven is Ripping Off Its Workers.
The Age, Fairfax Media, viewed at <www.theage.com.au/interactive/2015/7-
eleven-revealed/>.
Head, B. (Ed.) (1986). The politics of development in Australia. Sydney: Allen &
Unwin.
Head, B. (Ed.) (1988). State and economy in Australia. Melbourne: Oxford
University Press.
Horne, D. (1980). Time of hope: Australia 1966–72. Melbourne: Angus &
Robertson.
Hughes, O. (1998). Public management and administration: An introduction. 2nd
edn. South Yarra: Macmillan Education.
INDECS Economics. (1986). State of play 4: The INDECS economics special
report. Sydney: Allen & Unwin.
Kelly, P. (1992). The end of certainty: The story of the 1980s. Sydney: Allen &
Unwin.
Keynes, J. M. (1936). The general theory of employment, interest and money.
London: Macmillan.
Manning, I. (1988). Policy for restructuring boundaries of the debate. National
Economic Review, 8: 5–11.
McIntyre, S. (1989). Neither capital nor labour: The politics of the establishment of
arbitration. In S. McIntyre & R. Mitchell (Eds.), Foundations of Arbitration:
The Origins and Effects of State Compulsory Arbitration 1890–1914.
Melbourne: Oxford University Press.
Murphy, J. (2000). Imagining the fifties: Private sentiment and political culture in
Menzies’ Australia. Sydney: Pluto Press.
Petzall, S., Timo, N., & Abbott, K. (2000). Australian Industrial Relations in a
South East Asian Context. Melbourne: Eruditions Publishing.
Stone, R. J. (2002). Human resource management. 4th edn. Milton, Queensland:
Wiley.
Turner, I. (1976). In union is strength: A history of trade unions in Australia 1788–
1974. West Melbourne: Nelson.
Wood, A. (1990, 28 August). How we rate in the economic race. The Australian, p.
15.
 Chapter Three
TRADE UNIONS

INTRODUCTION
From the previous chapters, it should be now apparent that there are three main parties
involved in employment relations: first, employees and trade unions; second, employers
and employer associations; and third, the institutions and regulatory bodies falling
under the umbrella of ‘the state’. This chapter focuses on the theories, history and
analysis of the role of trade unions; employer associations and the state are discussed in
following chapters. Some broad theoretical analysis is provided to begin with, which is
designed to be applicable to understanding trade unions in any context, in any country.
This is followed by an analysis of Australian trade unions, beginning with their history
and evolution, and finishing with commentary on contemporary trade unionism in
Australia. It is worth noting that although trade union membership has declined
significantly in recent years—particularly trade union density (i.e. trade union
membership as a percentage of the workforce)—unions continue to play a vital role in
determining benchmarks for the wages and conditions of most Australian workers.

Union density
The proportion of the workforce who are union members.

WHAT IS A TRADE UNION?

At one level, a trade union can simply be defined as an organisation of workers.
However, this definition could equally apply to a football team, a political party or a
social club. To understand the meaning of trade unionism, we need a definition
explaining the nature of its membership, as well as its purpose or mission. The most
widely recognised definition is that provided by late nineteenth-century British
socialists Sidney and Beatrice Webb, who described a trade union as ‘a continuous
association of wage-earners for the purpose of maintaining or improving the conditions
of their employment’ (Webb 1894: 1). One hundred and twenty years later, that
definition remains the clearest and most accurate descriptor of this unique
organisational form. That is not to say that the Webbs’ definition does not have some
limitations, but it highlights the essential components of what makes a trade union.
Clearly unions may represent more than just wage-earners, as they often represent
salaried professional workers as well. Equally, their membership is likely to compose
a proportion of unemployed members who, temporarily at least, are not ‘wage-earners’.
Modern trade unions may have memberships based on a shared trade or craft, industry
or industries, occupation or occupations, employer or a shared locality (Martin 1989:
9). Equally, trade unions may be concerned with wider socio-political concerns, of
interest not only to their members, but to their families, communities or wider society.
For instance, Australian trade unions have often committed resources and taken
industrial action in relation to broader political issues, such as when waterside
workers banned the loading of pig-iron bound for Japan immediately prior to World
War II, or their ban on shipments of armaments during the Vietnam War. In the late
1970s, the Australian Council of Trade Unions (ACTU) held a national general strike in
opposition to the federal government’s proposed dismantling of Medibank (now called
Medicare). Clearly, wages and conditions are not the only concern of many trade
unions. However, concern for wages and conditions is essential for defining a trade
union. Thus, the protection and advancement of the wages (and salaries) and working
conditions of workers is perhaps best thought of as an essential, but not exclusive
objective of trade unions. Trade unions may have other broader objectives related to
equality, fairness and social justice, but it is their concern for their members’ wages
and working conditions that characterises them as trade unions.

Trade union
A group of wage-earners concerned about their members’ wages and working
conditions; they may also have broader objectives related to equality, fairness and
social justice.

THEORIES OF TRADE UNIONISM

The theoretical frameworks for explaining employment relations outlined in Chapter 1
offer useful concepts and theories for understanding trade unions. These theoretical
frameworks provide useful categorisations for interpreting the purposes, interests and
supposed representation of trade unions from their formation and behaviour over time,
both in Australia and in other countries. In keeping with this approach, we can
distinguish five broad categories of trade unions: pluralist, Marxist–Leninist,
syndicalist, organicist and authoritarian (Martin 1989). What distinguishes these
groups of theories from each other are the answers provided to two quite specific
questions. First, whose interests do they serve? Second, what purposes or goals do they
have?

Organicist unions
Organicist unions operate on an assumed harmony of interests, resting on a moral
obligation of everyone in society to put aside their sectional interests for the greater
good.

Pluralist unions
Pluralist unions serve the sectional interests of their members in the workplace,
rather than serving external interests of a firm, political party or a nation.

Marxist–Leninist unions
are trade unions that aim to organise and educate their members. Members become
engaged in struggles over wages and conditions, primarily to educate them about the
power of organised labour and capital and to expose the inequity of capitalism.

Syndicalist unions
Syndicalist unions aim to organise workers along industry lines, using direct
industrial methods of boycotts, sabotage and strikes to wrest control of industry from
employers to achieve workers’ control.

Authoritarian unions
Trade unions operating under dictatorial or authoritarian regimes, as an extension of
state power. Their unifying principles are to bring the activities of trade unions under
the control of the state, and to ensure industrial peace and maximum productivity.

Pluralist
The central plank of pluralist theories is the assumption that conflict is an inherent and
natural part of social and economic life in capitalist/liberal democratic societies.
Rather than view conflict as a destructive force (as Marxists do; see the following
section), pluralists regard conflict as an essential component for problem-solving and
societal improvement, including for the operation of the industrial relations system. The
expression and airing of differences between competing interests in the workplace is
considered an opportunity for constructive change, especially if such conflict is
managed by the parties (such as trade unions and employers) in accordance with
accepted ‘rules of the game’ or ‘web of rules’ (Dunlop 1950). Trade unions, under this
schema, exist to serve the sectional interests of their members in the workplace, rather
than serving the external interests of a firm, political party or a nation. Trade unions
have a legitimate and important role in promoting society’s wellbeing when they act to
represent the narrow sectional interests of their members (Martin 1989: 14). This was
perhaps best captured by the answer given by George Meany, the long-time President of
the American Federation of Labor–Congress of Industrial Organisations (AFL–CIO),
when asked what American trade unions want: ‘more’ was his one-word reply.
In pursuing the sectional interests of their members, trade unions enable workers—
to some degree—to play a role in the governance of the workplace and in the
determination of their pay rates and conditions of employment. Through the process of
collective bargaining or worker participation in workplace decision-making, trade
unions seek not only to protect and increase the wages of their members, but also to
safeguard job security and to impose limits on the intensification of work (Perlman
1949; Flanders 1975). Trade unions operating in such a pluralist manner, with a narrow
focus on protecting and advancing the wages and working conditions of their members,
seek to achieve some balance against the otherwise unfettered power of capital and
management rather than seeking to overthrow capitalism or to take over the running of
firms. This pluralist objective is often summed up by the century-old trade union
objective of ‘a fair day’s work for a fair day’s pay’. Of course this begs the question of
‘what is fair’?
Martin (1989) notes that the idea that trade unions should legitimately serve the
sectional interests of their members, without regard for the interests of other parties,
has a number of variants. Perlman (1949), for instance, emphasised the purpose of trade
unions as ensuring job security through the mechanism of job control, whereby unions
establish workplace rights via collective bargaining. Another variant of this view of
trade unions is gleaned through the works of Smith (1850), the Webbs (1894), Dunlop
(1950), Hayek (1960) and the Friedmans (1963), who all argued that the legitimate role
of trade unions was to maximise economic returns via wage rises. A third variant is
associated with the work of Flanders (1975), who emphasised the participative role of
trade unions in the establishment of rules and regulations governing employment
conditions.

Marxist–Leninist
Rather than limiting their role to concerns over wages and conditions, radical theories
of trade unionism seek to utilise the organisational and strategic strength of trade unions
to mobilise workers to challenge capitalism itself. One way of thinking of this is that
rather than aiming to increase wages, the objective should instead be the elimination of
the wages system itself. There are two broad traditions of radical theory and practice
concerning trade unions: Marxist–Leninist and Anarcho-Syndicalist. Although these
approaches have much in common in their opposition to capitalism, they depart in
important ways in their strategy and tactics for achieving their ends.
The Marxist–Leninist theories of trade unionism draw on the works of Marx
(1874), in his critique of capitalism, as well as the political works of Lenin, the leader
of the 1917 Russian Revolution, who set out to establish the world’s first workers’ state
(Lenin 1960–1980). Other writers in this tradition include Pannekoek (1948),
Luxemburg (1971), Gramsci (1971) and Hyman (1971). According to this interpretation
of the ‘correct’ purpose of trade unions, the wages system itself is abhorrent, since it
divides society into two opposing classes: the working class (the vast bulk of the
population), who create the wealth and have only their labour power to sell in order to
survive; and the small capitalist class, whose ownership of capital enables them to live
off the work of others and enjoy supreme wealth and privilege. According to this
schema, narrow pluralist pursuits of trade unions can only ever result in partial failure,
whereas real emancipation can only be achieved by the revolutionary overthrow of the
capitalist system and the abolition of classes themselves.
In pursuing this radical agenda, it is necessary for trade unions to adopt the
appropriate strategy and tactics. Thus, they need to have both long- and short-term
objectives. For such radicals or revolutionaries, the long-term strategy is to achieve the
overthrow of capitalism and the end of the wages system itself. However, to achieve
this strategic goal, trade unions need to both organise and educate their members. In the
short term, this will inevitably involve engaging workers in struggles over wages and
conditions; not so much for their own sake, but to educate workers about the power of
organised labour and capital and to expose the inequity of capitalism. Through struggles
over wages and conditions, radicals hope to spread and develop the ‘class
consciousness’ of workers, so they increasingly come to identify themselves as part of
the working class, engaged in a long battle with the capitalist class. Thus, radicals
influenced by the Marxist–Leninist tradition see trade unions as having both an
organising and educative role. Importantly, however, in this schema, trade unions
should themselves accept the leadership of revolutionary or communist political
parties, who are able to unite and advance the interest of the entire working class, not
just trade-union members. In Australia, communists were at the forefront of organising
and leading many of the country’s strongest and most influential trade unions,
representing coal miners, building workers, iron and steel workers, maritime workers,
timber workers and train drivers, as well as those in the public sector, from the 1920s
until the 1980s. Following the collapse of the Soviet Union and the dismantling of
socialism in Europe in 1989 and the early 1990s, the influence of Marxist–Leninist
ideas on trade unionism in Australia—and in much of the rest of the world—has
declined considerably.
Syndicalist
Another variant of radicalism is associated with the syndicalist (and anarcho-
syndicalist) tradition, outlined in the works of Monatte (in Woodcock 1977), Lagardelle
(in Estey 1913), Soral (1960) and Pouget (in Guerin 1970). Like the Marxist–Leninist
perspective, these radicals argued for the revolutionary overthrow of the capitalist
system, but their methods and ideas on the central role of trade unions differed
considerably. Fundamental to the syndicalist view is that trade unions (particularly at
the workplace level) are the only ‘pure’ representatives of the working class and
thereby constitute the organisational mechanism for the revolutionary transformation of
society. Acting independently of political parties, it is the proper role of trade unions to
organise workers along industry lines, using purely direct industrial methods of
boycotts, sabotage and strikes—eventually the general strike—to wrest control of
industry from employers to achieve workers’ control.
Another radical tradition, focusing on the role of trade unions, is the idea of One
Big Union, a syndicalist notion exemplified in the works of De Leon (1963), which lay
somewhere between the Marxist–Leninist and syndicalist approaches. This idea was
quite influential among trade union radicals at the beginning of the twentieth century,
prior to the 1917 Russian Revolution. Organisationally, it was best represented by the
Industrial Workers of the World (IWW; often referred to as the ‘Wobblies’), first
formed in Chicago in the USA in 1905, but whose ranks spread to Britain, Australia and
elsewhere, reaching their peak of influence immediately after World War I, which they
opposed as being an exercise in the slaughter of workers for the sole benefit of
capitalist interests. Fundamentally, the One Big Union idea was to unite all workers
into a single body, as the only way to wrest political and economic power from
employers. The IWW suffered from government suppression with the jailing of many of
its leaders and activists (labelled as ‘traitors’ for their opposition to World War I) and
from a series of splits and divisions, particularly in the years after the emergence of
communist parties throughout the Western world in the early 1920s.

Wobblies
The nickname given to the Industrial Workers of the World, a radical anarcho-
syndicalist organisation active early in the twentieth century.

In Australia, a more moderate form of this idea lay behind the formation of the
Australian Workers Union (AWU), which at one time viewed itself as a union open to
all workers across the country—despite beginning as a union of shearers and cane-
cutters—and eventually to the formation of the Australian Council of Trade Unions
(ACTU), as a reformist (rather than revolutionary) organisational structure for uniting
trade unions throughout the country.
Organicist
In contrast with radical traditions of trade unionism, organicist ideas represent a more
conservative approach. Much like unitarist ideas in mainstream human–resource
management theory and practice, which emphasise the commonality of interests
between workers and managers as joint stakeholders in the success of organisations,
organicists adhere to the view that ‘individuals, groups, [and] classes comprising
society are defined, above all, by their functional contribution to its survival and
wellbeing, in which all have a common interest’ (Martin 1989: 51). Rejecting the
characterisation of capitalism as a system based on exploitation and inherent class
conflict, organicists consider the constituent parts of society as having interlocking
responsibilities that require cooperation, not conflict. There is thus an assumed
harmony of interests resting on a moral obligation of everyone in society to put aside
their sectional interests for the greater good. Trade unions, in this schema, have an
important role as educators and enforcers of this moral obligation among workers,
through the promotion of social harmony in the service of the interests of society at
large or the nation as a whole.
Martin (1989) distinguishes three strands of organicist theories of trade unions.
First, Christian socialism (see Ely 1980; Tawney 1961; and Maurice & Kingsley, cited
in James 1962) views trade unions as contributing to harmonious social order by
advocating for social reform and providing moral leadership for workers. The second
strand in the organicist tradition is social Catholicism, as enunciated through the papal
encyclicals of Popes Leo XIII (in Gilson 1954), Pius XI and John XXIII (in Treacy &
Gibbons 1963) and John Paul II (1981). According to these encyclicals, the excesses of
unfettered capitalism, with its tendency towards insecurity, conflict, greed and
exploitation, are best addressed by the promotion of cooperation between church, state
and trade unions. The role of trade unions should be to provide moral guidance to
workers, encouraging and educating them in the need to promote economic prosperity
for the enterprises they work in, as well as for the social stability of their communities
—beginning with their families—and for the security of their nation. The third strain of
organicist theory is conservatism (see Carlyle 1911; Cecil 1912; Hailsham 1947;
Tannenbaum 1947; Utley 1949; and Macmillan 1978). Principally, this approach views
the proper purpose of trade unions as providing workers engaged in the harshest and
most onerous tasks in industry with a sense of self-worth and dignity. Under this
schema, this purpose is best achieved by establishing an organic link between
themselves and managers and employers to achieve harmonious social order for the
benefit of everyone in society.

Authoritarian
Authoritarian-type trade unions refer to those operating under dictatorial or
authoritarian regimes, where trade unions act as an extension of state power.
Historically, these have existed under left- and right-wing regimes, both communist and
fascist states. The unifying principles behind these trade unions are two-fold: to bring
the activities of trade unions under the control of the state, and to ensure industrial
peace and maximum productivity (Martin 1989: 70). The justification and advocacy for
this type of trade unionism is to be found in the writings and speeches of authoritarian
political leaders including Lenin (1960–80, vols. xxii, xxiii, xxx); Stalin (1974); Perón
(1948); Mboya (1963); Mussolini (1968); Hitler (1933); as well as the scholarly works
of the Webbs (1902; 1935).
Despite the similarity between the leftist and rightist versions of authoritarian-type
trade unionism, there is a clear ideological difference in their justification. Under
fascist and Peronist regimes, the state is proclaimed as the one force capable of rising
above and overcoming the ‘melee of conflicting interests that otherwise disfigured
society’ (Martin 1989: 71). The interests of the state are paramount and therefore it is
the duty of trade unions to reinforce state power. Under fascism (in both Nazi Germany
and Mussolini’s Italy), trade unions became state-run institutions, with no independence
at all. Perón (long-serving President of Argentina) and Mboya (Pan-Africanist political
leader in Kenya) both viewed trade unions as needing to abandon political and
ideological objectives in favour of promoting cooperation between labour and capital.
As for Lenin and Stalin, their models of trade unionism under socialism were premised
on the absence of class conflict, as class distinctions would no longer exist after
capitalism had been overthrown and replaced by socialism. In the absence of class
conflict, trade unions, under the direction of ‘the party’, were to act to maximise
production in the interests of society as a whole. Under the schema outlined by the
Webbs, this same outcome was to be achieved through bureaucratic organs.
Fundamentally, all these variants of authoritarian-type trade unionism, regardless of
their degree of state control, considered the prime roles of trade unions to be the
promotion of social harmony and the maximisation of production for the national
interest.
These various categorisations of trade unions (see Table 3.1), based on their
purposes and the interests they serve, remain useful in today’s world where the role and
purpose of trade unions differ across the globe. Thus, when working in overseas
countries it would be a mistake to automatically assume that trade unions play the same
role as they do in Australia. Obviously, context plays a huge part in understanding the
purpose and interests associated with the activities of trade unions in different
countries, and it is beyond the scope of this book to explain trade unionism throughout
the world in any detail.
However, based on the five categorisations of trade unions outlined earlier, it is
instructive to make some broad generalisations based on the purpose and interests
served by them in many parts of the world. Thus we can categorise trade unionism as
being dominantly pluralist in most advanced Western countries with long parliamentary
democratic traditions, including Australia, the United Kingdom, the United States,
Canada and Western Europe. Marxist–Leninist influences have declined considerably
since the collapse of the Soviet Union and other Eastern European socialist regimes
after the fall of the Berlin Wall in 1989. Nevertheless, communist and socialist parties
remain influential in important trade unions in France, Italy, Portugal, Spain and
Greece, as well as in several Latin-American countries. Authoritarian-type trade unions
are to be found in one-party states such as China and Cuba, as well as in nations
dominated by a single political party such as Singapore, Malaysia and South Korea.
The organicist influence of social Catholicism can still be found in predominantly
Catholic societies, where Christian democratic (i.e. Roman Catholic) political parties
continue to have a presence, including within sections of the trade union movements in
Italy, France, Belgium, and the Netherlands, as well as parts of Latin America.
Syndicalism, once an influence on trade unions in the United States, Italy and Spain,
remains an historical artefact, as a feature of the early twentieth century. However,
being aware of its one-time influence is useful in understanding trade unions today.

Table 3.1 Trade unions: Interests, purposes and functions

Interests Purposes Functions

served

Pluralist Union Job regulation; security and Collective

members freedom on the job; bargaining (rule-
participation in making)
administration of industry;
securing wage increases
Syndicalist Working class Raise workers’ Education
consciousness; overthrow (revolutionary
capitalism; administer and
industry after revolution administrative);
strike
organisation
Marxist– Working class Raise workers’ Education
Leninist consciousness; help (revolutionary);
overthrow capitalism strike
organisation
(party directed)
Organicist Society/Nation Promoting members’ moral Education (moral
and material wellbeing; improvement);
workers’ participation, collective
cooperative enterprises, bargaining
profit-sharing, joint
ownership
Authoritarian State/Party Promoting production; Education (for
protecting workers’ interests productivity);
(chiefly or wholly by raising administrative
their productivity) participation
(under state/party
direction)

In Australia, as in most of the Western world, pluralist objectives have been the
prime motivators for trade unions. Since the 1850s, Australian trade unions have been
preoccupied (but not exclusively) with using collective bargaining to secure and
advance wage claims, as well as exercising some degree of job control to achieve job
security and resist employer-driven intensification of work. Despite often having
socialist ideals, Australian trade unions have, in practice, accepted the capitalist nature
of our economic system and, rather than promoting revolution, have attempted instead to
moderate the excesses of capitalism by advancing workers’ material interests within the
parameters of the existing parliamentary democratic capitalist system. Nevertheless,
some influences of other trade union types have also been apparent. Throughout much of
the twentieth century, some of Australia’s strongest trade unions were led and organised
by communists committed to Marxist–Leninist ideology. Although this didn’t lead to
unions adopting revolutionary activities, many trade unions—such as the maritime,
building and mining unions—have long traditions of involvement in broader political
campaigns, against war, for Aboriginal rights and for protection of the environment.
Syndicalist elements were influential at the beginning of the twentieth century,
particularly in the push for ‘One Big Unionism’ in the 1920s. The creation of the ACTU
dissipated their influence. Some organicist influences can be identified with unions
seeking to advance industrial democracy, and authoritarian purposes can perhaps be
seen as being a partial by-product of the trade union movement’s organisational ties to
the Australian Labor Party, particularly when Labor is in government. Overall,
however, pluralism has been and remains the dominant influence in guiding the interests
served and the purpose of Australian trade unions.

TRADE UNIONS BY MEMBERSHIP TYPE

The previous section distinguished categories of trade unions, based on the interests
they served and their goals or purposes. We now turn to the membership basis to
identify five types of trade unions in Australia. These are set out in Table 3.2.

Table 3.2 Types of trade unions

Type Basis of membership Example

Craft unions Workers employed in a particular craft or Communication,

trade requiring an apprenticeship, such as Electrical and
electricians, mechanics, carpenters and Plumbing Union of
plumbers. Australia (CEPUA).
Occupational Workers doing a particular type of work, Rail Tram and Bus
unions regardless of qualifications, such as shop Union (RTBU)
assistants, clerks and teachers.
Industry Workers in a particular industry, Finance Sector Union
unions regardless of trade or occupation. (FSU)
General Workers across several industries, Australian Workers
unions regardless of trade or occupation. Union (AWU)
Company (or Workers in a particular company or Commonwealth Bank
enterprise) enterprise, regardless of trade, occupation Officers Association
unions or job. (CBOA; now
defunct).

Occupational union
A union whose membership is based on the work they do, regardless of trade or
qualification.

Industry
union
A union whose membership is based on workers from a particular industry,
regardless of trade or occupation.

All of these five union types have existed at one time of another since the
emergence of Australian trade unions in the early 1800s.
 A BRIEF HISTORY OF AUSTRALIAN TRADE
UNIONISM
Initially, around the 1830s, craft unions were the dominant type of union, based on the
British medieval guilds, particularly for stonemasons, printers, carpenters and joiners.
These early associations and guilds were typically a cross between trade unions and
employer organisations, with membership often open to both, and with a significant
insurance role. They provided income insurance during economic downturns.
Inevitably, their membership and very existence fluctuated with economic conditions.
However, the discovery of gold in Victoria in the middle of the nineteenth century led to
severe labour shortages in the cities as workers (locally and from around the world)
flocked to the goldfields in search of riches. The economic conditions of growth led
trade unions, initially based around crafts and trades, to become more firmly
established. These trade-based unions were often able to set wage rates and assist in
resolving workplace disputes as they arose, without much need for direct action.

Craft union
A union whose membership is based on workers’ craft or trade.

By the 1870s, a new form of occupational trade unionism emerged, made up of

semi-skilled workers, including shearers, labourers, seafarers, waterside and dock
workers, and coal miners. These unions were more militant, with a greater propensity
to strike in pursuit of improved wages and conditions for their members. Unlike craft or
trade-based unions, these newer occupational unions represented workers who had few
unique skills to bargain with and could be readily replaced by other workers, should
employers choose to replace them. These workers apparently viewed their individual
bargaining power as being weak, so sought the increased bargaining power and
protection provided by these new occupational unions. From the 1870s to 1890 this
new form of trade unionism flourished, until the financial collapse and economic
depression of 1890–94.
In the face of such an economic disaster, employers sought to take advantage of their
increased bargaining power by launching a campaign under the banner of ‘freedom of
contract’, seeking to bypass unions altogether and instead employ workers on
individual contracts. Unions representing shearers and maritime workers responded to
this employer onslaught with a series of great strikes. Between 1890–92, thousands of
workers downed tools, manned picket lines and often fought non-unionists (‘scabs’), as
well as police and employer-friendly security forces. The ability of employers to
utilise armed police for their own purposes proved a decisive factor in the outcome of
these strikes. Violence was the order of the day with many shearing sheds and ships
burnt to the ground and unionists, including many of their leaders, jailed. This episode
represents the most violent period of Australian employment relations, and has become
part of trade union folklore. ‘The Ballad of 1891’, a song well known among trade
union circles, vividly captured the events and emotions of these tumultuous times.
In the aftermath of the failed ‘great strikes’, with many union leaders jailed, union
assets stripped by the courts and union membership vastly diminished, a group of
shearers met in north Queensland to ‘assess the damage’ and develop a strategy for
rebuilding Australian trade unionism. These union activists met under a ghost gum (the
‘tree of knowledge’) in Barcaldine in 1891 and decided to form a Labor Party. This
momentous decision was made after recognising that trade unionism could never
succeed against the brunt of employers backed by the full forces of the state, such as the
police and courts. For unionism to survive, they concluded, workers needed a voice in
parliament, so they could have a moderating influence on the role of the state. Labor
parties soon began getting members elected around the country. Shortly after Australia
became a nation in 1901, the Australian Labor Party became a permanent presence in
the new Commonwealth Parliament, and has succeeded in forming government at
various times since.
No doubt, influenced by the violence and disorder of the ‘great strikes’ period, the
‘founding fathers’ inserted a clause into the new Australian Constitution of 1901,
empowering the Commonwealth to establish a regulatory regime ‘for the prevention and
settlement of industrial disputes’, which, in part, led to a system of trade union
legitimation and security. This, following the Commonwealth Conciliation and
Arbitration Act of 1904, led to the growth and prosperity of trade unionism, which
lasted most of the twentieth century. Trade unionism flourished under this regulatory
regime, which gave unions unprecedented legal protection and status in return for their
commitment to ‘play by the rules’ and submit their constitutions, rules and finances for
regular audit.
Trade unionism also grew rapidly in the aftermath of World War II, when Australia
embarked on a rapid process of industrialisation and growth in manufacturing, spurred
on by the influx of European migrants in the 1950s and 60s. At its peak in the 1970s,
Australia had over 300 individual unions, although many of these were state-based
structures.
However, by the 1990s, as a result of the impact of rapid technological and
industrial and sectoral change, many trades, crafts and occupations were fast
disappearing, and the industrial relations system was being transformed to one focused
on enterprise bargaining. The combination of these economic, structural and legal
factors prompted the ACTU to encourage its member unions to undergo a radical
organisational transformation through the amalgamation of unions. Increasingly,
Australian unions have become organised along industry lines, although there remains
considerable blurring between some industry, occupational and general unions.
Company unions (or enterprise unions) have never established a foothold in Australia,
though they occasionally arise and disappear from the industrial relations landscape. In
2016, there were 46 trade unions affiliated to the ACTU (see Table 3.3).

General union
A union whose membership is drawn from workers across several industries,
regardless of a particular trade or occupation.

Company union (or enterprise union)

A union of workers in a particular company or enterprise, regardless of trade,
occupation or job.

Table 3.3 ACTU-affiliated unions

Association of Hospital Pharmacists AHP

Australasian Meat Industry Employees Union AMIEU
Australian & International Pilots Association AIPA
Australian Education Union AEU
Australian Institute of Marine and Power Engineers AIMPE
Australian Licenced Aircraft Engineers Association ALAEA
Australian Manufacturing Workers Union AMWU
Australian Maritime Officers Union AMOU
Australian Nursing & Midwifery Federation ANMF
Australian Professional Footballers’ Association APFA
Australian Salaried Medical Officers Federation ASMOF
Australian Services Union ASU
Australian Workers’ Union AWU
Australian Writers’ Guild AWG
Blind Workers Union of Victoria BWU
Breweries & Bottleyards Employees Industrial Union BBEIUW (WA)
of Workers WA
Civil Air Operations Officers Association of Civil Air
Australia
Club Managers Association Australia CMAA
Communications, Electrical and Plumbing Union of CEPU
Australia
Community and Public Sector Union CPSU PSU Group
Community and Public Sector Union CPSU SPSF Group
Construction, Forestry, Mining and Energy Union CFMEU
Finance Sector Union of Australia FSU
Flight Attendants’ Association of Australia FAAA Domestic/Regional
Division
Flight Attendants’ Association of Australia FAAA International
Division
Funeral and Allied Industries Union of NSW F&AI
Health Services Union HSU
Independent Education Union of Australia IEUA
Maritime Union of Australia MUA
Media, Entertainment & Arts Alliance MEAA
Medical Scientists Association of Victoria MSAV
National Tertiary Education Union NTEU
National Union of Workers NUW
New South Wales Nurses and Midwives’ Association NSWNMA
Pilot Association for Virgin Australia Group VIPA
Police Federation of Australia PFA
Professionals Australia APESMA
Rail, Tram and Bus Union RTBU
Shop Distributive and Allied Employees Association SDA
Textile, Clothing and Footwear Union of Australia TCFUA
Transport Workers Union of Australia TWU
Union of Christmas Island Workers UCIW
United Firefighters Union of Australia UFU
United Voice UV (formerly LHMU)
Victorian Psychologists Association Incorporated VPA Inc
Western Australian Prison Officers’ Union of WAPOU
Workers

Source: ACTU union directory (2016)

TRADE UNION STRUCTURE

For the most part, Australian trade unions are organised along federal lines, in keeping
with the federal structure of the country’s political and legal system. Thus unions
operate at both state and territory levels, as well as nationally, and are registered as
both state/territory and federal organisations. The federalist structure is also a
reflection of the way in which industrial relations powers lie with both federal and
state parliaments. However, over the last hundred years, more and more industrial-
relations power has shifted to the federal government, requiring unions to centralise
their own power structures. Despite this, state–based trade unions remain important as
most states continue to maintain their own industrial tribunals, separate from the federal
tribunal system. As well as operating nationally and at a state and territory level, the
union movement also maintains a range of regional trades and labour councils to
coordinate union activities and negotiate with employers at the regional level.
The Australian trade-union movement is also part of the international trade-union
movement. The ACTU is affiliated with the International Trade Union Confederation
(ITUC); the former president of the ACTU, Sharon Burrows, was previously the first
female president of the ITUC and is currently (2016) its general secretary. Most
individual unions maintain organisational ties with various peak international union
bodies. Thus, the Maritime Union of Australia (MUA) is affiliated with the London-
based International Transport Workers Federation (ITF). These international trade-
union secretariats are becoming increasingly important in coordinating union
campaigns, particularly those involving union struggles against multinational
corporations. Since capital operates globally, so too must trade unions if they are to
protect and advance workers’ rights in the global workplace.
Most trade unions operate through a system of elected workplace representatives,
union delegates or shop stewards, who are unpaid union representatives at the
workplace level. Their roles are to maintain union membership and act as the point of
union contact for both workers and employers at the workplace level. The strength or
otherwise of trade unions usually rests on the quality of their union delegates, as these
are the people whose role it is to organise and mobilise the membership at the
workplace level behind union campaigns. Union delegates usually undergo some form
of training and are regularly called upon to attend union meetings and conferences.
Where there are multiple unions represented at a given workplace, there will often be
joint committees or shop committees, enabling the various unions to coordinate their
activities and form a united voice in representing their members’ interests in
negotiations with the employer (Martin 1980a). Primary example 3.1 outlines the
ACTU’s charter of union delegates’ rights.

Shop stewards (job delegates)

Rank and file unionists voted as representatives of unionists within individual
workplaces.

PRIMARY EXAMPLE 3.1

Charter of workplace union delegates’ rights
1. Workplace union delegates hold a vital position in the union. The union delegate has
the key role of representing the collective and individual hopes, aspirations and
needs of their work colleagues. They are critical to the improvement of pay,
employment conditions and health and safety.
2. The union delegate can bring together the individual creativity, skills, and
knowledge of a group of people at a workplace to improve how a job is done.
Australian working people have always been prepared to make a positive
contribution to make sure the enterprises in which they work prosper. In a period of
economic crisis, and with the passage of the Fair Work Act further increasing the
role of workplace–level enterprise bargaining, the role of the workplace union
delegate is even more important.
3. Workplace union delegates must receive recognition, through a Charter of
Workplace Union Delegates’ Rights, for the key role they play. These rights should
not have to be bargained. They should be universally accepted rights in a decent
society.
4. With rights comes responsibility. Workplace union delegates need to act in good
faith, and do the best they can for their work colleagues together or on their
individual needs.
5. The Charter of Workplace Union Delegates’ Rights is a guide for fair standards for
all union delegates and will be pursued by unions for inclusion in collective
bargaining agreements, award entitlements, and in Australian law as rights for
endorsed workplace union delegates. These rights are basic and fair. Union
delegates are entitled to know their role is recognised and respected. Unions will
campaign to build these rights over time into workplaces across the country.
6. Accordingly, Union delegates shall have:
a. the right to be treated fairly and to perform their role as union delegate without
any discrimination in their employment
b. the right to formal recognition by the employer that endorsed union delegates
speak on behalf of union members in the workplace
c. the right to bargain collectively on behalf of those they represent
d. the right to consultation, and access to reasonable information about the
workplace and the business
e. the right to paid time to represent the interests of members to the employer and
industrial tribunals
f. the right to reasonable paid time during normal working hours to consult with
union members
g. the right to reasonable paid time off to participate in the operation of the union
h. the right to reasonable paid time off to attend union education
i. the right to address new employees about the benefits of union membership at
the time that they enter employment
j. the right to reasonable access to telephone, facsimile, photocopying, internet and
email facilities for the purpose of carrying out work as a delegate and consulting
with workplace colleagues and the union
k. the right to place union information on a noticeboard in a prominent location in
the workplace
l. the right to take reasonable leave to work with the union.
Source: ACTU (2009)
Questions
1. Should these ‘rights’ be enshrined in law?
2. What ‘frame of reference’ would employers have to adopt if they were to recognise
these ‘rights’?
3. Given that trade unions, in various forms, have operated in Australia for almost 200
years, why is it that such ‘rights’ are still not entrenched?

The ACTU, being the peak national union body, acts as a coordinating body as well
as a policy initiator, setting the tone and agenda and providing leadership to the whole
union movement on major issues. Importantly, the ACTU represents the union movement
in discussion, consultations and negotiations with the federal government and national
peak employer organisations. The ACTU also regularly appears as the main union
representative before national hearings of the Fair Work Commission (FWC). In
addition to its affiliation with ITUC, the ACTU is also formally represented in
international forums, including the Geneva-based International Labor Organisation
(ILO) and the Paris-based Organisation for Economic Cooperation and Development
(OECD).
Formally, Australian trade unions operate with democratic structures and processes
(see Figure 3.1), as these are required for registration with the various state and federal
industrial tribunals. Unions must have their rules for the election of officials registered
and evidence of breaches of such rules, including financial irregularities, can result in
deregistration of trade unions, stripping them of their representation rights. Despite the
apparent democratic structure of Australian trade unions, in practice union leaders have
enormous power and influence over their members through their control of union
communication and the tendency for unionists to adopt a ‘unity is strength’ attitude to
their own union. This has led to a high level of tolerance—or even deference—from
rank and file unionists towards their leaders (Abbott 1996: 37–38). Criticism is often
portrayed as ‘playing into the hands of the bosses’, although there are still challenges to
leadership positions. But in general it is difficult to oust incumbents from official union
positions unless there are major crises or clear ideological issues at stake.
Nevertheless, despite the general tendency towards ‘unity’, there have also been other
currents leading to division and conflict, whether along occupational, regional or
ideological lines (Dufty & Fells 1989: 151–55), as unions fought for control of ‘their
own turf’.
For many decades, there were ongoing battles between leftist/socialist/communist-
influenced activists and right-wing Catholic-inspired anti-communist unionists—called
‘the movement’ or ‘groupers’—linked to the breakaway Democratic Labor Party
(DLP) and its sympathisers within the Australian Labor Party. For several decades
from the 1950s, encouraged by Cold War politics, Catholic right-wing forces waged a
series of campaigns to rid the Australian trade union movement of communist
influences. Over time, with the decline of the ‘red scare’ as a political issue in
Australia, these battles have all but disappeared, although some major unions continue
to remain under the leadership of proudly leftist or rightist groups. One thing is sure:
trade unionism and politics go hand in hand, although the strident ideological divide
between the left and right within the union movement has significantly diminished.
Perhaps one reason for this is that most unions today are more focused on their own
survival in an era of falling memberships and dramatic technological and economic
structural change.

Groupers
The nickname given to the anti-communist Catholic action activists operating within
Australian trade unions.

FIGURE Australian trade union organisational structure

3.1
 TRADE UNION MEMBERSHIP
Australia once had one of the strongest trade union movements in the world, with up to
60 per cent of the workforce unionised by the 1960s. As a result of a range of factors,
the last four decades have witnessed a dramatic decline in union membership in
Australia, in actual numbers and, more significantly, in terms of union density: union
membership as a proportion of the workforce. The union movement has responded to
these challenges by restructuring itself, as well as by initiating numerous organising and
renewal campaigns, all with limited success. Nevertheless, over 1.7 million workers
are union members, constituting the largest organisation of any type in Australian
society.

FIGURE Trade union membership (in thousands)

3.2
 Source: ABS (1990–2013)

This reduction in raw numbers actually understates the fall in union membership,
since the size of the workforce has been growing. The more useful statistic is trade
union density, which measures the proportion of employees who are union members.
Since Federation in 1901, trade union membership grew rapidly in the first half of the
twentieth century from 6.1 per cent in 1901, reaching its peak of 60 per cent in 1951. It
remained high at 50 per cent in 1981, before commencing a dramatic fall to just 17 per
cent by 2013 (see Figure 3.3).
What is clear is that over the past four decades trade union membership has
continued to fall both in actual numbers and as a proportion of the workforce, as the
size of the workforce has increased. Many explanations have been offered to explain
this decline in union membership, with the most authoritative analysis conducted by
David Peetz in Unions in a contrary world (1998). Peetz explains the fall in union
membership as being primarily the result of the rapid transformation of the Australian
economy, evidenced by a steady decline in the manufacturing sector, the decline in
large-scale workplaces, the decline in the relative size of the public sector and the rise
of part-time and casual employment. These structural factors have seen significant
contractions in the areas of the workforce that have traditionally been highly unionised.
In their place has expanded the service sector, part-time and casual employment; all
forms of employment traditionally with low rates of unionism. Peetz (1998), as well as
Drago and Wooden (1998), also argues that increased employer and government
opposition to unions was a significant factor in the fall in union membership throughout
the 1980s and 1990s. Employer anti-union militancy and hostile government policies
and regulation combined to effectively end ‘closed shops’, or compulsory unionism,
even in industries previously almost 100 per cent unionised, such as mining and
construction. The decline in union membership has been more pronounced in the private
sector, which is now only 12 per cent, compared to the public sector, where trade union
membership remains more robust at 42 per cent. The decline in trade union density
should also be seen in the context of an overall fall in the membership of most
traditional organisations, including churches and political parties. The postmodern
world seems to be one where people are increasingly becoming more atomised, while
perhaps finding newer, alternative forms of connection with others, via social media
and other technological platforms. Whether these other forms of ‘connectedness’ can
replace or supplement trade unionism only time will tell.

FIGURE Trade union density (percentage of employees in a union)

3.3

Source: Deery & Plowman (1991); ABS (1976–2013)

Nevertheless, despite the decline in trade union membership to around 1.7 million
members, Australian trade unions remain a major force in employment relations and,
through their role representing workers at industrial tribunals, are able to impact upon
the wages and conditions of most Australian workers, both unionists and non-unionists.
Therefore, to understand employment relations, it is vital to understand why people join
trade unions at all. Over the decades, many studies and theorists have offered various
explanations to this simple question: why do workers join unions?

Why do workers join trade unions?

Trade unions offer a means of protection for workers, who are powerless alone to
defend their interests against the power of employers. This view, in keeping with a
Marxist perspective, sees unions as being a product of capitalism itself. The factory
system divides employees from employers, bringing together large numbers of workers
who are removed from the end product of their work, and who are powerless to
determine how and when to work or to have any say over their remuneration. Such
oppressive and exploitative conditions—the conditions of capitalism—inevitably lead
workers to form and join trade unions for protection (Hyman 1971). Other writers,
including Allen (1975), argue that the rise of the factory system provides a necessary,
but not sufficient reason for workers to form or join trade unions. Oppressive and
exploitative working conditions alone do not produce trade unionism. What is needed
for trade unionism is for workers to become aware of these conditions and to form the
view that, as a result of this oppression and exploitation, they have more in common
with their fellow workers than with their employers. Thus, some degree of class-
consciousness is required for workers to join trade unions: they need to develop a
collective consciousness based on the social image they hold of themselves combined
with their awareness of their powerlessness and economic isolation. When this
collective or class consciousness exists, workers perceive joining a trade union as
being in their best interest. Interestingly, this Marxist explanation is fully in keeping
with the capitalist ethos that people act in pursuit of their own self-interest. There is
nothing altruistic in this explanation about why workers join trade unions. Ultimately,
they do so when they consider it is in their self-interest to identify with the collective
interests of workers, whether at a particular workplace or in society more generally.
Other writers, while accepting this broad proposition, focus on more economic or
specific work-related issues encouraging trade unionism. Perlman (1949) argued that
trade union membership mainly resulted from the attitudes workers had towards the
scarcity of jobs. Trade unionism was seen as a means of equitably apportioning job
opportunities. Along similar lines, Commons (1917) argued that workers join trade
unions for protection against the insecurity of market economies, given the unequal
bargaining power of individual workers compared to employers. Increasing workers’
bargaining power through trade unions can thus be seen as a way of both protecting job
rights and improving workers’ wages and conditions.
Aside from the economic reasons, some theorists have argued that trade unionism
results from the psychological needs of workers. Tannenbaum (1951) argued that
workers primarily join trade unions as a subconscious means of defence against the
loss of community and alienation that capitalism produces. In this schema, the economic
individualism and atomised social relations generated by capitalism lead workers to
join trade unions as a means of reinforcing social bonds (cited in Deery & Plowman
1991: 216–17). A variant of this explanation is offered by Hoxie (1923), who argued
that the diverse outlook and psychological needs of workers emanate from their
specific employment status and social circumstances. Thus, workers will join and form
particular types of trade unions that best serve their specific outlooks and needs. This is
seen as an explanation for the differences among the organisational type and function of
trade unions.
Prevailing economic conditions are also posited as having a powerful influence on
trade union membership (see seminal studies by Davis 1964; Hines 1965; Freeman
1986; and Ng 1987). Examining British experience, Bain and Elsheikh (1976) argued
that high inflation (as occurred in the mid 1970s) encourages trade unionism, as
workers seek ‘money’ wage increases to protect their real wages in the face of rising
prices. Price and Bain (1983) argue that unemployment discourages trade unionism as it
increases the power of employers to resist unionism and discourages workers from
putting their jobs at risk by engaging in conflict with employers. To counter this
tendency, in periods of high unemployment it is incumbent upon trade unions to promote
the benefits of trade unionism, including the protections they provide. Thus, Hawkins
(1981) argued that the very threat of unemployment can lead workers to join trade
unions, both as a means of job protection and as a means of negotiating superior
redundancy packages than individual workers would be able to achieve on their own
(cited in Dufty & Fells 1989: 143).
During the course of the twentieth century, a variety of theorists (including the
Webbs 1920; Lockwood 1958; Flanders 1974; Bain & Elsheikh 1979; Price & Bain
1983a) identified a correlation between trade unionism and the size of workplaces.
Size is seen as operating on both the demand and supply of trade unionism. Managers
may see advantages in having their large workforce unionised to enable a single
bargaining unit to negotiate wages and conditions, as well as to help secure workplace
discipline. Trade unions are also better able to service large workplaces and recruit
members, thus reducing the costs per member. However, perhaps the most important
factor is the impersonal nature of working in a large establishment, whether a factory or
a multi-storey office (Dufty & Fells 1989: 145). In large establishments, workers are
likely to feel more isolated from top management, and are able to take advantage of
trade unionism while enjoying a feeling of relative anonymity. Put simply, ‘them and us’
attitudes are more likely to ensue when ‘them’ are few and ‘us’ are many.
The political environment—particularly the attitudes, policies and practices of
governments—can also impact on trade union membership. This is particularly the case
in countries like Australia, where trade–union bargaining rights are highly regulated.
Centralised industrial relation systems, which provide protections and status for trade
unions, are prone to encourage trade unionism (Howard 1977; Wallerstein 1989).

SUMMARY
This chapter has outlined the history of Australian trade unionism, explored various
theories of trade unionism in terms of their purposes and functions, identified various
organisational forms, and discussed the reasons why people join trade unions, as well
as offering some explanations for their recent fall in membership.
 Despite the declining rate of union membership in Australia, trade unions continue
to play an important role in the determination of workers’ wages and working
conditions, a role whose influence far exceeds their raw membership numbers. For that
reason alone, it is vital for an understanding of Australian employment relations that the
role of trade unions—both historically and today—is recognised.
Finally, the ability of Australian trade unions to influence governments, particularly
Labor governments—due to their ongoing organisational ties to the ALP —makes their
roles, functions, methods, values and aspirations all the more important to understand.
However, to better understand Australian trade unionism, it is necessary to comprehend
the role, functions and methods of the other major players in employment relations,
employers and the state. The next chapter analyses employers and their organisations or
associations.

REVIEW QUESTIONS
1. What is a trade union?
2. What are some of the key aims of trade unions?
3. How would you distinguish pluralist, Marxist–Leninist, syndicalist, organicist
and authoritarian trade unions?
4. How would you characterise most Australian trade unions?
5. How would you distinguish between a craft union, an occupational union, a
general union and a company union?
6. Why do workers join trade unions?
7. Why has trade union density been in serious decline in recent decades?
8. What is the name of Australia’s peak national trade union body and its
international affiliate?
9. How might the changing structure of industry affect trade union density?
10. Why is the Australian trade union movement so closely aligned with the ALP?

Visit Oxford Ascend for
further revision material

CASE STUDY UNIONS WIN

3.1 ASBESTOS CASE
 AGAINST JAMES
HARDIE
Unions have ensured that thousands of Australians suffering from asbestos-related
diseases will continue to be properly compensated.
After campaigning by unions and asbestos victim support groups, the NSW
government has agreed to lend the Asbestos Injuries Compensation Fund an extra
$104 million to cover a shortfall caused by increasing number of claims for
mesothelioma. ACTU Secretary Dave Oliver said it’s a win for unions and
asbestos victim support groups, who have worked tirelessly to hold James Hardie
and the NSW Government to account.
James Hardie and the NSW Government have been toying with
people’s lives by refusing to top up the compensation fund or stop a
move to change compensation payments to instalments instead of a
lump sum. Asbestos victims and their families have been living with
this stress and uncertainty for the past six months. The average
mesothelioma victim dies within 155 days of diagnosis—they do not
die in instalments and should not be paid in instalments. The ACTU
announced in November last year that we would take this issue to the
Supreme Court to ensure asbestos victims continued to receive proper
lump sum compensation so they could settle their affairs and die in
dignity. While it’s disappointing that James Hardie chose to ignore its
moral responsibility to top up the compensation fund with more money,
unions welcome the NSW Government’s decision to provide a loan to
the compensation fund to cover the increase in claims.
Mr Oliver said unions are now calling on James Hardie, the New South Wales
and federal governments to guarantee the future viability of the compensation fund.
‘This loan will manage the current shortfall in the compensation fund
but we need a sustainable, long-term commitment from both
governments to ensure this situation doesn’t happen again. The reality
is compensation claims will continue to increase as more and more
people are dying from asbestos-related diseases. Asbestos victims and
their families cannot continue to be put under this unnecessary stress
and heartache,’ said Mr Oliver.
Source: ACTU (2015a)
Background information
Unions have campaigned for decades about the dangers of asbestos and have
successfully banned it from Australia and helped secure long-term compensation
for people affected by asbestos-related disease. Australia had the highest per
capita use of asbestos in the world from the 1950s until the 1980s. About every
third domestic dwelling built between 1945 and 1987—when manufacture of
asbestos products in Australia ceased—is thought to contain asbestos.
Australia’s union members have been hit hard by the asbestos epidemic. Many
have lost their lives through their exposure in the workplace. Miners of asbestos
have been badly affected, but so have many other tradespeople, workers and even
family members of workers. Waterside workers who loaded asbestos onto ships,
mechanics who worked on asbestos-filled brake pads, electricians and technicians
in power stations that used asbestos, as well as builders, carpenters, roofers and
other tradespeople that used ‘fibro’ building products. After many years of
concerted union campaigning, the use of asbestos in Australian workplaces was
banned at the end of 2003.
But more than 500 Australians die annually from the asbestos disease
mesothelioma; that rate is still increasing and the number of deaths each year are
still to peak. Even after the projected peak number of deaths each year, people
will continue to die from asbestos-related diseases for many years to come. And
now, added to all these deaths, there are serious concerns that the boom in DIY
renovations will expose more people to breathing in asbestos. Home renovators
contracting asbestos-related diseases are already being call the ‘fourth wave’ of
sufferers.

Asbestos-related disease
The inhalation of asbestos fibres can lead to asbestosis, a severely disabling
respiratory disease, and to asbestos mesothelioma, an incurable form of lung
cancer.
Mesothelioma is a disease that occurs in the lining of the lung and causes
extreme pain and breathlessness. Australia has the highest per capita incidence of
mesothelioma in the world.
There are no cures for mesothelioma and it is usually fatal within about 9–12
months of diagnosis. Up to 18,000 Australians are likely to die from mesothelioma
by 2020 and historical figures suggest that for each diagnosed case of
mesothelioma there are as many cases of lung cancer and non-malignant asbestos-
related disease.
James Hardie
Until the mid-1980s, James Hardie was Australia’s largest manufacturer of
asbestos-containing products, particularly asbestos cement sheet or ‘fibro’, as
well as brake and clutch linings. There is evidence that James Hardie had
knowledge of the dangers of asbestos from at least the 1930s but no warnings or
directions were placed on the company’s asbestos fibro products until 1978.
In October 2001, the James Hardie company moved to the Netherlands and set
up as a Dutch company, taking with it $1.9 billion in assets from its former
Australian companies. Following campaigning by unions and asbestos groups, in
2004 David Jackson QC conducted a Special Commission of Inquiry into the
adequacy of funding for James Hardie asbestos victims.

Justice for asbestos victims

In September 2004, tens of thousands of Australian unionists held rallies under the
banner ‘Make James Hardie Pay’ in capital cities around Australian to coincide
with the company’s Australian shareholder briefing meeting in Sydney. Unions in
the United States rallied in support of Australian asbestos victims outside James
Hardie’s United States headquarters in California, taking union protests into the
US market where the company earns more than 80 per cent of its income.
The Jackson Inquiry found James Hardie had seriously under-funded its
liabilities to asbestos victims and recommended charges against company
directors and officers for making misleading and deceptive statements. Under
pressure from all sides, James Hardie agreed to negotiate a settlement.
On 21 December 2004, the ACTU, Unions NSW, asbestos groups represented
by Bernie Banton, and the NSW Government signed a Heads of Agreement with
former asbestos products manufacturer James Hardie for what is believed to be
the largest personal injury settlement in Australia’s history.
Source: ACTU (2015b)

Questions
1. How does the James Hardie case reflect on the role of trade unions?
2. Could an individual worker have been able to mount a successful legal
case against a multinational company like James Hardie?
3. What role did the international union movement play in this case?
CASE STUDY PUBLIC
3.2 TRANSPORT
UNION WINS
BETTER WAGES
AND CONDITIONS
The Rail Tram and Bus Union’s (RTBU) Victorian branch says it has reached an
in-principle agreement with Yarra Trams that will deliver pay rises of 14 per cent
over four years, plus 3 per cent in cash bonuses.
The union’s tram and bus division secretary, Phil Altieri, said members had
exhibited ‘resolve and tenacity’ in increasing the employers’ wage offer from 13
per cent and securing the sign-on bonus for the ‘Homesafe’ trial of 24-hour public
transport on Fridays and Saturdays.
The deal reached over the weekend led to the cancellation of further strikes
planned for this week.
Altieri said the agreement provides a ‘substantial’ improvement in conditions,
including:
introducing trauma leave and family violence leave, plus increases in
parental leave, secondary carer’s leave, and bereavement leave
ensuring members receive 28 days’ notification of master timetable
changes
providing a maximum meal break length of 70 minutes for drivers on
weekends
paying annual leave loading paid week by week, rather than averaging it.
Yarra Trams said it was delighted to have negotiated the in-principle
agreement, bringing to an end to recent industrial action.
‘Our passengers can once again travel on Melbourne’s tram network as
normal,’ it said. ‘We have only maintained or improved conditions in
this agreement, giving our employees a better work–life balance.’
‘The agreement that covers tram drivers, customer service
employees, authorised officers and other operational employees is the
outcome of complex negotiations between Yarra Trams and the RTBU,’
it said.
 The first wage increase will be backdated to July 1.
Both the union and the company acknowledged the ‘constructive role’ played
behind the scenes by the Victorian Government, led by Transport Minister Jacinta
Allan.
Source: Workplace Express (2015)
Throughout the union’s industrial campaign, there was intense pressure placed
on the union, with media outlets questioning the ‘high wages’ earned by these
public transport workers. One radio commentator claimed that tram drivers were
earning $91,000 a year, much more than teachers, until it was pointed out that such
a figure was only earned as a result of drivers working extra shifts, working on
public holidays as well as working overtime. The union faced a hostile media in
response to their industrial campaign, which involved a couple of four-hour
stoppages, which obviously inconvenienced the public. The union had threatened
possible further stoppages leading up to the AFL Grand Final in Melbourne, but
with the union reaching an agreement with Yarra trams, all further industrial action
has been called off.
In a statement on its website, the RTBU advised its members that industrial
action planned for next week had been ‘cancelled and withdrawn’.
‘All members are thanked and congratulated for the solidarity shown
throughout this dispute,’ the statement said.
‘Your resolve and tenacity in all actions resulted directly in lifting
the wage offer from 13 per cent to 17 per cent.’
Source: RTBU (2015)

Questions
1. What type of union is the Rail, Tram and Bus Union (RTBU)?
2. What is meant by the term ‘solidarity’ used by the leadership of the RTBU
in thanking its members?
3. Do you think Melbourne tram drivers would have been able to win similar
improvements in wages and conditions without a union? Why or why not?

FURTHER READING
Bailey, J., & Peetz, D. (2015). Australian Unions and Collective Bargaining in 2014.
Journal of Industrial Relations, 57(June).
Bowden, B. (2011). The rise and decline of Australian Unionism: A history of
industrial labour from the 1820s to 2010. Labour History, 100(May).
Cooper, R., & Patmore, G. (2002) Trade union organising and labour history. Labour
History, 83(November).
Hagen, J. (1982). The history of the ACTU. Sydney: The Australian Society for the
Study of Labour History.
Svenson, S. (1995) Industrial War: The Great Strikes 1890–94. Wollongong: Ram
Press.

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 Chapter Four
EMPLOYERS AND EMPLOYER
ASSOCIATIONS

INTRODUCTION
Australian employer associations play an important role in representing Australian
business interests. From providing a wide range of services and assistance to
individual employers, through to representation at the political level for all employers,
their influence in employee relations in Australia has been extremely important since
the formation of the first associations almost 150 years ago. Surprisingly, given the
perceived and real influence that they have had on the industrial-relations landscape
over the last 25 years—in particular starting with the Accord years, through the shift to
enterprise bargaining and influencing the framework for the Work Choices legislation
(inspired in part by employers’ desire for negotiations on workplace conditions to be
decided on an individual worker basis)—historically little focus has been given to
them by researchers or the media compared to their trade union counterparts. The aim
of this chapter is to investigate in detail a number of aspects of employer associations,
including exploring why employers join them, theories of their role, history of employer
associations in Australia, as well as their structure, broad objectives and strategies.

Employer association
An organisation of employers who share common beliefs and interests. They play a
number of roles from general advice (e.g. health and safety, award advice,
superannuation advice, dispute resolution) through to representation in the various
tribunals.

Employers
Individual organisations that employ workers to perform tasks.
 DEFINING EMPLOYER ASSOCIATIONS
Although there is an enormous range of employer associations in Australia, with
differing roles, in general, an employer association can be described as an organisation
that has a specific interest in industrial relations (Plowman 1982). Reflective of the
diversity of employer associations in terms of size, financial capacity, industry and
political influence as well as membership numbers, they play many roles in
representing employers, from general advice on employment relations issues ranging
from health and safety, award advice, superannuation advice, dispute resolution,
through to representation in the various tribunals (Mortimer & Still 1996). Employer
associations also play a crucial role in lobbying state and federal governments on
behalf of their members on issues related to employment relations, as well as industry-
specific issues such as subsidies, training, trade and taxation.

HISTORY OF EMPLOYER ASSOCIATIONS IN

AUSTRALIA
The history of employer associations in Australia is to a large degree intertwined with
that of the Australian trade union movement. Australian workers began forming trade
unions in a number of different industries from the early 1800s onwards, prior to
Federation in 1901. From the well-documented Stonemasons’ Society eight-hour-day
victory, through to the shipyards on the eastern seaboard (predominantly Sydney,
Newcastle and Melbourne) and the formation of Trades and Labour Councils in
Melbourne and Sydney, significant gains in wages and conditions were made in a
relatively short period by Australian unions. This, combined with the shortage of labour
caused by the gold rush of the 1850s, saw an unprecedented challenge to employer
power, the likes of which had not been seen in Australia before.
The financial crisis and economic depression of the 1890s saw employers not only
concerned with the rise of increasingly united workers’ organisations, but also issues
such as trade tariffs and market regulation. Employers responded to the threat from
unions in several ways, most commonly by attempting to oppose all requests from
unions about workplace conditions. Two disputes over the last two decades of the
nineteenth century clearly demonstrate this. First, the formation by employers of the Iron
Trades Employers’ Association in 1873 to oppose the trade union–inspired eight-hour-
day campaign (Dabscheck & Niland 1982), and second, the bitter 1891 shearers’ strike
in the north of Queensland. The ‘great shearers’ strike’ was created by employers on
large farms, who were attempting to continue their right to employ who they wanted on
their terms without having to engage in union negotiations. ‘Freedom of contract’ was
their rallying cry. That dispute was led by the newly created Central Queensland
Pastoral Employers’ Association and was ultimately successful in defeating the trade
unions (Svensen 1989).
At the same time as the disputes were defining the Australian industrial landscape
and causing great division in the community, state governments (prior to Federation)
were attempting to alleviate the conflict though better regulation. The last decade of the
nineteenth century saw the establishment of compulsory arbitration, wage boards, and
tribunals that, importantly, provided legal status to the embattled trade unions. This
reinforced the need for employers to organise in response (Wright 1995).
The creation of the new industrial relations system, with the introduction of the
Commonwealth Conciliation and Arbitration Act in 1904, discussed in Chapter 3,
quickly led to the establishment of a wide variety of trade unions that were given
legitimacy when they registered with the newly created tribunal, the Commonwealth
Court of Conciliation and Arbitration. Employers, still emboldened by victories against
unions in the 1890s, were reluctant to participate in the new system—and that
reluctance led to few associations registering with the tribunal. However, this quickly
changed as unions’ success in having conditions arbitrated by the Court led to new
employer associations being created, reflective of their union counterparts, commonly
along industry lines.
From the early 1900s up until the early 1980s, employer associations have, for the
most part, played an important role in what is a complex industrial relations system.
Employer associations, as well as representing individual employers, have worked at
an industry level in creating and modifying awards, providing representation during
disputes, playing an important role in the national wage cases that occurred on an
annual basis, and providing a voice in the political arena on issues impacting on
employers as a whole. During that period, a number of important conflicts occurred,
such as the miners’ strike of 1917, the ‘Dog Collar Act’ of 1928, the decrease in wages
during the Great Depression, and continual struggle against the perceived communist
influence of trade unions. However, for the most part, the lead role in these actions was
taken by governments not individual employers or employer associations.
Employer associations became more active in the 1980s with a struggling economy,
high inflation, high unemployment, the emerging global economy, and the election of a
new federal government: the Hawke Labor Government. Although employer
associations played a role in the Prices and Incomes Accord, participating in the newly
created Economic Planning Advisory Council and various other industry councils, such
as the Tripartite Australian Manufacturing Council, a number of disputes occurred that
challenged the legitimacy of trade unions and the system itself. These included the 1985
Mudginberri and Dollar Sweets disputes, in which employer organisations such as the
Confectionery Manufacturers of Australia and the National Farmers Federation (NFF)
successfully pursued legal sanctions to defeat union industrial action. The Dollar
Sweets dispute, in particular, had an enormous influence on the future of Australian
employment relations laws, partly because the lawyer used by the employer
association, Peter Costello, became the Treasurer of Australia 11 years later, during a
period that arguably oversaw the most radical changes to the industrial relations system
since Federation.
The introduction of enterprise bargaining by the then Keating Government, and later
the promotion of individual contracts, called Australian Workplace Agreements
(AWAs), by the Howard Government, had a profound impact on not only trade unions
but also on employer associations in Australia. The old ‘industrial relations (IR) club’
created by the system of regulated workplace relations—with a focus on tribunals
resolving disputes and setting wages—was dramatically eroded, with a focus on each
individual workplace. This had major implications for employer associations, their
membership, activities and survival. Prior to embarking on a discussion of these recent
developments in employment relations and their impact, it is useful to first investigate
current employer association types and structures.

TYPES OF EMPLOYER ASSOCIATIONS

There are three broad types of employer associations in Australia, each varying on the
basis of industry, trade and interests: craft, industry and peak associations.

Peak associations
Associations that represent employers from a wide variety of industries.

Craft employer associations

The first type is craft employer associations. These associations have traditionally
been concentrated in the building industry, reflecting their business services and the
unions that represent the workers who work in them. There are both state- and territory-
based employer associations and federal associations. The state-based associations
work in the interests of their members at the state level, attempting to influence state
governments and local business conditions. Some state-based employer associations
also have a national organisation that represents them at a federal level. An example of
such a craft employer association is the Master Plumbers Association, which was
established in 1891 and is Australia’s largest plumbing industry association.

Craft employer associations

An association that represents employers with a specific skill; traditionally
concentrated in the building industry.
 PRIMARY EXAMPLE 4.1
The Master Plumbers Association
The Master Plumbers Association recognises the vital role plumbing plays in
developing and maintaining public health and ensuring the environmental sustainability
of our communities.
Established in 1891, Master Plumbers is Australia’s largest plumbing industry
association. An industry leader for over 120 years, we are a trusted source of
information, advice and expertise for our members, the industry, government and the
community.
Our large membership represents a powerful and reputable group and we lobby on
behalf of members to protect and effect change to the industry and in support of various
plumbing, business and environmental recommendations.
Our vision is a strong, respected and sustainable plumbing industry. Our mission is
to provide representation and services to support the success of our members, the future
of the plumbing industry and the health of the community.
In 1891, 57 plumbing contractors paid a £1 subscription to enable the establishment
of the Associated Master Plumbers of Victoria. The first member to pay a fee was Mr J.
E. Cornochan of Jackson Street, St Kilda. By 1893, the Association was recommending
a course of lectures, which included items such as plumber’s work and house drainage
in relation to public health; bad plumbing and its prevention; evil effects of bad
plumbing and drainage work; and the system of sewerage as adopted by the
Metropolitan Board of Works. Today, the Master Plumbers Association has over 900
active members accessing information, advice and training.
Source: (MPA 2015)
Questions
1. What type of workers does the Master Plumbers Association represent?
2. What is the purpose of the Master Plumbers Association?
3. Why would plumbers want to join the Master Plumbers Association?

Industry associations
The second type of employer associations—and the most common—is industry
associations. These employer associations represent members in a specific industry,
such as the National Farmers’ Federation, which represents farmers, or Restaurant and
Catering Australia, the national association that leads and represents the interests of the
35,000 restaurants and catering businesses across Australia
(www.restaurantcater.asn.au 2015). Another association, Master Builders Australia
(MBA), was established in 1875 and presents itself as a broad industry-based
organisation. MBA services the needs of the entire industry, from residential to
commercial and engineering businesses’ principal contractors to subcontractors,
manufacturers and suppliers (www.mbav.com.au 2015). MBA provides a number of
services to its members: political representation; functional services; advice on health
and safety and general industrial-relations issues; and assistance to employers,
particularly to smaller employers dealing with enterprise agreements in the construction
industry—an environment in which unions have attempted previously to pattern bargain.

Industry associations
Associations that represent members in a specific industry.

Peak associations
Peak employer associations are the final type of employer associations. These
associations represent employers from a wide variety of industries. There are three
major peak bodies in Australia: the Business Council of Australia (BCA), the
Australian Chamber of Commerce and Industry (ACCI) and the Australian Industry
Group (AIG).

Business Council of Australia

The Business Council of Australia (BCA) has a unique membership, comprising the
CEOs of 100 of Australia’s top companies, representing an enormous range of
important industries from mining, transport, telecommunications and the financial
services. The focus of the BCA is on lobbying and influencing government on important
issues from industry-specific concerns such as foreign ownership, climate change,
infrastructure, and employment regulation. Indicative of the BCA’s influence was its
role—along with the other large general employer association—in encouraging then
Prime Minister John Howard to introduce the Work Choices legislation in the mid-
2000s.

Table 4.1 BCA members

Accenture Australia AGL Energy Limited Alcatel-Lucent Australia

Alcoa of Australia Allens Alumina Limited
Amcor Limited ANZ Aon Risk Solutions Australia
APA Group Arrium Limited Asciano Limited
Ashurst Aurizon Holdings Australia Post
Limited
Australian Foundation Investment Company Australian Securities
Exchange
Australian Unity Bain & Company Bank of America Merrill
Lynch
Bank of Tokyo- Bendigo and Adelaide BG Group
Mitsubishi UFJ, Ltd Bank Group
BHP Billiton BlueScope Steel Limited BNP Paribas
Boeing Australia and Boston Consulting BP Australasia
South Pacific Group, The
Brambles Limited Brickworks Limited British American Tobacco
Australasia
Bupa Caltex Australia Limited Capgemini Australia and New
Zealand
Chevron Australia Citi Australia and New Clayton Utz
Zealand
Coca-Cola Amatil Cochlear Limited Commonwealth Bank of
Limited Australia
Compass Group ConocoPhillips Corrs Chambers Westgarth
(Australia) Pty Australia
Limited
Credit Suisse CSC Australia Pty Ltd Deloitte
(Australia) Limited
Deutsche Bank AG Downer EDI Limited EnergyAustralia
EY ExxonMobil Australia Fletcher Building Limited
Pty Ltd
Fortescue Metals FOXTEL Management GDF SUEZ Australian Energy
Group Limited Pty Limited
GE Australia and New Gilbert + Tobin Glencore
Zealand
Goldman Sachs Google Australia & GPT Group
Australia New Zealand
Grocon Group GWA Group Limited Hanson Australia
Herbert Smith HSBC Bank Australia IBM Australia and New
Freehills Limited Zealand
Incitec Pivot Limited Infosys Insurance Australia Group
Jacobs JBS Australia Pty J.P. Morgan Australia and
Limited New Zealand
King & Wood KPMG Leighton Holdings Limited
Mallesons
Lend Lease Lion Pty Limited McDonald’s Australia
McKinsey & Company Macquarie Group Medibank Private Limited
Limited
Metcash Limited Microsoft Australia Minter Ellison
Mirvac Group Mitsui & Co. (Australia) MMG Limited
Ltd
Morgan Stanley Murray Goulburn Co- MYOB Australia
Australia Limited operative Co Limited

National Australia Navitas Limited News Corp Australia

Bank Limited
Norton Rose Fulbright Nufarm Limited Oracle Corporation Australia
Australia Pty Limited
Orica Limited Origin Energy Limited Perpetual Limited
Programmed PwC Australia Qantas Airways Limited
REA Group ResMed Limited Rio Tinto Australia
Santos Limited SAP Australia and New Shell Australia Limited
Zealand
SingTel Optus Pty SKILLED Group Snowy Hydro Limited
Limited Limited
Stockland Sumitomo Mitsui Suncorp Group
Banking Corporation
Sydney Airport Tabcorp Holdings Telstra Corporation Limited
Limited
Transfield Services Transurban Group UBS Australasia
Unilever Virgin Australia Washington H. Soul Pattinson
and Company Limited
Wesfarmers Limited Westpac Group Woodside Energy Limited
Woolworths Limited WSP | Parsons
Brinckerhoff

Source: BCA (2015a)

The Australian Chamber of Commerce and Industry

Australian Chamber of Commerce and Industry (ACCI) represents more than 300,000
members and 37 chamber and industry associations (ACCI Annual Report 2014). It is
Australia’s largest and most representative business association. The ACCI ‘speaks at a
national and international level on behalf of the nation’s peak State and Territory
Chambers of Commerce and Industry and National Industry Associations from all
sectors of the economy. These significant and representative organisations make up
ACCI’s National Member Network and give us the mandate and authority to be the
essential connection between industry, governments, regulators and influential policy
forums which influence business at home and abroad’ (ACCI 2015).

The Australian Industry Group

The Australian Industry Group (AIG) represents more than 60,000 businesses across a
range of sectors and types, such as manufacturing, construction, automotive, transport,
information technology, telecommunications, call centres and labour hire
(www.aigroup.com.au 2015). Differing slightly from the BCA, AIG is affiliated with
more than 50 other employer groups and directly manages a number of those
organisations. It also plays a functional role for its members, providing services such
as information training and representation on a number of industrial-relations issues,
including general workplace conditions of employment, health and safety, equal
employment opportunity (EEO) and other general HR issues.

Employer association structure

Unlike the Australia trade union movement, which has a clear structure—with each
union affiliated with the state-based Trades and Labour Councils and the Labour
Councils affiliated with their peak body, the Australian Council of Trade Unions—
employer associations have not attempted such coordination. The primary reason for a
lack of cohesion between employers and their associations is because of a lack of
common purpose in the marketplace itself. There are more than 2 million actively
trading businesses in Australia, each differing in size and market share (ABS 2015).
For example, the hospitality industry is one of the largest industries in the economy.
Within the hospitality industry, there are a small number of large hotels, commonly part
of an international chain; however, there is also an enormous range of smaller hotels
either family owned or owned by a small group of investors. The issues impacting on
both parties differ considerably. Industrial relations issues such as wages and penalty
rates are less of a concern for the larger hotels than the smaller hotels. Hence, recent
initiatives by the Australian Hotels Association (AHA) to remove penalty rates are less
likely to generate much interest from large hotels, whereas this issue is often crucial to
the survival of small hotels, faced with dwindling profit margins. Further complicating
the issue of unity is that many of the employer associations have different membership
rates depending on size of the organisations, with the members of those associations
with larger businesses generally expecting greater involvement in the employer
associations’ formulation of policy and strategies and often being able to dictate those
policies and strategies to the association. Larger businesses are more likely to have the
time and expertise to obtain positions of influence within the associations, typically
either at the board or leadership level.
The case of the BCA provides a good example of the differing interests and
aspirations of Australia organisations. With a membership of the top 100 companies in
Australia, the BCA makes no apology for its members being the biggest and most
powerful businesses, with no involvement of the majority of Australian companies, the
90 per cent—or more than 800,000 small businesses—with fewer than 50 employees.
Further limitations to employer associations’ lack of success in creating a single peak
body are factors of industry-specific issues and dominance that hinder possible
common interests. The reasons for industry goal differences are many. The actions of
employers in an industry can have an impact, both positive and negative, on other
industries. Because of the recent Australian mining boom—predominantly based on
Chinese growth and consumption of minerals from Western Australia—many
organisations in the mining industry had extremely profitable years over the last decade.
However, those profits came at the expense of those organisations on the eastern
seaboard of Australia that struggled to export goods because of the high cost of the
Australian dollar. So while those large organisations and their employer association
encouraged the continued growth of the mining sector, those in manufacturing, already
struggling from the lowering tariffs in the late 1980s onwards, have suffered. So, to a
large degree, the interests of the mining and manufacturing sectors conflicted with each
other, making a unified approach for lobbying the government on economic policy
problematic, if not near impossible.

Employer association governance

Similar to trade unions registered with the Fair Work Commission (and its
predecessors), employer associations have requirements of governance imposed upon
them. These requirements differ from union governance, but little research has been
conducted on the rationale for this difference. The focus of successive Liberal
governments, amid Cold War fear and hysteria about communist party influence in the
mid-twentieth century, was on trade-union democracy. However, this focus on how
representatives were elected in the employee organisations did not translate to their
employer counterparts. Previous research conducted in the 1980s (Plowman 1988)
found that employer association governance in Australia usually consists of three
distinct parts. First, the council, which is made up of representatives of the membership
who create general policies for the organisation; second, the executive, which is
commonly empowered by the council to make decisions outside general council
meetings on emerging or important issues; and third, the secretariat, which carries out
the day-to-day operations of the association.
For associations with state branches, it is common that they replicate the structures
at the state level and create a national executive made up of the executive officers of the
state branches. For example, see the Australian Hotels Association 2015 executive
structure, outlined in Box 4.1.
Peak association structures differ slightly from those mentioned above, perhaps
reflecting their size as well as the power of those who are members. The BCA provides
all 100 members with the opportunity to participate in activities to ‘determine our work
program and policy positions through their participation in policy committees, special-
issue task forces and the BCA Board’ (BCA 2015b). The board, which comprises the
president and seven board members, oversees the work of the organisation and
determines its strategic policy agenda (BCA 2015c).
 Box 4.1 Australian Hotels Association executive structure
President
Senior Vice President and President NSW Branch
Vice President and President Tasmania Branch
Secretary/Treasurer
South Australia President
Western Australia President
Northern Territory President
ACT President
Queensland President
Accommodation Division President
Source: AHA (2015)

Reflecting the complexity and diversity of its membership, the ACCI has a slightly
different structure from the BCA. The ACCI is governed by a memorandum and
‘Articles of Associations’, which is overseen by the board and its committees. Board
members are elected annually. Oversight of ACCI policy development is the
responsibility of the General Council and its various committees.
Overall, there are not obvious differences in the structures and governance of
employer associations and their trade-union counterparts. Unions, however, because of
legislation over the last 100 years, have had greater scrutiny of their behaviour and
representative mechanisms. Of great importance too, are the restrictions placed on
Australian workers in freedom of choice of union membership. Australian trade unions
registered with the Fair Work Commission are only able to represent employees that
are deemed to have ‘coverage’. Thus, a plumber cannot join the Australian Education
Union (see Chapter 6 for more on coverage). This is in contrast with Australian
employers, who are not bound by any ‘coverage’ issues and can join any employer
groups they wish. This can be a challenge for employer associations. In order to
survive and grow, they need members and must be responsive to them. Unlike unions, in
which factions can control the organisations, far greater focus is on consensus (Palmer
1983; Windmuller & Gladstone 1984), which is often difficult to achieve with such
diverse groups of employers competing with each other in the marketplace.

Why do employers join employer associations?

Previous research has debated the complex question of why employers choose to join
(or not join) employer associations. Fox et al. (1995) argue that most employers have
limited interest or unity due to the unique conditions that each employer faces, and that
when they have the dilemma of acting in their own interests or in the interests of
employers as a class, employers are far more likely than employees to act in their own
interests. Matthews (1994) believes that employer associations give individual
employers the opportunity to exploit their power in the marketplace. Gardner and
Palmer (1992) believe that employers make conscious decisions to join employer
associations to help shape their environment.
Gardner and Palmer (1997) also argue that employers join associations to oppose
unions, control procedures, create a level playing field on wages and as a response to
government policies. Plowman (1978) found that employers were not generally loyal to
individual associations and shopped around for the best one. This lack of ideological
commitment from employers towards their associations has been a focus of research for
some years. Plowman (1978) argues that a lack of cohesion among employer
associations has been detrimental to Australian employers providing a consistent policy
on industrial relations, and is also a reason for the lack of a single peak union body
(Matthews 1994). Others, such as Thornthwaite and Sheldon (1996), question this
analysis, claiming that the diversity of associations has meant that many associations
provided a voice for a variety of competing and common objectives from the mid-
1980s until the mid-1990s.

THEORIES OF EMPLOYER ASSOCIATIONS

Many theories have been developed over the last 100 years to help understand the
origins of employer associations; some theories are from the United States and the
United Kingdom and some, more recently, are from Australia. Barry and Wilkinson
(2011) note that most theories of the formation of employer associations can be
summarised in three ways. First, in response to the growth of trade unions in the 1870s;
second, to seek influence in politics; and third, to manage competition among
employers.
The response to trade-union influence in Australia before federation—and
particularly with the introduction of the new conciliation and arbitration system in 1904
—is often called the ‘reactivity theory’. The idea, first developed by Hoxie (1924),
argues that employer associations developed as a result of attempts to dilute the
perceived growing power of trade unions in the United States (Hoxie 1924). In
Australia, Plowman (1982) further developed this theory by arguing that the creation of
the ‘new IR system’ in 1904, with the development of arbitration and the rapidly
growing union movement, provided a large threat to employer ‘managerial
prerogative’. Thus employers, having previously resisted participating in the system,
gradually accepted its existence and formed groups to counteract and respond to the
threats (Plowman 1989). Indicative of employer associations’ reactivity, Plowman
(1982) claims that most had little or no policies or long-term strategies, other than to
oppose at every point. Plowman (1982; 1989) has received much support for his thesis,
but in recent years the reactivity idea has been challenged. Barry (1995: 544) argues
that declaring all employer association activities as merely reactive is ‘inadequate to a
general understanding of employer combination and behaviour’, and that ‘associations
adopting only general or even no-policy policies should not be considered reactive, but
rather simply accommodating to organisational constraints’ (Barry 1995: 557).
At the same time as theories have been developed about the reasons for the
emergence of employer associations, a number of theories have also been developed
about their purpose in the industrial relations arena. These theories, according to
Gardner and Palmer (1997), reflect three basic categories: laissez-faire employer
associations, authoritarian employer associations and pluralist employer associations.

Laissez-faire
The French term laissez-faire refers to the concept of an economic system in which the
transactions or business between private parties is free from interference from external
organisations in particular government. This nineteenth-century idea had a resurgence in
the mid-twentieth century, especially following the writings of Austrian economist
Friedrich Hayek (1944), who found a receptive audience among conservative ‘free-
market’ thinkers in the United States, such as Milton Friedman (1962). In brief, the idea
developed that as little government intervention as possible provides the best
environment for business and the community to succeed. In terms of industrial relations
in an Australian context, this involves free-market competition for employers to enter
into arrangements with their employees without legislative interference governing
working conditions or the influence of third parties, such as trade unions. Although it is
difficult to quantify exactly what percentage of Australian employer associations favour
this form of system, during the creation of the Work Choices legislation—which
restricted working conditions, promoted individual contracts (Australian Workplace
Agreements) and restricted trade union rights in the workplace—employer groups
generally encouraged the government to introduce the legislation.

Pluralist associations
The second theory of employer associations borrows its ideas form the pluralist
perspective discussed under ‘Frames of reference’ in Chapter 1. The pluralist theory is
premised upon diverse interests and attitudes towards the employer/employee
relationship, with competing interests within organisations the natural cause of conflict
(Dabscheck 1989). Inherent in the pluralist perspective is the idea that employees have
a right to join and participate in trade unions (Leat 2001), and that the role of the
government is to protect the public interest by regulating the employment relationship
(Kaufman 2008). Although many employer associations would, for political and
membership reasons, claim to be more laissez-faire, in practice most begrudgingly
acknowledge at least the role of the government in the regulation of workplaces,
particularly in industries in the mining, construction and (traditionally) manufacturing
sectors, where trade unions have a great deal of strength and influence in achieving
their aims. Many of those employer associations involved in disputes have reflected
this, by initiating or attempting to initiate government involvement through the tribunals
as a means of constraining trade union strength and influence.

Authoritarian
Finally there is authoritarian theory, which should not be confused with laissez-faire
employer association theory. Gardner and Palmer (1997) argue that the authoritarian
theory suggests that employers’ associations may seek participation in governmental
processes when they consider it a possible method of promoting production and
protecting industry. The inference of this theory is that employer associations pursue
authoritarian purposes that act in the commercial interests of members by trying to
influence the policy agenda of the state and that, in so doing, they are principally
serving the economic and social interests of the nation as a whole. From an
authoritarian view, the primary purpose of employer associations in the field of
industrial relations is limited to ensuring that industry has the productive capacity
necessary to satisfy the workplace demands of employees and their representatives.

AUSTRALIAN EMPLOYER ASSOCIATION

STRATEGIES
Taking into account the differences in the types, aims and objectives of Australian
employer associations since the formation of the first employer associations almost 80
years ago, there have been some consistent themes in their activities and strategies.
These can be basically broken up into two distinct periods: pre-Federation and post-
Federation.
The strategy of direct opposition to trade unions, as occurred in the 1890s,
moderated with the formation of a federal government and the creation of a unique
industrial relations system built around compulsory conciliation and arbitration. This
new industrial relations system, established shortly after Federation, had wide-ranging
implications for employer associations and their approach to the union movement.
However, the introduction of the new system was not without opposition from employer
associations. Plowman (1988) documents the creation of a Central Council of
Employers of Australia by state employer associations, established to politically and
legally challenge the Conciliation and Arbitration Act 1904. Some aspects of the
strategy have lingered in employer association approaches, although their efforts were
constrained by the regulatory regime over the course of the twentieth century. Certainly
there were employer associations calling for the removal of trade unions in the mid-
twentieth century because of communist party leadership and activities, and also in the
early 1980s when the then Builders Labourers Federation caused major disruption in
the building industry with its ‘green bans’ (e.g. refusal to allow the destruction of
heritage buildings, particularly in The Rocks area of Sydney), as well as their
propensity to ‘walk off’ during concrete pours to advance conditions and wages.
During this same period, employer associations also engaged in union-busting activities
in a number of high-profile cases, such as the Mudginberri meatworks dispute in 1985
involving the National Farmers Federation and the Australian Meat Industry Employees
Union, resulting in prosecution of that union under section 45D of the Trade Practices
Act 1974, Secondary Boycott provisions; and the Dollar Sweets case, resulting in a
number of small unions being forced to pay common law damages to an employer for
losses suffered through picketing. The industry association, the Confectionery
Manufacturers of Australia, were instrumental in the Dollar Sweets case going before
the courts.
Most recently, since the introduction of enterprise bargaining in the early 1990s,
there have been a number of high-profile cases highlighting employer associations’
attempts to oppose union recognition and their legitimate status as representatives of
employee interests. In the Asahi Diamond Industrial Australia Pty Ltd and
Amalgamated Metal Workers Union cases, the union attempted to bargain for workers’
wages and conditions at the company, although they had no existing members. The AIG,
fearful of legal precedence in this new era of workplace bargaining, played a critical
role in supporting the employer’s successful resistance to the union’s involvement
(McCallum 2002).
The opposing of unions by employer groups gained momentum during the Howard
Government, reflected in the Work Choices legislation that restricted union access to
workplaces without members, which was unprecedented since 1904. The role of the
employer associations in supporting the Howard Government in the introduction of
AWAs reflects this (Peetz & Preston 2009), as well as the overall key provisions of the
Work Choices legislation, aimed at restricting or preventing union rights. This radical
legislation was supported and promoted by a large number of employer associations,
such as the BCA and ACCI. More recently, the introduction of the Fair Work Act also
saw some employer association opposition to the proposed reintroduction of union
right of entry to workplaces and enhanced role in the workplace bargaining process
through the introduction of good faith bargaining. Employer association opposition to
union presence in workplaces continued until the 2013 federal election, which was won
by a Coalition government.
 Of course, it is not only through employment relations legislation that employer
groups have attempted to oppose unions. A number of different areas, from EEO
legislation to occupational health and safety (OH&S) legislation have, over the last 100
years, seen employer associations attempt to isolate or prevent union involvement in the
workplace. The recent introduction of the Model Work Health and Safety Act saw
strenuous opposition from employer associations relating to the right of trade unions
(based on NSW OH&S laws) to prosecute for alleged breaches of the state health and
safety legislation. When the legal right of unions to become involved in a workplace
under the guise of potential health and safety issues was introduced in Victoria in 2004,
employer associations such as VECCI (Victorian Employers Chamber of Commerce
and Industry) strongly lobbied the state government to exclude the clause. But for the
most part, since the historic legislation of 1904, employer associations have
begrudgingly accepted that trade unions have a role to play in the employment
relationship and their strategies have for the most part been about containment.
A final point on employer associations opposing unions. Certainly many employer
associations still opposed Australia’s conciliation and arbitration system up until the
late 1930s (Plowman 1988). However, the very nature of the arbitration system in
Australia since 1904 has meant that, for the most part, its lack of interfering in the
employers’ right to manage their employees—generally referred to as ‘managerial
prerogative’—meant that most employers begrudgingly accepted the system (Quinlan
1986). Furthermore, ‘while arbitration tribunals guarantee certain rights to labour this
occurs within a broader package of restrictions’ (Quinlan 1986). This means that
although many employers would welcome a deregulated system—as explained earlier,
regarding the opposing of unions in some industries where unions are well organised
and capable of demanding high wages—they are restricted from doing so by the very
tribunals that gave them existence and legitimacy.
Indicative of the role of employer associations’ focus on controlling unions is their
registration with the Fair Work Commission (FWC), and its predecessors. (See Box 4.2
for a list of employer associations registered with the FWC as of 2015.) By virtue of
their registration, employer associations have accepted the legitimacy of the tribunal,
the unions that represent employees, and the powers provided to those registered
employee organisations to be able to access workplaces (right of entry), represent and
negotiate on behalf of employees on a number of contract issues, such as pay and
general working conditions. Similar to the debates that exist within the trade union
movement, some employers would rather work outside of the system, unrestrained by
the requirements of registration, such as abiding by the extensive sections of the Fair
Work Act related to registered associations and the penalty of deregistration for failure
to comply. This registration gives employer associations a legitimacy in the extensive
activities of the FWC on behalf of their member employers, such as award creation,
advocacy during disputes, making submissions during national pay cases, etc. It is
difficult to imagine that an employer association wanting to influence employment
relations in a specific industry or sector would be able to fully participate or represent
its members without registration. This was the case on the other side for the unions and
employees in the late 1980s, when the Builders Labourers Federation was deregistered
in Victoria and eventually withered away after attempting to work outside the formal
structures of the system.
The benefits for those employer associations registered with the FWC must also be
considered. Many employer associations offer a number of services that are linked to
the role of the FWC, such as unfair dismissal, agreement certification and award
representation, and use these ‘services’ as a means of attracting new members.

Box 4.2 Australian employer associations registered with

the Fair Work Commission
General business organisations
Australian Chamber of Commerce and Industry
Australian Industry Group
Business Council of Australia

Industry employer associations

Civil Contractors Federation
Master Plumbers’ and Mechanical Services Association of Australia
National Electrical Contractors Association
Timber Trade Industrial Association
Traffic Management Association of Australia
Australian Childcare Centres Association
Building Services Contractors Association of Australia, New South Wales
Division
Building Services Contractors Association of Australia–Queensland Division,
Industrial Organisation of Employers
Australian Higher Education Industrial Association
Australian Entertainment Industry Association
Screen Producers Association of Australia
National Fire Industry Association
 Australian Meat Industry Council
Printing Industries Association of Australia
Hair and Beauty Australia
Australian Community Services Employers Association
Extended Care Industry Secretariat
Shearing Contractors’ Association of Australia
Australian Hotels Association
Australian Retailers Association
Clubs Australia–Industrial
Motor Inn, Motel and Accommodation Association
Association of Consulting Architects–Australia
Consult Australia
Australian Retailers Association
Master Grocers Australia Limited
Pharmacy Guild of Australia
Australian Security Industry Association Ltd
Australian Community Services Employers Association
Australian Trainers’ Association
Australian Public Transport Industrial Association
Australian Road Transport Industrial Organisation
Timber Trade Industrial Association
Australasian Convenience and Petroleum Marketers Association
Note: There are also state-based employer associations registered with the FWC, such as Master Painters
Australia–NSW Association Inc.
Source: Fair Work Commission (2015)

As has already been discussed, the emergence of the unique Australian industrial
relations system was initially strongly opposed by Australian employers and their
associations. That opposition gradually dissipated as familiarity with the system and
the placation of fears that a fundamental aspect of the employer relationship—
managerial prerogative—would come under threat. Indeed, from the 1970s onwards,
the system was sometimes cynically called the ‘IR Club’, such was the perception of
the institutionalisation of both employer associations and trade unions within this
mechanism for settling disputes. Political commentator Gerard Henderson described
the so-called club in 1983 thus: ‘Industrial relations in Australia takes place in [a]
club-like atmosphere. The Club’s high priests preside on the Conciliation and
Arbitration Commission … The key IR institutions are located in Melbourne—the
Commission, [the ACTU], Confederation of Australian Industry and … the Department
of Industrial Relations’ (Henderson, cited in Forsyth 2014). Since the Work Choices
era, the erosion of power of the tribunals that once determined much of the conditions
of employment of Australian employees, and the gradual acceptance of the process of
workplace bargaining as the mechanism for wage rises by both unions and their
members, the role of the employer associations has changed dramatically.

THE FUTURE OF EMPLOYER ASSOCIATIONS

There has been a great deal of speculation and debate about the future of employer
associations in Australia in recent years. This has been for a variety of reasons. One
reason is the declining power and membership of Australian trade unions for a variety
of reasons (discussed in Chapters 1 and 3). It is reasonable to expect that as the power
and reach of Australian trade unions dwindles, employers’ perceived need for a voice
in the political arena and in the workplace would lessen. This can be disputed, as trade
unions—although in small numbers in many industries—remain a potent force in crucial
sectors of the economy in construction and mining and, to a lesser degree, in
manufacturing. Another reason given for the decline of employer associations has been
their success—and that of consecutive federal governments—in changing a once
centralised industrial relations system into one that focuses on the workplace, and not
only places emphasis on wages and conditions being determined at the workplace but
also with a tribunal (Fair Work Australia) increasingly reluctant to intervene in disputes
over issues relating to the daily operations of organisations, such as rosters, promotions
and classifications. Further factors include the decreasing size of Australian
organisations. With almost 90 per cent of all Australian companies being small
businesses with no union presence, often limited financial resources to pay membership
dues of employer associations let alone participate in their structures or hold office
within the associations, combined with little commonality with other employers in an
increasingly unstable marketplace, many employers remain suspicious of employers’
associations as being captured by larger business or simply not relevant to their needs.
Although some academics dismiss Henderson’s claims of an IR Club, noted earlier in
this chapter, it can be questioned whether the system that employer associations so long
rallied against—the tribunals and the legislation governing employee relations—
actually provided fertile ground to grow and provide relevance by giving employer
associations a legitimacy perhaps unwarranted by the actual numbers of employers they
represented in individual industries and in the Australian economy overall.
How employer associations in general will be successful in facing the challenges of
modern industrial relations remains to be seen. The focus on workplaces and the
development of workplace mechanisms for dealing with complex issues such as
enterprise bargaining, EEO, safety and a range of other issues, provides scope for
employer associations to evolve into semi-consultancies, assisting employers when
needed at a functional level. Some academics argue that the answer is already
emerging. Windmuller and Gladstone (1984), and later Behrens (2003), suggested that
apart from the common role of collective representation of employer interest,
particularly in the political arena, many employer associations are increasingly
providing services on a fee-for-service basis to individual employers reluctant to pay
—or financially incapable of paying—membership dues. Although this strategy is not
new and has traditionally been provided to individual employers, particularly small
business employers (Gennard & Judge 2005), it is becoming a more common method of
attracting much needed finances to help those political campaigns already noted and the
cost of day-to-day running of employer associations.
An example of the increasing fee for service provided by employer associations is
VECCI. According to its website, it ‘is the peak body for employers in Victoria,
informing and servicing more than 15,000 members, customers and clients around the
state’. Apart from the typical services provided to its members, similar to other
employer associations, VECCI offers a number of non-member services provided by
consultants on a number of different employee relations matters, including:
representation, including at the Fair Work Commission
right of entry and other union-related matters
dispute resolution and consultation compliance
investigation, mediation, performance management, disciplinary and termination
advice
generalist HR services, including policies, procedures and employee-engagement
strategies
equal opportunity, harassment, discrimination and bullying
modern award compliance and wage information
over-the-phone advice via the Workplace Relations Helpline.
(VECCI 2015)
In addition to the services outlined, VECCI also offers training and seminars to non-
members (at an increased cost) on topics ranging from employee relations issues to
social media and market analysis, as well as accredited training, such as OH&S and
construction induction. These types of services are being replicated by employer
associations across the country as they attempt to remain financially viable and continue
their normal business operations.
Apart from the general viability of the smaller industry associations, the role of the
larger peak associations such as the BCA and AIG must be considered. These two
organisations have played a significant role in Australian industrial relations,
particularly in shaping legislative reform over the last two decades. In the context of the
Australian economy being increasingly exposed to, and impacted by, the global
economy, the role of these two peak bodies—particularly the BCA, with its
representation of the largest employers in the country—should continue to exert
considerable influence on the political agenda, regardless of which political party is in
power. After all, governments have to grapple with the complexities of demands from
powerful business interests while remaining in power through the support of the
Australian voters, most of whom are paid a weekly wage and expect either stable or
improved workplace conditions.

SUMMARY
This chapter has explored employer associations in detail, including theories of their
role; the history of employer associations in Australia; their structure, broad objectives
and strategies. Similar to trade unions, employer associations are diverse groups acting
within the Australian employment relations framework. Historically, the role of the
associations has changed greatly. From initial opposition to unions at the turn of the
twentieth century, most associations now aim to control trade-union activities within
individual organisations, and to lobby governments for legislation favourable to
flexibility in the employment relationship between employers and employees.
The introduction of enterprise or workplace bargaining has dramatically changed
the role and power that the representatives of Australian employers once had in the era
of centralised wage fixing. Although this role has diminished for many employer
associations—and actually threatens the viability of others—some associations still
retain a great deal of influence in Australian employment relations, particularly the
major peak associations such as AIG and the BCA.
Australian employer associations play an important role in representing Australian
business interests both at the individual employer or workplace level and at the
political level. Although employer associations play an important role in articulating
the concerns and interests of Australian employers, for historical reasons, a lack of
unity in goals and several other reasons, minimal research has been conducted by
academics or attention given to them by the media compared to their trade-union
counterparts. This is surprising, given the perceived and real influence that they have
had on the industrial relations landscape over the last 25 years in particular, starting
with the Accord years and then enterprise bargaining and later on the Work Choices
legislation, inspired in part by employers’ desire for negotiations on workplace
conditions to be decided by employers dealing with individual employees.
 REVIEW QUESTIONS
1. What is an employer association?
2. What are the different types of employer associations?
3. What are the differences between craft, industry and peak employer associations?
4. What role do employer associations play?
5. What type of employers does the Business Council of Australia represent?
6. With the changed laws that have led to a decentralisation of the employment
relations system, do employer associations still have a role to play in Australia?
7. What was the strategy of employer associations prior to Federation?
8. How did employers initially respond to the introduction of the Conciliation and
Arbitration Act in 1904?
9. How might individual companies be able to influence governments in ways that
individual workers are unable to?
10. Why do employer associations register with the Fair Work Commission?

Visit Oxford Ascend for
further revision material

CASE STUDY BUSINESS

4.1 COUNCIL OF
AUSTRALIA
PUSHES FOR ONE
UNIVERSAL
AWARD IN IR
REFORM
A single penalty rate and one universal award would apply across the economy
under a blueprint for labour market reform proposed by big business.
 The Business Council of Australia has called for a fundamental redesign of the
workplace relations system, including a dramatic cut in the number of awards and
the stripping back of the content of workplace agreements.
A submission to the Productivity Commission’s workplace relations inquiry by
the Business Council says the ‘rigid and complex’ system needs to be overhauled
because it is not fit to meet the challenges of a modern economy.
Rates for casual work, overtime, penalty and shift work would be removed
from awards and replaced by an economy-wide minimum rate for each category,
to be determined by the Fair Work Commission.
The current 122 modern awards would be reduced to one per industry.
Eventually, one universal award would apply across the workforce.
The content of awards would be limited to 10 clauses, and enterprise
agreements would be restricted to matters covering the employment relationship,
such as pay and leave.
BCA chief executive Jennifer Westacott said managerial decisions, including
rostering and the use of contractors, would not be regulated under the proposal.
‘That’s where the big productivity gains are,’ she told the Australian
Financial Review.
‘If companies can quickly change their system, change their processes, that’s
where you get the big innovation.’
‘What we have got now is a system that’s too rigid. If you have got things like
contracting and rostering … you have got to go back to the drawing board of
enterprise agreements and that just slows agility and it makes managers risk
averse.’
Employees working penalty shifts would be paid less than now. The proposals
will be fiercely resisted by unions who will use them to claim workers will be
worse off if the federal Coalition is re-elected for a second term.

Three-tier system
Under the business lobby group’s three-tier system, a safety net of minimum pay,
conditions and protections for employees would be retained.
The Business Council proposes the Fair Work Commission reviews the
ordinary span of hours for each industry to ‘ensure they are aligned to a 24/7
economy’.
The commission would set a new definition of unsocial hours for each
industry.
‘For example, a review may show that the ordinary hours for retail have
shifted to a seven-day week and now may be 8am–8pm Monday to Sunday, in line
with the community’s expectations of when they are able to shop,’ the council’s
submission says. ‘The same review may show that the ordinary hours for nurses
have not changed.’
Ms Westacott said there needed to be more scrutiny of penalty rates.
‘We think there ought to be a minimum rate that is set by the Fair Work
Commission,’ she said. ‘We cannot see why you would have different rates across
the economy.
‘We want the same scrutiny applied to those rates as is applied to minimum
wages.’
She said the current system was very complex and had ‘outdated views about
what is unsociable in sectors like retail’.
‘What we are trying to do strike a middle ground on penalty rates but more
importantly, solve the problem that has to be solved, which is there’s no rhyme or
reason for what constitutes unsociable hours.’
Ms Westacott said she hoped the commission would support the proposals and
that they would eventually be taken up by the Abbott government in the lead up to
next year’s election.
While the government could seek a mandate to introduce broad changes to the
workplace framework, the remaining change could be introduced over the next
five years.
‘We want to see that framework taken to the next election because we think
that’s got the greatest durability,’ she said.

Convince voters
However, she accepted that the government needed to convince voters of the need
for change.
‘With all these workplace reforms, I think the challenge for the Productivity
Commission and the government is careful incremental change that allows the
community to change and adapt,’ she said.
‘I think we have got to move from 122 awards to one per industry and then,
over time—and we want the commission to have a look at this—whether or not
you have one universal award.’
In its submission, the council says awards should be limited to 10 areas,
including ordinary hours of work, wage classifications, employment categories
and accident pay.
It says the employment relationship in agreements should also be restricted to
seven areas, including remuneration, ordinary hours, leave arrangements and
employment categories.
‘All workplace relations matters not specified in safety net provisions or
agreements are beyond the scope of the employment relationship and therefore
outside the scope of regulations,’ it recommends.
Source: Hannan (2015)

Questions
1. What changes do the BCA want to make to Australian workplace
conditions and why do they want those changes?
2. What impact would the changes have on the Australian workforce?
3. What are the obstacles that the BCA faces in persuading the government to
make the changes?

CASE STUDY IMPACT OF CFMEU

4.2 PAID MEETINGS
CLAIM
‘IMPOSSIBLE TO
PREDICT’: MBA
Master Builders Queensland says an ‘open-ended’ clause in the CFMEU’s
Queensland pattern agreement that obliges employers to pay workers attending
four-hour union meetings might leave the industry vulnerable to ‘costly delays’ that
emerged under the previous state deal, but the union says many have already
signed up.
The peak body says the CFMEU construction and general division Queensland
branch draft clause entitling building workers to paid time off when attending
union meetings or participating in union activities of up to two hours—which can
be taken consecutively—is similar to a contentious clause in the 2011–15
agreement.
‘In this period, the CFMEU often met with union members, on or off site, at the
commencement of the day’s work, which sometimes led to costly delays in daily
programs,’ the MBQ says.
 Because the clause acts as a ‘standing authorisation by an employer for
employees to take time off at the request of the union’, employers have restricted
ability to deem the absences industrial action, the MBQ says.
‘This claim is an open-ended entitlement that is impossible to predict if not
amended or struck out.’
In the union’s latest issue of the Construction Worker, the union’s Queensland
branch assistant secretary, Jade Ingham, says the union is seeking to increase
wages and allowances by 5 per cent a year, super from $207 to $257.33,
redundancy contributions (BERT) from $90 to $115.50, and the daily travel
allowance from $45 to $50.
But the MBQ is warning members that while ‘on the face of it’, the agreement
seeks a 27.4 per cent increase in wages and allowances, there are ‘additional
costs and restrictive practices’ and ‘irregular or indirect extras’ built into the four-
year claim.
According to the MBQ, other clauses of concern in the EBA—which the union
is apparently charging employers $2000 to access—include:
a ban on productivity schemes unless agreed with each employee and the
union, with a 68 per cent premium on the flat rate if agreed
26 annual rostered days off, with employers obliged to apply to the union
for approval if requiring workers to come in on RDOs
an obligation to offer full-time employment to casuals after six weeks,
compared to six months currently, and that they be paid industry
superannuation, BERT, BEWT, income protection and 25 per cent loading
to compensate for no access to sick leave and other entitlements
an entitlement in ‘some versions of the claim’ that workers be paid two
days’ bereavement leave upon the death of any worker engaged by the
same contractor
an employee’s right to take up to five days unpaid leave without notice or
approval
a requirement to give union delegates five days’ notice of termination,
while other employees receive one day, and a minimum CW4
classification for delegates—5 per cent above the trade level.
Master Builders Australia chief executive Wilhelm Harnisch says the
provision of paid two-hour union meetings ‘may or may not be a permitted matter’
for inclusion, yet ‘it has appeared now in hundreds of pattern agreements in
Queensland and is a central element of the new pattern agreement’.
Labelling the proposed agreement ‘economically reckless and unproductive’,
he says the union is returning to ‘traditional tactics’, ‘intimidating contractors in
forcing them to sign economically reckless agreements that above all contain no
productivity trade-offs’.
The union’s Queensland branch assistant secretary, Jade Ingham, has told
members it is ‘funny how whenever conservatives talk of productivity, there is no
mention of innovation or technology … The idea of productivity gains usually
means workers losing pay and conditions, or worse still, their jobs’.
In the Construction Worker, Ingham rejects the notion that the pattern
agreement represents ‘some quantum leap’ in costs for employers and warns that
the union ‘won’t be backing down’.
‘Hopefully by now the bosses have realised that it is pointless to spend big
money on a dispute, before signing the agreement anyway.’
‘That is what happened last time round in 100 per cent of the EBA disputes.’
With a number of companies already signing on, Ingham says ‘the smart ones
know that CFMEU members will do whatever it takes to ensure they get their
EBA’.
Master Builders Australia says there is an ‘urgent need’ for cross-bench
senators to support the return of the ABCC powers to ‘give contractors the ability
to reject such reckless claims and at the same time protecting the interests of the
community by not having to pay exorbitant costs for the construction of schools,
hospitals, childcare facilities and other vital community facilities’.
Source: Workplace Express (2015)

Questions
1. What issue related to a new enterprise bargaining agreement is the MBQ
opposing?
2. What, according to the MBQ, will be the result of the agreement if it is
successful?
3. What action is the MBQ taking to oppose the clause being implemented in
the upcoming agreement?

FURTHER READING
Barry, M., & Wilkinson, A. (2011). Reconceptualizing employer associations under
evolving employment relations: Countervailing power reconsidered. Work,
 Employment, and Society 25(1): 149–62.
Broad, P. (2001). Australian business associations: Their strategies for surviving the
1990s and beyond. Labour & Industry, 11(3): 27–54.
Cooper, R., Ellem, B., Briggs, C., & van den Broek, D. (2009). Anti-unionism,
employer strategy, and the Australian State, 1996–2005. Labor Studies Journal
34(3): 339–62.
Sheldon, P., & Thornthwaite, L. (2004). Business of association? The strategic
responses of employer associations to the decentralisation of bargaining in
Australia. Economic and Labour Relations Review, 15(2): 128–158.
Thornthwaite, L., & Sheldon, P. (2012). Employer and employer association
experiences of enterprise bargaining: Being careful what you wish for? Labour
& Industry: A journal of the social and economic relations of work 22(3): 55–
74.

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WEBSITES
www.abs.gov.au
Australian Bureau of Statistics
www.acci.asn.au
Australian Chamber of Commerce and Industry
www.aigroup.com.au
Australian Industry Group
www.bca.com.au
Business Council of Australia
www.mbav.com.au
Master Builders Association of Victoria
www.restaurantcater.asn.au
Restaurant and Caterers Association
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The Conversation
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Victorian Employers Chamber of Commerce and Industry
www.worplaceexpress.com.au
Workplace Express
 Chapter Five
THE STATE AND EMPLOYMENT
RELATIONS

INTRODUCTION
Having examined the role of employees and trade unions in Chapter 3 and employers
and their associations in Chapter 4, we now turn our attention to the final party in
employment relations: the state. The state plays an important role in employment
relations as an employer in its own right, as well as providing the legal framework for,
and policing of, employment relations.

State
The full array of a country’s governing and law enforcing apparatuses, including its
government (executive and parliament) at the national, state/territory and local
levels; judiciary; police; military; and the civil or public service.

Despite the political ascendency of neoliberal (i.e. ‘free market’) ideology, broadly
adopted by both Labor and Liberal governments since the mid 1980s (see Chapter 2),
the laws and policies adopted by the state continue to have a profound effect in shaping
the environment in which employment relations occur. Governments of all political
persuasions have a keen interest in managing employment relations in such a way as to
ensure conflict between capital and labour is not left unchecked. Too much workplace
conflict can damage the economy by increasing costs of production, reducing
productivity, interfering with the supply of goods and services, and damaging the
nation’s reputation as a reliable economic agent. Governments generally intervene in
employment relations to prevent trade unions becoming too powerful, thus pushing up
costs of production and potentially contributing to inflation. However, if employers and
managers have too much power, there is also a danger that the disparity in wealth
between rich and poor may become too great, thus creating conditions for widespread
labour and community anger and unrest, leading to political instability, if not revolt,
thus threatening the viability of the state itself.
 This chapter examines the various ways the state involves itself in employment
relations. We begin by analysing four theories of the state, focusing on how power is
distributed under alternative political systems, and identifying the main beneficiaries
under each system. Following this generalist analysis, we turn our attention to the
Australian state, focusing on the legal framework established to regulate employment
relations. Finally, this chapter provides a detailed examination of the current federal
employment relations framework. But first, we will begin by defining what is meant by
the state.

DEFINING THE ‘STATE’

The term state refers to the full array of a country’s governing and law-enforcing
apparatuses, including its government (executive and parliament) at the national,
state/territory and local levels; judiciary; police; military; and the civil or public
service. While there remains some debate among theorists as to what defines the state,
a useful definition was provided by Weber (1919), who held it to consist of the
governmental institutions and processes that have ‘a monopoly on the legitimate use of
force’. In keeping with this definition, we can observe that government at the executive
(i.e. government ministers) or parliamentary level has the powers to make law, the
judiciary (judges and courts) has the power to interpret law, public service departments
are empowered to administer law, and the police and military have the ultimate power
to enforce the law. Regarding employment relations, the state includes all those broad
levels of authority, including specialist agencies, industrial tribunals, conciliation and
arbitration services, workplace health and safety inspectorates, as well as equal
opportunity commissions (Gospel & Palmer 1993: 154).

THE RATIONALE FOR STATE INTERVENTION IN

EMPLOYMENT RELATIONS
It might be asked why we have employment laws at all and why the state should seek to
intervene in the relations between employers and employees. Given our extensive laws
on the formation and performance of contracts, on the operations of corporations, why
don’t we as a society simply leave it to individuals to determine all the aspects of
employment relations via employment contracts? Why have another layer of state
regulation, overseeing the negotiations and bargaining over employment contracts?
Since the advent of industrialisation and the capitalist economic system, the state
has regularly intervened in employment relations by making laws to protect workers
from excessive exploitation, by establishing minimum wages, and by protecting
workers from harsh working conditions. In the absence of such laws, child labour,
‘poverty’ wages and unsafe (if not deadly) working conditions have emerged as a blight
on ‘civilised’ society. Thus, the state has taken it upon itself to enact laws to protect the
economic as well as the physical and psychological wellbeing of workers. Apart from
well known historical accounts of Dickensian working conditions in nineteenth–century
British steel and textile mills and coal mines (Dickens 1850; Engels 1845), today, in
parts of the world where employment laws are non-existent or ineffective, market-
driven outcomes result in the use of child labour, dangerous working conditions and (at
best) meagre wages. For this reason, employment laws have evolved in most countries
—often resulting from significant political and, more importantly, industrial pressure,
from organised labour—by providing substantive protections via minimum wages and
conditions, as well as providing procedural protections for the formation and
operations of trade unions, so that workers can engage in collective bargaining. This
duality of individual employment protections and protections for collective action of
workers, organised in trade unions, has formed the basis of employment and labour
laws for around 200 years.
Fundamentally, the rationale for employment laws is that due to the inequality of
bargaining power between most workers and employers, the absence of such laws
would result in low wages and poor working conditions, of such magnitude that it
would not be tolerated by society at large. This is particularly the case in countries
such as Australia, where access to unemployment benefits is denied if a worker does
not accept a job offer. Thus, in the vast majority of cases, the system works on the basis
of ‘take it or leave it’. This inequality of bargaining power has long been widely
accepted as a rationale for state intervention in employment relations. Moral outrage
and concern for basic human rights, such as ‘a fair day’s work for a fair day’s pay’,
have resulted in the formation and evolution of employment and labour laws.
Nevertheless, there are myriad approaches and theories, both explaining and justifying
alternative roles for the state, particularly in relation to the regulation of employment
relations.

THEORIES OF THE STATE

While we can determine what is meant by the ‘state’, when it comes to understanding
and explaining its purpose, role and functions, there are a variety of theories and
approaches. In keeping with systems theory (Dunlop 1958) and strategic choice theory
(Kochan, Katz, & McKersie 1986), the state plays a crucial role in distributing power,
thereby constituting a central environmental or contextual factor in which employment
relations take place. Accordingly, no understanding of employment relations’ processes
and outcomes can occur without consideration of the crucial role played by the state. To
examine and explain the role of the state, particularly in terms of its intervention in and
impact on employment relations, we can distinguish four broad theoretical frameworks:
pluralism, neoliberalism, corporatism and Marxism.
Pluralism
In Chapter 1, pluralism was outlined as a framework of analysis, based on the
assumption that there are competing interests and perspectives, and that therefore
conflict is an inevitable and natural outcome in organisations. In terms of a theory of the
state, pluralism simply extends its basic assumptions of competing interests and conflict
from the organisational level to that of society at large. Under this schema, the state
itself is subject to competing influences from pressure groups, both political and
economic, each attempting to sway the state to favour its particular interests. These
competing interest groups vary in strength, size, status and resources (especially
money) and therefore influence (Dahl 1961: 228). Some are self-enclosed policy
groups or organisations, possibly maintaining institutionalised or semi-institutionalised
relations with the state (Richardson & Jordon 1979: 13). Other interest groups are able
to exert an influence on the state because of their economic might (Lindblom 1977:
172–5). In Australia, big business—particularly the mining and banking sectors—has
been able to strongly influence government policy, regardless of which political party
is in power. Media interests also, because of their narrow ownership structure in
Australia, have long been viewed as having significant power to influence government
policies because of their perceived ability to ‘make or break’ governments.
Given the dynamic and moving strength or influence of competing groups, based on
their ever-changing political or economic power, pluralism holds that the ability of
pressure groups to sway the state in their favour is never consistent or equally relevant
at all times. For this reason, political power and influence can never accrue exclusively
to one pressure group; as one group’s influence grows, it causes changes to the
economic and political landscape, causing other groups to organise and lobby more
effectively (Galbraith 1963: 123–5). According to this view, political power is never
completely centralised, but rather dispersed among ‘multiple centres of power’ (Dahl
1961: 24). Government policy and decision-making is therefore rarely, if ever,
completely predictable and subject to a fixed array of pressure group influences.
Instead, governments respond, on a day-to-day basis to the changing array of influences
and pressures, reflected in the moving balance of power between competing social
interests or groups (Schattsneider 1960: 141). On balance, pluralists tend to view the
state as having an important role in acting as a mediator between competing pressure
groups and interests in society.

Neoliberalism
Neoliberal or ‘free’-market philosophy (Friedman & Friedman 1963) underpins the
approach to government adopted by most conservative governments around the world.
Neoliberalism as a macro approach to government mirrors the unitarist perspective on
workplace regulation. Just as unitarism upholds management’s right to have a monopoly
on rule-making and governing at the workplace level, at a macro level the state is
viewed as the provider of policies, regulations and rules by which society is governed.
Unlike the pluralist perspective, unitarism does not view the state as being subject to
overt influence from particular pressure groups, but that it has its own interests and
objectives. However, pursuing its own self-interest—that of maintaining power—
requires governments to respond to the periodic will of the electorate, who cast their
votes as individuals, not as groups or blocs.
Neoliberals consider society to simply be the sum of the atomistic individuals
within it, each pursuing their own self-interest. Thus, the most forthright neoliberal
political leader, Margaret Thatcher (UK Prime Minister 1979–90), proclaimed, ‘there
is no such thing as society. There are individual men and women, and there are
families’ (Keay 1987). Accordingly, the state should limit itself to providing the
necessary rules and regulations for individuals to engage, bargain, contract and
otherwise cooperate or compete with each other. This philosophy has provided the
ideological underpinning of government policies aimed at privatising state assets and
deregulating both product and labour markets. It is premised on market-based solutions
to both economic and social problems and faith in the superior performance and
efficiency of the private sector (Bell 1992). While conservative political parties have
been the strongest adherents to this approach, labor and social democratic governments
throughout the Western world have also broadly embraced these policy prescriptions,
although less enthusiastically.

Corporatism
Corporatism shares some similarities with pluralism, positing the state as providing the
rules, regulations and policies for governing, and also in acknowledging the distinct
interests of labour (trade unions) and capital (big business and employer associations)
(Lehmbruch 1977: 96). However, what distinguishes corporatism from pluralism is that
rather than the state being subject to the influence of particular pressure groups, the
state consciously includes or ‘incorporates’ peak representatives of the key
stakeholders in national policy-making, to engender their support for national or state
goals. Generally, big business and national trade union representatives are given
privileged insider status with the state in recognition of their powerful and decisive
influence in determining key economic indicators, such as income, employment and
investment. By providing the peak bodies representing labour and capital with such
special status, the state aims to elicit moderation and compromise from them, thus
tempering their otherwise pursuit of their sectional interests (Williamson 1989: 204–5).
For such corporatist processes to be successful, it is vital that the employer
associations and trade unions have a strong degree of monopoly control over the
interests they represent, thus ensuring that agreements made with the state are capable
of being implemented and delivered ‘on the ground’. Several Scandinavian countries,
particularly Sweden, have a long history of corporatism, whereby the nation’s trade
union movement and big business groups combine with the state in a consensus
approach to committing to broad economic, employment-relations and social-policy
frameworks.
Neo-corporatism refers to a situation where the state establishes processes for
privileging only one of the major stakeholders, representatives of labour or capital, but
not both. Arguably, during Nazi rule of Germany (1933–45), big business was
‘incorporated’ into an alliance with the state, and privileged with the running of
industry, while the trade union movement was completely suppressed. Alternatively,
from 1983–96 the Labor Government entered into an ‘Accord’ with the ACTU on a
broad range of price, incomes and tax policy frameworks, in return for a commitment
by the trade union movement to constrain their wage demands. While the Accord
process was formally ‘neo-corporatist’, since it constituted an agreement between the
Labor Government and the trade union movement alone, in practice it may be
considered ‘corporatist’, as big business was informally part of the process.

Marxism
Marxism—despite its relative unpopularity since the collapse of the Soviet Union and
other Eastern European socialist states in the late 1980s and early 1990s—provides the
most thorough and well-developed prism for explaining the role of the state. Marxists
analyse the state in terms of the class structure of society. Marx (1856) argued that
capitalism led inevitably to society developing two competing and irreconcilably
conflicted classes – the small bourgeoisie (capitalist class) and the proletariat
(working class), who constituted the vast bulk of society. In stark terms, Marx argued
that ‘the executive of the modern state is but a committee for managing the common
affairs of the whole bourgeoisie’ (Marx 1854: 35). Some Marxists (including Miliband
1969; O’Connor 1973) cite the massive wealth in the hands of the small property-
owning class and the use of their economic might to exercise political power. Most
recently, this global polarisation of wealth, with its ever-widening gap between rich
and poor, has been explained as the natural outcome of capitalism and one entrenched
by the state (Piketty 2014).
Under this schema, capitalism relies on the state protecting its interests. Therefore,
the protection of private property remains the bedrock of the legal system in all
capitalist societies: market-driven economies based on private ownership of the means
of production. Regardless of which political party forms government, including Labor
or Social Democratic parties, they all act to protect and advance the interests of the
ruling class—the owners of capital. If a truly socialist government is elected and begins
to genuinely threaten the interests of capital, it will face sabotage and ultimately violent
overthrow, as occurred in Chile with the US-backed military coup against the popularly
elected socialist government of President Salvador Allende on 11 September 1973
(Guardiola-Rivera 2014).
While viewing the state in purely class terms, most Marxists today acknowledge
that the state rules primarily through maintaining the dominant ideology, rather than
express use of force, although in the last instance it will use force. Whether by reliance
(historically) on the church or through corporate ownership and control of the modern
mass media, the ruling class runs the state by making its ideology seem the natural
order. The ruling class in modern capitalist societies holds power through maintaining
ideological hegemony (Gramsci 1936). Thus, notions such as ‘the rule of law’,
‘protecting private property’ and ‘the right to manage’, become virtually unchallenged
values and norms in society, all combining to protect the status quo, thus preserving
capitalism and reinforcing the authority of the state.
Some Marxists (Poulantzas 1973) argue that while the state acts on behalf of the
ruling class—the owners of capital—the contradictory nature of capitalism produces
fractures between particular sections of the ruling class. Hence, at any one point in
time, for example, finance capital may have particular interests that conflict with mining
or manufacturing interests. Under such circumstances, the state itself can become a site
for class struggle between competing capitalist interests, but also providing the
possibility that organised labour can exert some influence on the state. This is similar to
the pluralist perspective, where competing interests influence the state, except that
Marxists hold that fundamentally the state will always serve the interests of the ruling
(i.e. capitalist) class at the expense of working-class interests.

The state and employment relations

So how do these alternative theories assist in understanding the manner and purpose of
state intervention in employment relations? From a pluralist perspective, the state
intervenes in employment relations to reconcile the competing interests of various
parties in the workplace, particularly the interests of employees and managers/business
owners. The competition between the major parties in employment relations leads the
state to intervene in various ways, including the making of rules and regulations for the
conduct of employment relations. The state itself becomes a player —alongside
employers and their associations, and employees and their trade unions—with the
power and influence of each party constantly changing on particular issues and at
particular times. The unitarist or neoliberal position is that the state should ignore the
pressure and lobbying from sectional interests. By rejecting the notion of irreconcilable
conflict between labour and capital, the state should, nevertheless, limit the power of
trade unions to interfere with ‘market-driven’ outcomes. A neoliberal environment may
be described as ‘one in which the state and leading managers share a common ideology
which precludes unions playing a significant role in national economic management or
workplace governance’ (Boxall & Haynes 1997). Where possible, the state should
provide a framework to assist individual workers and managers negotiate their own
agreements by ‘freeing’ up the labour market. A corporatist approach requires the state
to get the major producer groups—big business and trade unions—to adhere to national
employment relations objectives, by privileging these parties in exchange for requiring
them to deliver outcomes ‘on the ground’ under guidelines decided at the national or
corporate level. Finally, Marxists consider the state to be ultimately an agent of capital,
and thus required to legislate and regulate employment relations in a way to protect
profits and secure the health of the capitalist economic system.

Table 5.1 Alternative theories of the state and employment relations

Pluralism Neoliberalism Corporatism Marxism

Locus of Competing Individuals Key producer Class conflict

attention social/interest groups: unions
groups and big business
Broad view
Power is Power is Power is Power is held
distributed held by centralised by the
among individuals with the peak minority
various competing or bodies of ruling class,
groups, with cooperating business, which is the
no party with each trade unions capitalist
consistently other, in the and class (i.e. big
in the pursuit of government. business).
ascendancy their self- The three The interests
in interest. peak bodies of the ruling
influencing The state’s cooperate for class are
the state. role should the national irreconcilable
The state be to interest. with the
mediates intervene as Government’s interests of
between the little as role is to the working
various possible, thus provide a mix class, who
parties, allowing of incentives constitute the
achieving individuals to and majority of
broad take punishments society.
consensus. responsibility to business The state
 The state for their own and unions to operates to
upholds the lives. get their uphold the
public good The state cooperation. capitalist
by providing should ‘free system, thus
mechanisms up’ both making it an
for resolving product and agent of the
conflict. labour ruling class.
markets to
allow for
greater
efficiency
and
productivity.

Employment
relations Recognises Promotes the Legitimises Class conflict
the use of and grants is reflected in
legitimacy ‘individual’ special status never-ending
and contracts and to peak employment
advantages non-union business and relations
of trade agreements. union bodies. conflict.
unions and Reduces the Imposes The state
employer need for penalties on establishes
associations. industrial parties who tribunals,
Emphasises tribunals, seek to rules and
the need for rules and operate regulations to
rules and regulations, outside the mask their
regulations by allowing guidelines true role in
for resolving individuals to established protecting the
conflict. determine by the interests of
The main their own incorporated business.
parties— outcomes. parties. The system is
employers focused on
and unions containing or
—are supressing
encouraged expressions
to negotiate of class
with each conflict.
other.
 THE AUSTRALIAN STATE AND EMPLOYMENT
RELATIONS
The Australian state has a significant impact on employment relations, both directly, in
terms of providing rules, regulations and processes for the conduct of employment
relations, but also as an employer itself, as well as having an indirect impact through its
management of the economy and its ability to influence the political environment and
community attitudes.
The state is an important employer in its own right, with around one-third of the
Australian workforce employed by the state, including public servants; local
government; people working in public hospitals, schools, transport, the military and the
police; and a range of public-sector construction and infrastructure areas such as
sewerage, water, gas, sanitation, electricity and telecommunications. The way the state
conducts its own employment relations also has ripple effects in setting employment
standards across the economy.
The state’s role in managing the economy, through a combination of monetary, fiscal
and immigration policies, has a profound effect on employment relations by virtue of its
effect on labour market conditions, thus promoting or constraining employment,
unemployment and wages growth.
While the antecedents of employment laws in Australia, as with most laws, can be
traced back to ‘the mother country’, the regulation of employment is an area in which
Australia developed a distinct path, shared for most of the twentieth century only by
New Zealand. In particular, our core institutions involved in the regulation of
employment and the processes of preventing and settling industrial disputes are
products of this country. While these core institutions have evolved in name and
function since the beginning of the twentieth century, our system of industrial awards
providing minimum wages and conditions of employment covering most occupations
and industries continues to provide a ‘safety net’ of wages and conditions for the vast
majority of Australian workers.
The extent of such regulation, combined with our federal system of overlapping
state, territory and federal laws, has meant that Australia has developed an intricate and
complex web of laws and regulations concerned with employment. This regulatory
complexity in overseeing the rights and responsibilities of both employees and
employers is largely due to the multiplicity of instruments, including:
agreements, which may be written, verbal, individual, collective, registered or
unregistered
industrial awards
pay scales (new instruments created in 2006 and derived from awards)
 federal, state or territory statutes or regulations
executive government policies
organisational policies and procedures
the rules and processes of the common law
international labour standards.
(Stewart 2015: 3)

The state formally intervenes by providing a range of procedural rules and

substantive rules for the conduct of employment relations.

Procedural rules
The legal processes relating to federal and state industrial tribunals, human rights,
discrimination, and workplace health and safety commissions. Procedural rules
comprise ‘how’ to legally conduct employment relations.

Substantive rules
Legally enforceable employment standards including awards, minimum wages and a
range of statutory rights, such as annual leave, long-service leave, superannuation,
EEO, WH&S, working hours and sick (and other) leave entitlements. Substantive
rules comprise ‘what’ are legally enforceable employment standards.

Procedural rules include the legal processes relating to the array of federal and
state industrial tribunals, human rights, discrimination, and workplace health and safety
commissions. Such procedural rules confer these tribunals—such as the Fair Work
Commission (FWC)—with the powers to deliberate on industrial disputes and
bargaining issues. Essentially, procedural rules comprise ‘how’ to legally conduct
employment relations.

Fair Work Commission (FWC)

An independent federal industrial tribunal established under the Fair Work Act 2009.
It has the role of settling industrial disputes, ratifying awards, enterprise agreements
and individual flexibility agreements.

Substantive rules include the range of legally enforceable employment standards

including awards, minimum wages and a range of statutory rights, such as annual leave,
long-service leave, superannuation, EEO, WH&S, working hours and sick (and other)
leave entitlements. Essentially, substantive rules comprise ‘what’ are legally
enforceable employment standards.
The legal basis by which the state provides both procedural and substantive rules,
as well as making a range of economic, social and political decisions impacting on
employment relations, is determined by the nature and structure of Australia’s legal
system, comprising three sources of law: common law, statute law and constitutional
law.

Statute law
Law made by Parliament. Statute law forms the rules under which negotiations,
bargaining and the specification of terms and conditions of employment occur and
become legally enforceable.

Constitutional law
The Australian Constitution lays down the powers of the federal parliament to
intervene in a range of areas including employment relations. It does this in sections
51 and 122, which outline the various ‘powers’ of the federal parliament, thus
defining the parameters on which it can make laws.

COMMON LAW
The common law is best explained as judge-made law, case law, or law made by the
decisions of courts. The common law is the general term given to the received
principles of decision-making of courts, based on legal thinking, dating back, in many
cases, hundreds of years—particularly in Britain. The common law, therefore, is an
evolving entity, capable of adapting to new situations and new ways of thinking. The
common law fills in the gaps left by statute law.

Common law
is judge-made law, case law, or law made by the decisions of courts, which fills in
the gaps left by statute law. Common law is an evolving entity, capable of adapting
to new situations and new ways of thinking.

In particular, the common law underpins Australia’s system of contract law,

including contracts of employment. Common law principles provide a framework for
determining how and when an employment contract is formed, as well as providing an
extensive list of legal obligations on both employers and employees over the life or
performance of employment contracts, and in regulating termination of such contracts.
 One area of employment relations that depends almost exclusively upon the
common law is the determination of a worker’s status; whether they are an employee or
an independent contractor. The common law rules in this area, as there is no statutory
definition of what constitutes an employee. Defining a worker’s status has important
ramifications for the rights and responsibilities of the worker in terms of pay rate,
conditions of employment, hours of work, leave and other entitlements, as well as for
the obligations and rights of the putative employer. Even the common law, however, has
struggled to devise a simple, easily understood definition of what constitutes an
employee. Instead, courts have come to rely on an overall, somewhat subjective
analysis, called the multi-factor test (see Stevens v Bodribb Sawmilling 1986; Hollis
v Vabu 2001).

Multi-factor test
A series of questions about the relationship between the worker and the putative
employer. The test attempts to ascertain the nature and depth of control involved in
placing the worker in a subordinate position within the relationship with their
‘boss’.

The multi-factor test

The multi-factor test comprises a series of questions regarding the nature of the
relationship between the worker and the putative employer. In particular, it attempts to
ascertain the nature and depth of control involved in placing the worker in a
subordinate position within the relationship with their ‘boss’. Importantly, the issue of
control is about identifying the ‘right to exercise control’ over the worker, not simply an
assessment of the actual application of control. Control does not have to be about the
technical aspects of the job, as employees often have more skill than their employers;
however, even if they do not exercise it, an employer has ‘the right to control’ how a
person does their job. Control can be over things such as where and when the work is
to be done (see Zuijs v Wirth Bros 1955). Other factors considered include how the
person is paid, the extent of the worker’s obligation to work for the organisation, and
any capacity the person has to delegate their work to others. Overall, it is the totality of
the relationship that must be examined, with control being an important factor, but not
the only one. In examining the totality of the relationship, courts assess not just the
formal terms agreed between the parties, but also the ‘actual work practices’. Hence,
an agreement may describe the worker as an independent contractor, but the actual
practice of the relationship is one of employer and employee.
The very nature of the employment relationship has evolved in line with changes to
the way work is conducted, the nature of technology and the type of socio-economic
system operating in countries such as Australia. In terms of the role of the common law,
it has had a profound impact on the laws pertaining to employment contracts, which
grew out of the medieval notion of master and servant relations.

Master and servant

The master–servant relationship was based on obligations that were usually
inherited. The master was obliged to care for the servant, and the servant was
obliged to obey the master.

Master and servant

From the fourteenth century to the end of the nineteenth century, the law of employment
in Britain was founded upon the legal imagery of master and servant.
The law of master and servant was rooted in a society in which everyone was presumed to belong
somewhere, and the great parameters of belonging were kinship, locality, religion, occupation and
social class. In all spheres of life, including spiritual communion, subordination to legitimate authority
was thought to be a natural, inevitable, and even welcome accompaniment of moral grace and
practical virtue. (Selznick 1969: 26)

The model of the master and servant relationship was the household, with its ‘just’
governance structures (headed by the master), as the foundations of a stable and orderly
society. Society was structured in a strict hierarchy, with a place for everyone, and
everyone in their place. The main feature of the master–servant relationship was that it
was based on obligations that were usually inherited. The master was obliged to care
for the servant, and the servant was obliged to obey the master.
The law of master and servant was founded, in part, on the idea of a contract, with
some terms of the relationship, such as its duration and wages, subject to bargaining
and mutual assent. But the parties were not free to determine the conditions, as custom
and public policy defined the implicit framework of mutual rights and obligations, not
the will of the parties. Like marriage, the relationship might be entered voluntarily, but
its character was fixed by law. According to Selznick, by the seventeenth and eighteenth
centuries there had emerged four essential legal attributes of the master–servant
relationship.
First, the master had general authority to discipline the servant. Hence the master
had, under the law, the right to command. Importantly, the master’s right to command
and the servant’s obligation to obey resulted from their respective status, not from the
express terms of an agreement. However, the master’s commands had to be lawful, and
he could be held to account before local courts for cruel and oppressive conduct.
Second, the relation was not terminable at will. The law visualised a relatively
enduring relationship and a commitment by both parties to honour the contract until the
term of service was ended. Furthermore, it was illegal for another master to induce
servants to switch masters before the term of their contract had expired.
Third, specific performance of a contract of service was available as a legal
remedy. In other words, even where the relationship had broken down, resulting in the
servant breaking free from their service, or the master being found guilty of harsh
treatment of servants, the law generally compelled the parties back into their relation to
fulfil the terms of the contract. Hence the master–servant relation was not thought of as
an ordinary contract, for whose breach damages would suffice, because too much was
at stake, not just for the parties, but for the wider community.
Finally, the master had a responsibility to care for the servant. From a legal
standpoint, the status of master carried with it the responsibility to care for the servant,
akin to the modern notion of a duty of care. This obligation was not clearly defined, but
seems to have been acknowledged in principle and to have reflected local custom and
practice.
In combination, these four legal attributes supported a largely agricultural society,
in which there was little labour, geographic or social mobility. It was a static society
rooted in custom and dominated by the seasons. A person’s place in society as master
or servant was determined at birth, and generally intended to remain as such for the
remainder of their life. The essential feature of the master–servant relationship, apart
from it being based on subservience to authority, was that it was essentially a status-
driven relationship. A truly contractual theory of employment did not begin to emerge
until the concept of a free market gained ascendancy in the sphere of economics in the
late eighteenth and early nineteenth centuries.

From obligation to contract

With the advent of industrialisation and the emerging capitalist economic system’s need
for labour mobility, particularly to provide labour for the new factories and mills, the
law had to find new ways to deal with employment relationships in a way that
promoted the idea of freedom of choice, rather than status. The new legal device was
that of contract. Viewing the employment relationship as a contract emphasised the
limited nature of the commitments made by the parties to each other, as well as the high
value placed on the freedom of individuals to enter contractual relations and define for
themselves the terms of the bargain. Initially, the notion of the contract of employment
had four distinct features.
First, the employment relationship was identified as contractual in essence, and
subject to the conceptual and interpretive apparatus of the developing law of contract.
The theory was—as in all contracts—that the terms of the contract were to be sought in
voluntary agreement, whether express or implied. It was not the role of the state or the
law to seek substantive justice in the workplace, but to establish rules for the making
and interpreting of contracts entered into by individuals.
Second, rules and working conditions were incorporated into the employment
contract as implied terms; by entering into an employment contract, the employee was
deemed to have assented to the rules and working conditions in operation at the time.
Third, the employment contract was given a special status in the law, founded in the
distinctive right of one party to exercise authority over another. This was stated
categorically at the beginning of the nineteenth century and then unambiguously restated
at the beginning of the twentieth century. First, from Reeve (1818): ‘A master is one
who, by law, has a right to personal authority over another; and such persons over
whom such authority may rightfully be exercised, is a servant.’ Then from Labatt (1904,
cited in Selznick 1969): ‘Where one person is employed to do certain work for another
who, under the express or terms of the agreement between them, is to have the right of
exercising control over the performance of the work, to the extent of prescribing the
manner in which is shall be executed, the employer is a master, and the person
employed is his servant.’ The exercise of control is the criterion of the nature of the
contract. Thus, the traditional law of subordination from the master and servant relation
was carried over into the law of the employment contract.
Fourth, the presumption emerged that the employment contract was terminable at
will and therefore free of the constraints that accompany a contract of definite duration.
This served the interests of the new industrialists seeking to attract labour from rural
communities to the towns to work in the new mills and mines. As long as reasonable
notice was given, employment contracts could be ended by either party at any time.
Another effect of this contract at will theory was that it reinforced managerial
authority, as workers could be dismissed at any moment.

Contract at will theory

The presumption that the employment contract was terminable at will, and free of the
constraints that accompany a contract of definite duration. This reinforced
managerial authority as workers could be dismissed at any moment.

To this day, the common law treats the employment contract as a special form of
contract, in that it imposes important implied terms, including the obligation of the
employee to be subservient to the lawful instructions of their employer. In this sense,
the essential power relationship that underpinned the old master–servant relationship
forms the bedrock of the modern employment contract. It is a prerogative contract; one
which upholds managerial prerogative. As discussed in the following pages,
employment relations has become the subject of considerable statute law, which has
sought in part to compensate for the uneven bargaining power between employees and
employers and to regulate the nature of employment contracts, even to the point of
overriding ‘the will’ of the parties.
Our legal system operates in such a way that statute law overrules the common law,
but the common law fills in the gaps, or determines the legality or otherwise of
processes and outcomes not explicitly covered by statute law. If governments wish to
change the law, it is incumbent upon them to do so by statute law, either enacting a new
law or else amending an existing statute. Parliament’s authority to make laws, however,
is itself constrained by constitutional law.

CONSTITUTIONAL LAW
The Australian Constitution lays down the powers of the federal parliament to intervene
in a range of areas, including employment relations. It does this in sections 51 and 122,
which outlines the various ‘powers’ of the federal parliament, thus defining the
parameters on which it can make laws. Given the federal nature of the Australian
Constitution, all powers not granted to the federal parliament, by default, lie with the
states. While there is one specific power granted to the federal parliament dealing with
industrial or employment relations, in practice several powers have come to be relied
upon by successive federal governments as authority for their intervention in industrial
relations.

Industrial power, section 51 (xxxv)

The industrial power grants the federal government power to make laws with respect to
‘conciliation and arbitration for the prevention and settlement of industrial disputes
extending beyond the limits of any one state’ (s. 51 (xxxv)). At Federation in 1901,
when the Australian Constitution was enacted, it was intended by the ‘founding fathers’
that managing industrial relations was to be predominantly a state matter, except when
interstate disputes took place, as they had done during the Great Strikes of the 1890s.
Furthermore, even in the case of interstate disputes, the federal parliament was limited
to a specific form of intervention: conciliation and arbitration. This resulted in the
creation of specialised conciliation and arbitration tribunals, called a variety of names
over the course of the past century, including the Conciliation and Arbitration
Commission, the Australian Industrial Relations Commission, the Workplace Relations
Commission and presently the Fair Work Commission (FWC). Thus, under section 51
(xxxv), the federal parliament does not have the power to set wages and conditions, as
this would be a breach of their limitation to utilise conciliation and arbitration. Finally,
by referencing only the ‘prevention and settlement of industrial disputes’, section 51
(xxxv) has limited the federal government’s interventions to the prevention and
settlement of disputes. Over the past 100 years or more, the High Court has tended to
expand the meaning of these restrictive limitations in section 51 (xxxv), in particular,
allowing federal intervention in local or state industrial disputes, where the
protagonists (especially trade unionists) are members of national organisations. The
High Court has also rather liberally interpreted the meaning of an industrial dispute, by
including a paper dispute, which amounts to no more than a disagreement between
trade unions and employers over wages or conditions. Paper disputes have traditionally
taken the form of (usually) trade unions lodging a list of claims (i.e. demands) with an
employer(s), and the employer’s rejection of such claims constituting the proof of the
existence of an industrial dispute.

Paper dispute
Deliberate lodging of an exaggerated log of claims (called ambit claims), knowing
they will be rejected, in order to trigger the intervention of an industrial tribunal to
resolve the dispute.

Incidental power, section 51 (xxxix)

The incidental power enables the federal parliament to legislate on ‘matters incidental
to the execution of any power vested by this Constitution’ (s. 51 (xxxix)). In terms of
employment relations, this power has allowed the federal government to regulate a
system of trade union registration, including rules for union elections, as well as to
empower the federal government to enact enforcement provisions, and to ensure
compliance by parties with decisions of the federal industrial tribunal, such as today’s
FWC.

Trade and commerce power, section 51 (i)

The federal government can pass laws with respect to interstate as well as overseas
trade. In conjunction with section 98 of the Constitution, this power extends to
navigation, shipping and airlines, thus enabling the federal government to regulate
employment relations in the maritime, waterfront and airline industries.

Defence power, section 51 (vi)

The federal government has the power to directly regulate wages and employment
conditions in the Australian military. This power can also be extended to the whole
country during a wartime emergency or post–war reconstruction.

Exclusive (or absolute) power, section 52 (ii) and territorial

power section 122
The exclusive or absolute power grants the federal government authority to regulate the
wages and employment conditions of its own employees—all federal public servants.
Section 122 extends this power to cover employees in the Australian Capital Territory
and the Northern Territory.

Corporations power, section 51 (xx)

The federal parliament can pass laws in relation to the operation of foreign
corporations as well as financial and trading corporations formed in Australia. This
power has grown in importance since the Industrial Relations Reform Act 1993 when
the Labor Government relied on it to introduce non–union enterprise flexibility
agreements (EFAs), as well as establishing strict rules for union–brokered enterprise
bargaining, including a limited right to strike (Cooper & Ellem 2008), thus bypassing
the usual test on resolving interstate industrial disputes. Since then, the enactment of the
Workplace Relations Act 1996, its amended Work Choices 2005 and presently the Fair
Work Act 2009 have come to rely on the corporations power, perhaps more than any
other power in the Commonwealth Constitution.

Enterprise flexibility agreement

A non–union instrument for determining wage rates, introduced by the Keating Labor
Government in the 1990s.

Referral by states power, section 51 (xxxvii)

This power enables the federal parliament to extend its powers over the authority of
state governments, if the states cede or refer such powers to the Commonwealth. To
date, only the Victorian Government has referred its industrial relations powers to the
Commonwealth, abolishing its own conciliation and arbitration system in 1992 and
referring its remaining industrial relations powers to the Commonwealth in 1996.

STATUTE LAW
Whereas the common law may be characterised as judge-made law, statute law by
comparison constitutes law made by parliament. The preceding section outlined the
various powers in the Constitution that enable the federal parliament to make laws with
respect to employment relations. The form and manner in which these laws are made is
the subject of statute law. It is statute law that forms the basis of the institutional and
regulatory arrangements governing employment relations, particularly the rules under
which negotiations, bargaining and the specification of terms and conditions of
employment occur and become legally enforceable. Due to the federal nature of
Australia’s political system, there are a variety of state–based statute laws governing
employment relations, but their diversity and breadth is beyond the scope of this book.
For this reason, and because of its dominant influence, we confine our analysis to
statute law enacted by the Commonwealth or federal parliament.
Statutory regulation of employment relations in Australia is complex, consisting of a
multitude of legal instruments including statutes that:
directly impose obligations on employers; for example, to provide certain forms of
paid leave, to maintain a safe workplace, or to keep certain records
authorise industrial tribunals to make awards—legal instruments that operate with
the force of legislation and that impose obligations on employers in relation to
matters such as remuneration and working hours
permit the registration of enterprise agreements that set employment conditions for
groups of workers, and that override any awards that would otherwise apply
prohibit employers, workers or unions from engaging in certain types of conduct; for
example, discriminating against a person because of their race, gender, union
membership, etc., or taking or organising certain forms of industrial action
authorise courts or tribunals to vary contracts for the performance of work to prevent
those contracts operating in a harsh or unfair manner (Stewart 2015: 5).

Enterprise agreements
Agreements at individual enterprises that typically set employment conditions for
groups of workers.

EVOLUTION OF THE FEDERAL SYSTEM

Shortly after Federation in 1901, the industrial power of the Constitution (s 51 xxxv)
was relied upon to pass the Conciliation and Arbitration Act 1904. This Act
established a Court of Conciliation and Arbitration to resolve ‘interstate’ industrial
disputes, in keeping with the constraints of section 51 xxxv of the Constitution. The
Arbitration Court, as it became known, was empowered to bring the parties to
industrial disputes together in conciliation conferences, to encourage resolution of
industrial conflicts through negotiation. If conciliation failed to resolve the disputes, the
Court was empowered to conduct hearings at which the parties would be compelled to
attend and present their arguments. The Court would then arbitrate a resolution in the
form of an award, which was legally enforceable.
 Over time, trade unions became very successful at generating legally enforceable
common standards of employment for their members across whole occupations and
industries. Unions would create a paper dispute by lodging an exaggerated log of
claims (commonly referred to as ‘ambit claims’), knowing they would be rejected, on
numerous employers in various states, to satisfy section 51 xxxv, in order to trigger the
intervention of the Arbitration Court and create an award. In this manner, the trade
union movement was able to use the system to create a unique set of legally enforceable
awards across the country, covering most occupations and industries and providing for
minimum wages and conditions of employment. Often, such awards were established at
the conciliation stage (i.e. agreed to by both employers and unions), called consent
awards. The parties had strong incentives to settle their differences through
conciliation, rather than risk a resolution being imposed on them through arbitration.
The parties, both unions and employers, involved in these processes of creating and
(periodically) amending awards became respondents to the awards and were legally
obliged to uphold them.

Log of claims
The list of claims or demands placed, usually by unions on employers, as part of
their bargaining or negotiations over wages and working conditions.

Consent awards
Awards established at the conciliation stage by the mutual agreement of employers
and unions.

Once the system of national awards became established, a process developed

whereby the Arbitration Court (which became the Arbitration Commission in 1957)
would conduct periodic national wage cases, involving applications by unions to
increase the wage rates in several key awards, as a benchmark for a more generalised
movement in wages across all awards. Generally, the arguments presented to the
Commission by the unions (and usually opposed by employers) for national wage
increases were based on compensating workers for price inflation or for ensuring
workers got a share of the benefits flowing to employers from improvements in industry
productivity. Traditionally, the metal industry, covering manufacturing workers, where
the trade union movement was historically quite strong, became the test-case arena for
achieving such wage increases, which unions then sought to flow-on to all other
awards.

National wage case

 Method of adjusting wages across the country prior to enterprise bargaining. Unions
would apply to increase the wage rates in several key awards, as a benchmark for a
more generalised movement in wages across all awards.

Some of the key outcomes of this system included significant uniformity of wage
rates for particular occupations throughout Australia—and even across different
industries. By international standards, there was a relatively low level of wage
dispersion between the lowest and highest paid workers covered by awards. Both
outcomes were championed by the trade union movement as achievements towards
greater equality, but were disparaged by big business as leading to inefficiency, by
restricting the ability of price (i.e. wage) signals to encourage skills acquisition and
labour mobility.
By the 1980s, as globalisation gathered pace with the lowering of trade barriers,
financial and exchange rate deregulation, pressure, particularly from big business,
increased on the Australian Government to begin a process of labour market
deregulation to match the opening up of product and financial markets. Increasing
labour market flexibility became the order of the day.
Interestingly, it was a Labor Government rather than a conservative government that
began the process of labour market deregulation. In truth, it was a process of re-
regulation, the aim being to make wage rates more responsive to economic
performance at the enterprise level, rather than the industry or national level. This
initiative was clearly intended to generate both winners and losers, in terms of
workers’ wages, as a means of focusing attention on productivity at the enterprise level.
Prior to the 1990s, it was a widespread practice for employers and unions to reach
informal agreements at particular workplaces for over-award payments. These
became formalised with the Keating Labor Government’s amendments to the Industrial
Relations Act 1988. These agreements were now to be formalised by being presented
to the Australian Industrial Relations Commission (AIRC; previously the Conciliation
and Arbitration Commission) for certification. Henceforth, workers and their unions
would no longer rely on periodic national wage cases to adjust awards to achieve wage
increases, but would instead pursue enterprise bargaining. The focus had changed from
a centralised national system to a more decentralised enterprise system. The benefits of
wage equality, in terms of low wage dispersion and national uniformity, long
championed by trade unions, were forgotten because of the supposed benefits of
increased labour flexibility and productivity intended to accompany the new
enterprise–focused system. Under the Keating Labor Government, these certified
agreements were still products of collective bargaining, although they also introduced
a non–union instrument called enterprise flexibility agreements.
 Over-award payment
Wage rates in excess of the minimums required in industrial awards.

Certified agreement
A form of enterprise-based collective agreement.

Following the election of the Howard Coalition Government in 1996, the federal
parliament passed the Workplace Relations Act 1996 (WR Act). A key feature of this
new regime was the creation of a new instrument called an Australian Workplace
Agreement (AWA), effectively a system of certifying individual contracts. This was a
break with almost a century of basing Australia’s employment relations system on the
encouragement and protection of collective bargaining. Under the WR Act, awards
were no longer the main means of regulating wages and conditions, but rather became
simply a default safety net of minimum wages and conditions, intended for those not
covered by a certified agreement or AWA.

Australian Workplace Agreement (AWA)

A registered individual contract introduced by the Howard Government under the
Workplace Relations Act 1996 and further promoted under Work Choices 2005.

Alongside the federal industrial relations system, there remained a complex web of
overlapping state and territory systems and instruments for regulating employment
relations. Following its re-election in 2004, with an unexpected majority in the senate,
the Howard Government set about a radical overhaul of Australia’s industrial relations
system with the introduction of its Workplace Relations Amendment (Work Choices)
Act 2005. One of the aims of Work Choices was to move towards a single national
employment relations system. In order to do this, Work Choices derived its authority
from the corporations power (s. 51 xx) in the Constitution rather than the traditional
industrial power (s. 51 xxxv). No longer did the legislation require an interstate matter
or threat of an industrial dispute to occur, instead Work Choices applied to workplaces
classified as ‘constitutional corporations’, being all trading, financial and overseas
corporations. Under this power, the federal government was able to directly regulate
conditions of employment, leading to the enactment of a series of minimum standards
covering wages, maximum hours of work, and various types of leave entitlements.
As well as broadening the coverage of the federal system, thus diminishing the
various state systems, Work Choices also:
created greater flexibility for employers in the terms and conditions under which
 they could employ workers
reduced the role played by the AIRC in determining employment conditions and
resolving industrial disputes
transferred responsibility for fixing minimum wages to a new body: the Australian
Fair Pay Commission
made it more difficult for trade unions to enter workplaces or organise industrial
action
reduced the exposure of employers to claims of unfair dismissal.
(Stewart 2015: 30)

Australian Fair Pay Commission

A federal tribunal responsible for determining national minimum wages under the
Work Choices Act 2005 (now defunct).

In addition, Work Choices made AWAs the centrepiece of the new system, the
federal government committing itself to promoting individual contracting at the expense
of collective bargaining. In perhaps overreaching itself, the Howard government got rid
of the no-disadvantage test for AWAs. Previously, workplace agreements had to at
least provide conditions no less favourable to workers than those contained in the most
relevant award. No longer was this the case, thus opening up the opportunity for
employers to move workers onto new agreements with lower wages and poorer
working conditions. This proved to be a step too far for the Australian community,
resulting in the electorate not only voting the Howard Government out of office in 2007,
but John Howard becoming only the second Australian prime minister to lose his seat in
an election.

No-disadvantage test
Test applied to Australian Workplace Agreements; they must at least provide
conditions no less favourable to workers than those contained in the most relevant
award.

Sensing that the radical reforms of Work Choices, especially the promotion of
AWAs—which often reduced workers wages and conditions—conflicted with the
expectations and sense of ‘fair play’ of most Australians, the Australian trade union
movement, led by the ACTU, mounted a massive anti–Work Choices campaign
coinciding with the November 2007 federal election. Even many employers were
critical of Work Choices for its complexity, inconsistency and lack of clarity.
Ultimately, Work Choices became a political noose around the neck of the Howard
Government, resulting in the government’s defeat at the 2007 election.

THE FAIR WORK ACT 2009

The Fair Work Act 2009 (FW Act) forms the basis of Australia’s current regulatory
framework for employment relations. Following the election of the Rudd Labor
Government in November 2007, the new Act was introduced incrementally between
November 2008 and December 2010, replacing the Workplace Relations Act 1996 and
its amending instrument the Work Choices Act 2005. An interim Act, the Transition to
Forward With Fairness Bill 2008 was introduced by the Rudd Labor Government
before being replaced by the Fair Work Act 2009.
As its title suggests, the Fair Work Act 2009 was promoted and generally accepted
as restoring some fairness to the system, which had been seemingly judged by the
electorate as tilting power too heavily in favour of employers. Therefore the Act
provided new protections for workers’ wages and conditions and reduced some of the
restrictions on union activity. However, the new Act continued to rely on the
‘constitutional corporations’ power for its jurisdiction for parliament to directly
regulate terms and conditions of employment, and to override state industrial relations
jurisdictions.
The Act established ten new National Employment Standards (NES), replacing
the four minimum standards under the previous Work Choices Act. The NES was
designed as a legislated safety net of terms and conditions of employment; see Box 5.1.

National Employment Standards (NES)

Ten minimum employment standards that relate to maximum weekly hours of work,
flexible working arrangements, various leave entitlements, dismissal, redundancy,
public holidays, and information about workplace rights.

Box 5.1 The National Employment Standards ‘safety net’

1. Maximum weekly hours of work
2. Requests for flexible work arrangements
3. Parental leave (and related entitlements)
4. Annual leave
5. Personal and carer’s leave and compassionate leave
 6. Community service leave
7. Long-service leave
8. Public holidays
9. Notice of termination and redundancy pay
10. Fair Work information sheet

The Act also established new institutions and processes for settling the terms and
conditions of employment.

PRIMARY EXAMPLE 5.1

State intervention in Pig Out restaurant chain
Ned Sangster is a budding American entrepreneur who has decided to expand his Pig
Out all-you-can-eat restaurant chain to Australia. In the USA, Sangster pays his staff
around $8 per hour and, given the large number of migrant workers and overseas
students looking for work in Australia, he figures that he’ll be able to employ staff here
for a flat $10–12 per hour. After all, Australia, like the USA, has a market capitalist
economy, and if people are prepared to work for low wages, then Sangster is prepared
to provide the work for them.
Sangster is keen to employ his staff on individual common law contracts to avoid
having to deal with trade unions. In the USA, his restaurant chain has always operated
in a non-union environment, so he’s keen to do the same in Australia—although he
knows that unions have a stronger presence here.
Much to his shock, even before opening his first restaurant in Australia, Sangster is
advised that there are National Employment Standards (NES) in Australia, which are
mandatory. Furthermore, there is a Hospitality Award that sets out the minimum terms
and conditions of employment in the hospitality industry, including a minimum wage of
about $18 per hour, with penalty rates for working late at night, on weekends and on
public holidays. As well, these workers are entitled to employer contributions to their
superannuation and long service leave. The NES and the Hospitality Award are legally
enforceable.
But this is not all. Sangster is even more taken aback when he discovers that after a
few months of employment, his employees have access to unfair dismissal laws, making
it an offence to summarily dismiss them except under stringent conditions.
‘This is madness,’ cries Ned Sangster. ‘Americans would never let the government
have so much power over what employers can or can’t do with their employees.’
Questions
1. Why might Ned Sangster be shocked at the level of state intervention in employment
relations in Australia?
2. Do you think Australia has too much state intervention in employment relations?
3. Do you think the legal protections for Australian workers might actually dissuade
some workers from joining trade unions?

The Fair Work Commission

The FW Act rebadged the Australian Industrial Relations Commission (AIRC) as Fair
Work Australia, later amended to the Fair Work Commission (FWC). The FWC is the
preeminent employment relations’ tribunal in Australia, replacing a range of institutions
operating under the previous Work Choices regime, including the AIRC, the Australian
Industrial Registrar, the Australian Fair Pay Commission and the Workplace Authority.
The FWC (as of 2016) is made up of a president, two vice-presidents, 19 deputy
presidents, 22 commissioners, as well as several state–based commissioners and
expert panel members. Like the AIRC before it, most members of the FWC are drawn
from the industrial relations ‘club’, as former employer or trade-union representatives
or from the legal and (in very few cases) economics professions.
Commissioners are assigned industry panels, where they apply their conciliation
and arbitration powers to cases of both a collective and (increasingly) individual
nature. Cases are generally dealt with by individual commissioners, but appeals and
matters considered especially important are heard by full benches of three or
(sometimes) five commissioners.
Most of the FWC’s work involves dealing with disputes or applications brought
before it by unions, employers or individual workers. Among its other obligations, the
FWC is tasked with ‘promoting cooperative and productive workplace relations and
preventing disputes’ (s. 576(2)(aa)). The FWC oversees the award system, with
authority to vary awards as well as approve new ‘modern awards’. Once again, it has
the responsibility for determining minimum wage rates, and it has the power to approve
enterprise agreements, decide on unfair dismissal cases and make orders in relation to
the settlement of terms and conditions in enterprise agreements as well as awards. The
responsibilities of the FWC include:
adjusting minimum wage rates
reviewing and updating modern awards
policing industrial action and other tactics used in negotiating enterprise agreements
 helping to resolve bargaining disputes, including (in limited instances) through
compulsory arbitration
scrutinising and approving enterprise agreements
resolving disputes arising under awards, agreements or the National Employment
Standards (NES), where the parties agreed it should have that role
determining unfair dismissal claims (Stewart 2015, p. 10).
The powers of the FWC to settle industrial disputes over the content of awards or
enterprise agreements have been partially restored, but the FWC’s arbitration powers
remain quite constrained. The FWC can make ‘majority support orders’ in cases where
an employer refuses to negotiate an agreement with its workforce or the union
representatives, where the majority of employees support such an agreement. It can also
make ‘scope orders’ in cases where the FWC considers the bargaining process is
breaking down if it is not proceeding efficiently or fairly. The FWC can also make
‘good-faith bargaining orders’ in situations where the FWC considers that one of
more of the parties is not bargaining ‘in good faith’. Good-faith bargaining obliges each
party to:
attend, and participate in, meetings
disclose relevant information (apart from confidential or commercially sensitive
information)
respond in a timely fashion, and give genuine consideration, to proposals from other
representatives
‘recognise’ and bargain with other representatives
refrain from ‘capricious or unfair conduct that undermines freedom of association
or collective bargaining’ (Fair Work Act 2009, s. 228 (1)).

Good-faith bargaining orders

An order issued by the Fair Work Commission when one of the bargaining
participants is considered to be not genuinely seeking an outcome.

Freedom of association
The right of workers to belong to a trade union without fear of negative treatment
from their employer.

However, these obligations do not require any bargaining representatives to make

concessions or reach agreement on proposed terms. Parties are entitled to hold firm on
a fixed position or repeatedly reject offers to settle on certain terms. All that is required
is that the parties do more than simply go through the motions of bargaining. Despite the
obligation to bargain in good faith, failure to do so does not carry automatic
consequences. It can, however, lead to one of the parties seeking a bargaining order
from the FWC. If a party ignores such orders, the other party can ask the FWC to make
a workplace determination, ensuring no advantage is gained by the party flouting the
law.

Fair Work Divisions

The FW Act also established specialised Fair Work Divisions in both the Federal
Court of Australia and the Federal Circuit Court of Australia (formerly the Federal
Magistrates Court). Any proceedings for actions seeking remedies for breaches of
provisions of the Fair Work Act 2009 are heard in these courts. The Federal Court
generally hears appeals from the Federal Circuit Court, as well as from State courts
decisions arising under the FW Act.

The Fair Work Ombudsman

The Office of the Fair Work Ombudsman (FWO) replaced the previous Workplace
Ombudsman, and has responsibility for promoting compliance with awards, enterprise
agreements and other statutory obligations. The FWO operates field inspectors who
have powers to enter workplaces, investigate breaches and, where necessary, initiate
legal proceedings. It also has an educative and information role, providing advice on
award matters and other legal requirements to both employers and employees.

Fair Work Ombudsman (FWO)

An inspectorate headed by a statutory appointee whose role is to promote an
understanding of federal workplace laws, in particular the FW Act. It also has the
role of educating and providing advice about those laws, and enforcing compliance.

Modern awards
The FW Act requires the Fair Work Commission (FWC) to conduct a detailed review
of all awards every four years. As well, the FWC is required to conduct an annual
review of the minimum wage rates of modern awards. Whether reviewing, varying,
abolishing or creating modern awards, the FWC must ensure that modern awards and
the NES provide a ‘fair and relevant minimum safety net of terms and conditions’ (Fair
Work Act 2009, s. 134). In maintaining this safety net, it must consider a number of
factors, including:
 relative living standards and the needs of the low paid;
encouraging collective bargaining;
promoting social inclusion through increased workforce participation;
promoting flexible work practices and efficient and productive performance of
work;
likely impact on business, including on productivity, employment costs and the
regulatory burden;
ensuring a simple, easy to understand, stable and sustainable award system that
avoids unnecessary overlap of awards;
likely impact on employment growth, inflation and the sustainability, performance
and competitiveness of the national economy (Fair Work Act 2009, s. 134).
Modern awards are designed to work in tandem with the 10 NES (see Box 5.1) to
provide a safety net of minimum terms and conditions. The Fair Work Act (s. 139)
limits the content of modern awards to an additional ten matters, as outlined in Box 5.2.

Box 5.2 Ten additional minimum standards allowed in

modern awards
1. Minimum wages: Refers to skill-based classifications, pay within career
structures, incentive-based payments, bonuses, wages in general, and pay
arrangements for apprentices and trainees.
2. Types of work performed: Refers to permanent and casual work arrangements,
along with flexible work arrangements such as flexitime and job sharing.
3. Arrangements for when work is performed: Refers to hours of work, ordinary
hours of work, rostering, shift work, rest breaks and meal breaks.
4. Overtime rates for long hours: Refers to rates of pay for hours worked in excess
of ordinary hours of work, and, in the case of casuals, rates of pay for long hours
of work.
5. Penalty rates: Refers to employees working unsocial, irregular or unpredictable
hours or on weekends, public holidays and as shift workers.
6. Annualised wage or salary arrangements: Refers to the patterns of work in an
occupation, industry or enterprise as an alternative to the payment of penalty rates.
7. Allowances: Refers to the reimbursement of expenses, allowances for higher
duties, disability payments, and allowances for special circumstances (e.g. dirt
and dust, working in distant locations).
 8. Leave and leave loading: Refers to alternative arrangements in excess or
equivalent to the National Employment Standard and the rate of payment for
leave.
9. Superannuation: Refers to alternative arrangements in excess or equivalent to
legislated superannuation contributions.
10. Consultation: Refers to rights of representation and dispute-settling processes.
Source: Fair Work Act 2009, s. 139

Aside from these allowable matters, modern awards must include a flexibility term
to allow for the parties to negotiate individual arrangements to suit industry
circumstances. Such flexibility agreements must be agreed to in writing by both parties
and leave the employee better off overall than they would otherwise have been. The
employer is also prohibited from exerting undue influence or pressure on the employee
to agree to the agreement. All modern awards must also contain a dispute–settlement
procedure and a term specifying ordinary hours for each job classification and
employment type covered by the award. In keeping with the previous Work Choices
regime, it is prohibited for awards to include provisions around union rights of entry, as
well as long service leave.
Broadly speaking, modern awards, designed to provide a safety net, apply to all
workers and employers across most industries, the chief exception being ‘high income’
employees. The FW Act (s. 329) defines a ‘high income’ employee as one whose
annual earnings exceed a ‘high income threshold’, and who has accepted a formal
guarantee of those earnings. For 2014–15, the threshold figure was set at $133,000 and
indexed annually (s. 333; Regs reg 2.13). A pro-rata figure similarly applies to part-
time workers.
In 2015, there were 122 awards covering approximately 90 per cent of all
Australian employees across whole industries and occupations.

Enterprise bargaining
The Fair Work Act 2009 abolished AWAs, which were the centrepiece of the Work
Choices regime, and shifted the emphasis back onto collective enterprise bargaining.
Nevertheless, the FW Act makes no distinction between union and non–union enterprise
bargaining, simply requiring the terms to be approved by a majority of those subject to
such agreements. Specifically, the FW Act requires agreements to be approved by the
majority of those casting a vote in a formal ballot. While the FW Act promotes
collective enterprise bargaining, there is no requirement for union involvement, and
overtime, and it is likely that there will be a growth in agreements reached without any
union participation. In the absence of union involvement, ‘such agreements are rarely
the product of meaningful bargaining’ (Stewart, 2015: 138).
Enterprise agreements can be reached between a single employer and its employees
(a ‘single enterprise agreement’) or between two or more employers and their
employees (a ‘multi-enterprise agreement’). Multi-enterprise agreements were
prohibited under Work Choices, but the FW Act allows them in certain circumstances.
The FW Act allows multi-employer agreements in low-paid industries or industries that
provide limited opportunities for workers to gain the benefits of meaningful enterprise
bargaining. Typically, the FWC has approved multi-employer agreements in areas such
as aged-care, childcare, community services, hospitality, security and cleaning. Multi-
enterprise agreements are also allowed in cases where both employers and employees
agree in the absence of any coercion. There is, therefore, an intention to disallow
pattern bargaining resulting from industrial action, which is deemed to constitute
coercion.
Under Work Choices, there were limited ‘allowable matters’ that could be included
in enterprise agreements. But under the FW Act, items can include matters ‘ancillary or
supplementary’ to the NES, as well as ‘any matter pertaining to the employment
relationship’. Section 172(1) lists the following ‘permitted matters’:
a. Matters pertaining to the relations between each employer that will be covered by the agreement
and its employees
b. Matters pertaining to the relations between each employer and any unions covered by the
agreement
c. Deductions from wages for any purpose authorised by an employee covered by the agreement
d. Matters relating to how the agreement will operate. (Fair Work Act 2009, s. 172 (1).)

It is still possible for other matters, aside from those ‘pertaining to the employment
relationship’, to be included in enterprise agreements, but they will not be enforceable
at law.
In addition, four issues are mandatory inclusions in any enterprise agreement: a
specified duration (maximum of four years) and expiry date, a dispute-settlement
procedure, a provision for the making of individual flexibility arrangements, and
consultation requirements in the event of significant workplace change.
Final approval by the FWC requires enterprise agreements to pass the Better Off
Overall Test (BOOT). The BOOT requires the FWC to be satisfied that workers
covered by an enterprise agreement would be better off than if they were simply
covered by the relevant award. To satisfy the BOOT, modern awards must not contain
terms and conditions that offer less than those contained in the relevant National
Employment Standards; enterprise agreements must not contain terms and conditions
that are less than those contained in the relevant NES, as well as those contained in
applicable awards; and individual flexibility agreements must not contain terms and
conditions that are less than those contained in all of these instruments.
 Better off overall test (BOOT)
A test applied by the FWC before approving an award, enterprise agreement or
individual flexibility agreement to determine if workers covered by that award or
agreement would be better off than if they were simply covered by the relevant
award.

As long as a union represents one employee covered by an enterprise agreement,

the union can become a party to the agreement. Trade unions also have bargaining
rights, even where the majority of employees covered by the agreement are non-union.
Workers are entitled to have their union represent them in enterprise bargaining
negotiations, or they can appoint someone else of their choosing. Employers are also
entitled to appoint their own bargaining representative. Employers are also required to
provide written notice to their employees informing them of their right to be
represented in enterprise bargaining negotiations.

Union right of entry

The FW Act re-establishes many trade union rights of entry, which were lost under
previous legislation. Provided a union has a member at a workplace, they can enter that
workplace to investigate possible breaches of industrial legislation. In investigating
suspected breaches of industrial law, trade union officials are also entitled to review,
inspect and copy relevant employment records. Union officials are also entitled to meet
with and hold discussions with workers they are entitled to represent. Similarly, union
members and prospective union members have a right to meet with union officials at
their workplace during non-working hours; typically during lunch breaks or before or
after shifts. The FW Act prohibits any worker from being discriminated against for
participating or not participating in such meetings or discussions.
Union right-of-entry provisions also set out requirements for union conduct at
worksites, and requires that 24 hours’ notice be given to employers before a union visit.
This is a severe limitation on a union’s ability to catch unscrupulous employers, as it
can allow employers to ‘cook the books’ before a union visit. Traditionally, the
unfettered right of entry for union officials acted as a significant deterrent against
underpayment of wages and other terms and conditions, as union officials could arrive
unannounced and begin inspecting wages books at any time.

Workplace determinations
The FW Act continues to provide only limited conciliation and arbitration powers for
the FWC, compared with the traditional conciliation and compulsory arbitration
powers exercised by federal industrial tribunals throughout most of the twentieth
century. The FWC can exercise broad conciliation powers if requested by either party
to a dispute. However, as long as good faith bargaining has taken place, the FWC will
not impose a compulsory settlement, except in particular circumstances. The FWC can
impose a binding determination (i.e. arbitrate) where the industrial dispute threatens to
endanger life, personal safety, health or the welfare of the population, or if it considers
the dispute is threatening to cause significant damage to the economy or the economic
welfare of the parties to the dispute. Only in these limited cases can the FWC use its
power to enforce a legally binding workplace determination to resolve an industrial
dispute. Once made, a workplace determination has the same effect on the parties as an
enterprise agreement.
Similar to an enterprise agreement, a workplace determination must have a nominal
duration of no more than four years and it must pass the BOOT. Such a determination
must also include any terms previously agreed to by the parties in their enterprise
negotiations, while also considering a range of factors, including the interests of the
parties, the merits of each party’s case, possible improvements to productivity, the
conduct of the parties and how to assist the parties to continue bargaining in the future.
In some cases, the very intervention of the FWC to make a workplace determination has
led disputing parties to reach a compromise agreement, which has then formed the basis
of the determination (see CPSU v G4S Custodial Services 2014). However, more often
the FWC has to make its own arbitrated workplace determination, attempting to ‘arrive
at a conclusion that would be regarded as appropriate in the context of the bargaining
had the bargaining concluded successfully’ (see TWU v Qantas 2012 at [29]).

Unfair dismissal
The FWC is the institution responsible for hearing and dealing with unfair dismissal
claims. The FWA restored the rights of workers employed by small firms to have
access to such rights, which had been stripped off them under the previous Work
Choices regime. The FWA aims to protect good employees from being unfairly
dismissed, while allowing employers to take necessary steps to properly manage and,
where necessary, dismiss underperforming employees. In recognition of the widespread
lack of managerial skill and expertise, as well as the financial pressure, that
characterise many small firms, the FW Act only extends the right to claim unfair
dismissal to workers at firms with less than 15 employees, after they have worked there
for 12 months. For all other firms, the qualifying period is six months.
Section 385 of the FW Act explains that a person is deemed to have been unfairly
dismissed if the FWC considers their dismissal was harsh, unjust or unreasonable. To
determine this, the FWC is required to consider:
whether there was a ‘valid reason for the dismissal related to the [employee’s]
 capacity or conduct’
whether the employee was notified of that reason and given an opportunity to
respond
whether the employee received warnings about their unsatisfactory performance
whether the employer unreasonably prevented the employee from having a support
person with them in discussions relating to the dismissal
the degree to which the size of the business or the absence of a human resource
management specialist is likely to have impacted on the procedures for dismissing
the employee
any other matters the FWC considers relevant (Fair Work Act 2009, s. 385).
The FWC will not uphold a claim of unfair dismissal if the dismissal was the result
of a genuine redundancy related to downsizing or the legitimate restructuring of a firm’s
operations.
To assist small businesses comply with the FW Act, in June 2009 the government
introduced the Small Business Fair Dismissal Code. As long as a small business
complies with the code, they will be immune from any unfair dismissal claim (see Box
5.3).

Box 5.3 The Small Business Fair Dismissal Code

A dismissal is deemed fair if the employer has reasonable grounds to believe the
employee committed serious misconduct, such as fraud, theft, violence or serious
breaches of workplace health and safety requirements.
For other dismissals, an employee must be given a reason related to their conduct
or capacity, and prior to the dismissal they must have been given a warning to
improve their performance or risk dismissal. The employee must be given an
opportunity to respond to the warning and sufficient opportunity to improve their
performance.
Employees have the right to have someone present with them when discussions
around possible dismissal take place, but that person cannot be a lawyer acting in
a professional capacity.
In the event that an employee lodges an unfair dismissal claim with the FWC, the
small business employer is required to ‘provide evidence of compliance with the
code’.
Source: Small Business Fair Dismissal Code, declared 24 June 2009, pursuant to subsection 388(1) of the Fair
Work Act 2009
 Where an unfair dismissal claim is upheld, the FWC has the option of ordering the
employee be reinstated to their job (or to a position at an equivalent level), or else
ordering the employer to pay the former employee financial compensation. Because of
the usual loss of trust between parties over an unfair dismissal, the FWC rarely orders
reinstatement, instead awarding financial compensation of up to a maximum of six
months’ salary.

Transfer of business
In light of the massive growth of outsourcing and subcontracting of employment, the FW
Act contains a number of specific provisions relating to the transfer of employees,
particularly to situations involving outsourcing. The ‘transfer of business’ is defined in
s 311 of the FW Act. As such, a ‘transferring employee’ is one who has started work
for their new employer within three months of leaving their previous employer, and the
work they are doing for their new employer is substantially the same. There must also
be at least one other connection between the two employers from these four:
an arrangement between the old and new employer over the ownership or use of
assets related to the work in question
the outsourcing of work from the old to the new employer
the insourcing of work previously outsourced from the new to the old employer
both employers being associated entities (as per s 50AAA of the Corporations Act
2001). (Fair Work Act 2009, s. 311.)
The effect of this is that if a business employs somebody within three months of
them leaving their former employer and if there is some connection between their
employment and a movement of assets between two companies, or if the movement of
the employee involves some form of outsourcing, then the industrial award or
enterprise agreement that applied to that person’s employment with the original
employer becomes binding on the second employer.

General protections
For well over half a century, Australia has had freedom of association provisions in
industrial laws to protect workers from being discriminated against or victimised
because of their trade union membership or activities. More recently, conservative
governments have expanded these provisions to protect non-unionists from
discrimination and victimisation directed at them because of their non-union status or
unwillingness to participate in union actions. While the notion of freedom of
association is recognised internationally as a right of workers to form or join trade
unions, Australia is virtually alone in the world in expanding this notion to protect non-
unionists, thus creating a novel freedom of non-association.
The FW Act (Part 3-1) includes a range of General Protections, including freedom
of association provisions, covering the right to be represented by a union; the right to
participate in collective activities including bargaining or representing other workers
(e.g. fulfilling the role of a shop steward or union delegate); the right to the benefits of
an award or enterprise agreement; the right to make a complaint or inquiry regarding
terms and conditions of employment; and the right to non-discrimination for taking on
carer’s responsibilities. The key elements of the Fair Work Act 2009 are summarised in
Box 5.4.

Box 5.4 Key features of the Fair Work Act 2009

The Fair Work Act 2009 (FW Act), like the Work Choices Act 2005 before it,
relies on the ‘constitutional corporations’ powers of the Australian Constitution
for federal parliament to establish institutions and processes for the settlement of
awards and enterprise agreements, thus overriding state-based jurisdictions, apart
from unincorporated businesses and state public sector organisations.
The FW Act:
established 10 legislated National Employment Standards (NES).
allowed for the negotiation of a further ten minimum standards to be included
in awards
established a ‘one stop shop’, with the Fair Work Commission (FWC),
replacing the AIRC, the Australian Fair Pay Commission, the Office of the
Employment Advocate and the Workplace Authority
abolished AWAs and focused on promoting collective bargaining, with no
distinction between union or non-union enterprise agreements
reinstated many of the former powers and prerogatives of the federal industrial
relations tribunal over the processes of dispute settlement and agreement
making. The FWC has had restored (limited) compulsory conciliation and
arbitration powers to issue ‘majority support’ orders, ‘scope’ orders and
‘good faith bargaining’ orders
enabled employees earning $133,000 or more per annum to opt out of award
coverage
retained many of the previous restrictions on industrial action, such as the
requirement for secret ballots, but reinstates many rights of unions to enter
workplaces and represent workers in bargaining processes
introduced a series of measures to protect the wages and conditions of
 employees whose work is outsourced or where there has been a transfer of
business ownership
extended the operation of unfair dismissal laws to small firms.
Source: Fair Work Act 2009

BUILDING INDUSTRY LEGISLATION

Aside from the general provisions of the Fair Work Act 2009, there is another layer of
specific regulation governing the building industry. This industry, long dominated by
short-term contract employment, property developers constantly entering and exiting the
industry, large cash payments, subcontracting and pyramid subcontracting, have all
contributed to an industry sometimes more akin to a jungle. Whether because of this or
as a result of the nature of this industry, trade unionism in the building industry has
developed a reputation for being fierce and militant. Many employers and conservative
politicians have for many years labelled these unions as thugs and bullies. The
Construction Forestry Mining and Energy Union (CFMEU), as the strongest union, has
borne the brunt of these attacks. There is a history of de-registering building unions
every few decades, but over time they have always been able to rebuild, and re-
establish their strength and renew their militancy, much to the chagrin of employers and
conservative politicians.
The Building and Construction Industry Improvement Act 2005 was introduced by
the Howard Coalition Government. It contained a series of enforcement provisions,
including the imposition of fines of up to $110,000 per day for unprotected industrial
action. However, when the Gillard Labor Government came to power, they watered
down some of the perceived anti-union elements of this Act by introducing their own
Fair Work (Building Industry) Act 2012. Employment relations in this industry are now
solely regulated by provisions of the FW Act. Nevertheless, a specialist body, the Fair
Work Building Commission (FWBC) is tasked with the responsibility of enforcing
these provisions.
The FWBC has enormous powers of investigation, enabling it to compel witnesses
to provide otherwise confidential information and material, in its vigilant efforts to
clamp down on unprotected industrial action in the building and construction industry.
The FWBC has launched numerous legal proceedings against unions and individual
union officials, resulting in millions of dollars of fines. In one case alone, $1.3 million
in penalties was imposed as a result of a dispute at a project on Melbourne’s West Gate
Bridge (see Williams v AMWU 2010).
At the time of writing, the Turnbull Liberal Government was charting a course to
further strengthen the anti-union armoury of the FWBC.
Other legislation
As well as the specific industrial relations legislation examined above, Australia also
maintains other legislative instruments in the areas of discrimination and workplace
health and safety. These areas of law, where state-based jurisdictions continue to play a
dominant role despite federal legislation, are discussed in Chapters 10 and 11.

THE COMMON LAW

It is worth remembering that despite the complex array of ‘safety nets’, legislation and
other regulations, many people formally or informally enter into employment contracts
through common law contracts, as a simple agreement between an employer and
employee. Often, many employees are unaware of their legal entitlements and simply
accept the terms and conditions laid out by the employer. In some cases, even if they are
aware of their legal entitlements, they are reticent to speak up or take actions to uphold
their legal rights for fear of losing their job. This is especially a problem in areas of
low-paid employment, often dominated by newly arrived migrants from non-English-
speaking backgrounds.
From a legal point of view, it is important to understand that common law
employment contracts do not void the rights of workers to the terms and conditions in
awards. Awards continue to prevail, except where the common law contracts provide
more than the award.

LOOKING AHEAD
Almost three years after the Liberal and National Parties assumed power in federal
government at the end of 2013, the Turnbull-led Coalition has made only slight
amendments to the FW Act, no doubt mindful of the disastrous political consequences
of its previous Work Choices reforms. Nevertheless, in 2015 there were signs that
significant employment relations reforms were once again on the horizon, with the
federal government tasking the Productivity Commission to undertake a public inquiry
into workplace relations, coupled with the establishment of a Royal Commission—
headed by former Justice of the High Court, Dyson Heydon—inquiring into allegations
of trade union corruption and maladministration. On 28 December 2015, the Royal
Commission released its final report, recommending a series of criminal and civil
proceedings be launched against a number of current and former trade union officials. It
also recommended legislative reforms, particularly aimed at constraining how and for
what purpose union funds can be disbursed, as well as a strengthening of surveillance
and regulation of unions in the building industry.
Other than reforms aimed at limiting trade union activities, such as picketing, there
seems to be little appetite in the government for another round of sweeping industrial
relations reforms, given the resounding rejection of them at the 2007 federal election.

SUMMARY
This chapter began by examining the nature of the state by distinguishing four distinct
and influential theories: pluralism, neoliberalism, corporatism and Marxism. Each was
discussed in general terms and then in terms of their perspectives on the role of the state
in relation to employment relations. Theories of pluralism, neoliberalism and
corporatism have, at various times, all been influential on the state’s involvement in
Australian employment relations, with the Marxist perspective providing a critical
understanding of the underlying role of class interests in determining the role of the
state in this important arena.
Focusing on Australia, this chapter also provided a detailed discussion of the
various sources of law: common law, statute law and constitutional law. Adopting an
historical perspective, the chapter explained how the law has come to provide both
substantive and procedural laws for the conduct of employment relations, and how this
developed as society shifted from one relying on master–servant relationships—based
on status and obligations—to a society based on contract. Despite this change, modern
employment contracts retain some of the features of the old master–servant
relationships, as they are prerogative contracts that uphold the right of the employer to
direct the employee, who is in a legally subordinate position.
Finally, the chapter examined the essential features of the current Fair Work Act
2009, in part, by comparing it to the previous Work Choices regime. The Fair Work Act
is judged to have restored some balance to the system by providing additional
protections for workers’ wages and conditions and by re-establishing some lost rights
of trade unions.
Overall, the current system remains based on an extensive award system and a
generic set of employment safety-net provisions, called National Employment
Standards (NES). While the current system makes no explicit allowance for individual
contracts—being premised on enterprise bargaining—the inclusion of flexibility
clauses opens the door for individualised arrangements being utilised at workplaces.
The chapter closed with some discussion of the likelihood of further reforms to
Australia’s employment relations system, in light of the Abbott/Turnbull Coalition
Government’s Royal Commission into alleged trade union corruption and
maladministration, as well as the Productivity Commission’s inquiry into workplace
relations. In light of the massive community backlash against the previous conservative
attempt at sweeping reforms to Australia’s employment relations system, via the Work
Choices Act 2005, it is considered unlikely that such radical reforms will be attempted
again, in the short term at least, although some tighter regulation of trade unions is
emerging as a possible area of reform.

REVIEW QUESTIONS
1. What is meant by Weber’s 1919 comment that the state consists of the
governmental institutions and processes that have ‘a monopoly on the legitimate
use of force’?
2. Which of the theories of the state best describes the role of the state in Australia?
Why?
3. What was so radical about Work Choices? In what ways did it seek to reduce the
power and influence of trade unions?
4. How does the state establish procedural rules for the conduct of employment
relations?
5. How does the state establish substantive rules for employment relations?
6. How do the common law and statute law impact on employment relations?
7. What is s 51 (xxxv) of the Australian Constitution, and how was it relied upon for
regulating industrial relations for almost 100 years?
8. What is meant by conciliation and arbitration?
9. What are awards?
10. How does the federalist nature of the Australian Constitution affect the regulation
of employment relations?

Visit Oxford Ascend for
further revision material

CASE STUDY CFMEU TO PAY UP

5.1 TO $9M TO SETTLE
BORAL ACTION
The CFMEU construction and general division Victorian branch will pay up to $9
million in damages and costs to Boral and has given an undertaking that it won’t
renew its blackban on the company’s concrete supplies, under a settlement deal
announced today.
 The settlement deed provides that the union will pay $4m including GST in
damages to Boral entities, plus costs (to be finalised in court) that, according to
the company, will raise the total payment by up to a further $5m.
The deal settles the company’s separate damages and contempt cases against
the union.
As part of the deal, the union has entered what the company describes as ‘a
rigorous, legally binding regime of controls prohibiting interference with Boral’s
business’ for three years. If the union breaches the deal, it is bound to pay
penalties of $50,000 to $200,000 on each occasion, with those amounts doubled if
the CFMEU commits three breaches in a year.
Boral chief executive and managing director Mike Kane said the settlement
deed meant the company ‘will now be protected against illegal interference in
serving our customers’.
But the Victorian branch claimed the settlement constituted ‘a humiliation for
Mike Kane’.
‘Boral has claimed losses of over $23 million dollars, yet the matter has been
settled for $4 million’.
‘Mr Kane’s ideological campaign against the union has been damaging Boral’s
reputation for that entire time’, the union said in a statement this afternoon.
Employment Minister Eric Abetz in a statement issued this afternoon
welcomed the ‘record settlement’ and said it confirmed that the union’s Victorian
leadership team of John Setka and Shaun Reardon had ‘gravely let down’ members
by costing them more than $10 million in damages, court penalties and legal costs
over the Grocon dispute.
The deed also requires the union to issue a press release and public statement
on its website within seven days. The union is still facing an ACCC action against
it for the secondary boycott case that is going to trial next year.
Source: Workplace Express (2015)
The CFMEU’s dispute with Boral occurred as a result of the union’s attempts to
prevent the company from supplying concrete to Grocon, another company the
union was in dispute with over safety issues. Such secondary boycotts are illegal.

Questions
1. What arm of the state was involved in this dispute?
2. Can industrial disputes be solved by the imposition of penalties?
3. Should trade unions be able to take industrial action against one company,
to assist their campaign against another company?
CASE STUDY THE ROLE OF THE
5.2 STATE IN THE 1998
WATERFRONT
DISPUTE
In 1996, the newly elected Howard Coalition Government made clear its intention
to raise industry productivity by introducing Australian Workplace Agreements
(AWAs), to encourage employers to engage workers on individual contracts as a
means of reducing union power and influence. The government made it a priority
to use its new industrial relations laws to tackle the alleged restrictive work
practices imposed on Australia’s waterfront by the powerful Maritime Union of
Australia (MUA).
The Minister for Industrial Relations, Peter Reith, made clear the
government’s intention to smash the MUA’s ‘closed shop’ (effective compulsory
unionism). At that time close to 100 per cent of waterside workers in the country
were members of the MUA. Around 90 per cent of container traffic on Australia’s
wharves was dominated by a duopoly, including Patrick Stevedores (Patricks),
headed by CEO Chris Corrigan. During 1997, Reith and Corrigan met to plan an
industrial relations shake-up of the waterfront industry.
In December 1997, a new stevedoring company, Fynwest Pty Ltd, began
recruiting current and former military personnel from the Special Air Service
(SAS), the 3rd Battalion Royal Australian Regiment (3RAR) and the 2nd
Commando Regiment Australia. These mercenaries (as they became known), were
recruited and flown to the Middle East port of Dubai, where they were to undergo
training as stevedores. When the MUA became aware of this plan to train ‘strike-
breakers’ offshore, they drew international media attention to this ‘secret’ plan; the
threat of international trade union action led the government of Dubai to cancel the
visas of the Fynwest employees, forcing them to return to Australia under the glare
of intense media scrutiny.
The MUA claimed at the time that Patricks, in collusion with the Howard
Government, was behind this attempt to train a mercenary group of strike-breakers
offshore as part of a strategy to smash the MUA. What the MUA didn’t know was
that in late 1997 Patricks had secretly restructured its organisation, so that its
workforce—which was operating on wharves across Australia—was now
employed by a series of two-dollar shelf companies with no assets behind them,
other than contracts.
In February 1998, waterside workers arrived at Patricks No. 5 Webb Dock in
Melbourne ready to start their shift, only to find a sign instructing them that they no
longer had a job, as their employer (one of Patricks’ shelf companies) had lost its
contract to a new entrant, which had its own workforce. Not surprisingly, this new
entrant, P&C Stevedores—funded by a militant employers’ association, the
National Farmers Federation (NFF)—had many of the Dubai ‘mercenaries’ on its
payroll. The attempt to replace the unionised workforce with non-unionists was
now in full swing. Soon Patricks’ CEO Corrigan made it clear that the company
intended to use the training of new stevedores at Webb Dock to employ non-
unionists on other Australian wharves. Prime Minister Howard and Industrial
Relations Minister Reith congratulated Patricks on their initiative, and supported
the employer’s attempt to break the power of the MUA. Over the following weeks,
the MUA responded by maintaining a 24-hour picket line (union protest) outside
the entrance to Webb Dock and conducted a series of short unannounced strikes at
various ports around the country.
On 8 April 1998, armed and masked security guards wearing balaclavas
entered all of Patricks’ docks throughout Australia at midnight, and proceeded to
drag workers from cranes and off the wharves. In all, around 2000 waterside
workers, all members of the MUA, were locked out.
The response of the Australian union movement, and wider sections of the
community, was to set up ‘community pickets’ at the entrance to all Patricks’
operated wharves across the country to prevent the introduction of strike-breaking
‘mercenaries’. Thousands of people manned these protests, and they refused to
leave even when faced with court orders and the direct intervention of police. In
Melbourne one night, the then Victorian Liberal Premier, Jeff Kennett, and his
Police Minister, announced that police would clear the docks and remove the
picketers. That night, around 500 police were brought in from around the state,
including mounted police, and they marched to the dock in an attempt to forcibly
remove the union picketers and their supporters. When they got to the dock they
faced several thousand determined picketers who all linked arms and declared
they would not move. A stand off ensued for several hours, with the unionists
beginning to tire, until hundreds of construction workers marched from the city,
wedging themselves immediately behind the police. Being overwhelmed by the
numbers of unionists in front and behind them, the police decided to retreat from
the wharves altogether. It was also apparent, from the comments of several police
that night, that many of them were unhappy being used to help smash a trade union.
At that time, the Police Officers Association themselves were in the middle of a
protracted enterprise bargaining dispute with the Victorian Government. At any
rate, many unionists would later claim that this was the moment they won the
dispute.
The MUA, as well as maintaining a disciplined industrial and community
campaign, then initiated legal action against Corrigan, the head of the NFF and
Industrial Relations Minister Reith, alleging that they were all involved in a
criminal conspiracy to breach the ‘freedom of association’ provisions (the legal
right to belong to a union) of the federal government’s own Workplace Relations
Act, by secretly devising a strategy to sack an entire workforce because they were
members of a trade union, the MUA.
Justice North from the Federal Court of Australia heard the initial case and
found that there was prima facie case that such an illegal conspiracy had occurred,
and so he ordered Patricks to immediately reinstate its unionised workforce. The
federal government encouraged Corrigan to appeal the decision to the Full Federal
Court of Australia, who then upheld Justice North’s original decision. Still not
willing to admit fault or defeat, the decision of the Full Federal Court was
appealed to the High Court, who held a special sitting because of the damage
being done to the Australian economy by the dispute. The High Court upheld the
previous decision, but also ordered the MUA to enter into negotiations with
Patricks to enable a restructure, including the offering of voluntary redundancies to
reduce total numbers on Australia’s wharves.
It was only during these court proceedings, that Patricks made it public that, as
of late 1997, the workers had not in fact been employed by Patricks, but rather by
a number of shelf companies with no assets. Patricks told the court that they would
like to comply with the court’s orders, but these companies had no assets and were
thus unable to re-employ anyone. The MUA then announced that its members
would be willing to go back to work for nothing, with Patricks able to owe their
workers their wages. Furthermore, if necessary, the union would lend Patricks
around 5 million dollars to get their operations back working.
The final outcome led to the complete reinstatement of all the MUA members
and the dismissal of the ‘mercenaries’. Worker numbers on Australia’s wharves
were reduced by about 30–40 per cent through voluntary redundancies, leading to
a significant increase in labour productivity.

Questions
1. What parts of the state were involved in this dispute?
2. Did the state intervene in this dispute on the side of the employers or of
the union?
3. How, in the face of a united employer and government campaign against
 them, did the MUA win the dispute?

FURTHER READING
Cooper, R., & Ellem, B. (2008). The neoliberal state, trade unions and collective
bargaining in Australia. British Journal of Industrial Relations, 46(3), 532–
54.
Forsyth, A. (2015). Major court and tribunal decisions in 2014. Journal of
Industrial Relations, 57(June), 422–39.
Forsyth, A., & Stewart A. (Eds.). Fair work: The new workplace laws and the Work
Choices legacy. Sydney: The Federation Press.
Keller, B. (1991). The role of the state as a corporate actor in industrial relations
systems. In Adams, R. (Ed.), Comparative industrial relations: Contemporary
research and theory. London: Harper Collins.
Treuren, G. (2000). The concept of the state in Australian industrial relations theory.
Labour & Industry, 11(2), 75–98.

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CASES
CPSU v G4S Custodial Services Pty Ltd [2014] FWCFB 9044: 8.25
Hollis v Vabu Pty Ltd (2001). 207 CLR 21: 3.7, 3.11, 3.13
Stevens v Bodribb Sawmilling Co Pty Ltd (1986). 160 CLR 16: 3.7
TWU v Qantas Airways Ltd (2012) 225 IR 13: 8.18, 8.25
Williams v AMWU (2010) 196 IR 365: 18.17
Zuijs v Wirth Bros (1955) 93 CLR 561: 3.8Case study 1.1
 Chapter Six
MAKING AGREEMENTS

INTRODUCTION
For much of the twentieth century, there was a tacit understanding across the political
spectrum that the regulation of employment was necessary to ensure the ongoing
welfare of employees and profitability of business. To this end, both sides of politics at
both the state and federal levels supported the establishment and maintenance of
industrial tribunals, conferring them with the legal power to regulate the procedures of
agreement-making and the substantive outcomes they produced in setting the terms and
conditions of employment (McIntyre 1989). Historically, this system of workplace
regulation represented a far more interventionist role by the government than that of
governments in most other comparable countries (Owens, Riley & Murray 2011). This
is still the case. Indeed, the methods and laws governing agreement-making could be
said to lay at the core of the Australian system of employment relations, as
understanding the interplay between the two is central to any understanding of how the
system operates.
The first section of this chapter sets out the concepts of agreement-making, referring
to a range of dimensions by which it can be analysed and assessed. Having an
understanding of these dimensions will allow for analysis and assessment to be applied
to agreement-making, not only in Australia, but to any system that governs employment
relationships through organised bargaining that led to the settlement of the terms and
conditions of employment. These concepts are followed by a brief review of the
different types of agreements that have operated over the history of Australian industrial
relations, aimed at providing some historical context, with reference to how the
Australian system of agreement-making has transited from centralised to decentralised
mode of bargaining. With these concepts and history in play, the chapter then looks at
the operation of agreement-making under the current Fair Work Act 2009 (FW Act).
Here the types of agreements enabled by the Act in the form of modern awards and
enterprise agreements are described. Also described are their various types, the type of
content they are legally able to include and required to exclude, what matters might be
bargained over, as well as the legislative requirements that need to be adhered to when
making agreements and taking industrial action. All of this is aimed at providing
students with a practical understanding of the legal rights and obligations that need to
be met during the processes of agreement-making, and the interpretation and operation
of settled agreements once they are concluded. The chapter concludes by looking at
some major contemporary issues associated with agreement-making under the present
regulatory regime.

Fair Work Act 2009

The principal Commonwealth law governing Australian workplace relations.

CONCEPTS OF AGREEMENT-MAKING
Agreement-making refers to processes leading to the settlement of the terms and
conditions contained in contracts, whether or not they are legally enforceable. It
presupposes a willingness and ability of the parties to enter into a bargaining
relationship over such matters. It also presupposes the mutual recognition of others
engaged in the bargaining process, as well as an acceptance by the parties to be bound
by any settlements reached. Should any of these conditions be missing, it is difficult to
conceive of an agreed settlement being reached.

Agreement-making
A process leading to the settlement of the terms and conditions of employment
contained in labour contracts, whether they be legally enforceable or otherwise.

Agreement-making and the resultant agreements in a workplace context are built on

these suppositions and use of terminology. There are a range of features that need to be
noted as a means of making sense of the processes involved in agreement-making and
the types of individual and collective outcomes they produce (see Clegg 1976; Sisson
1987; Bray & Waring 1998). The first is that the outcomes entail both procedural and
substantive elements. The procedural elements, as the name suggests, refer to the rules
or conventions that govern the processes of bargaining that led to the settlement of an
agreement. These rules or conventions are the agreement-making feature that encompass
where and when negotiations are to take place, what actions are considered to be
legitimate and illegitimate in bringing pressure to bear on the bargaining process, and
who are to be regarded as legitimate and illegitimate participants in negotiations, as
well as what issues can and cannot be negotiated. The substantive elements refer to the
outcomes of negotiation, represented in the final content contained in an individual
agreement or a collective agreement. The content can range over anything related to
the employment relationship; for example, who is covered by the agreement and how
long the agreement will operate, what tasks are to be performed and by whom, what
hours are to be worked and what rates of pay will apply, and much else besides.
Overall, the substantive elements set out the agreed entitlements, rights and obligations
that are to govern the relationship between the signatory parties (Dunlop 1958).

Individual agreement
A labour contract containing the terms and conditions of employment agreed between
an employer and an individual employee; it can be an individual contract registered
by a federal or state industrial tribunal or authority, a common law contract, or an
over-award individual agreement.

Collective agreement
A labour contract containing the terms and conditions of employment agreed between
an employer, a group of employers, or one or more of their representatives, and a
group of employees, or one or more of their representatives.

Agreement-making can be conducted between an individual employee and their

employing organisation, or it can be conducted between an organisation and a number
of employees acting collectively. Individual agreement-making—or ‘individual
bargaining’ as it is often known—simply involves a single employee negotiating the
conditions of employment with the owner or representative of the employing
organisation. The substantive content agreed upon apply only to themselves and are
contained in individual agreements (Lewin 2014). Where at least one of the parties
consists of two or more individuals acting in combination, any negotiations represent
processes of collective agreement-making, or what is known as ‘collective bargaining’,
the settlements of which are concluded in collective agreements. Collective
agreement-making attracts greater complexity as it can involve not only a group of
employees within a single workplace (sometimes referred to as ‘single-employer
agreements’), but also others employed in similar occupations in other firms or in
similar firms operating in the same industry (or ‘multi-employer agreements’). It can
even involve outside participants in the form of unions and employer associations, as
well as other bodies called in to assist in the agreement-making process or mediate
disputes between the parties (Jackson 2005; Huiskamp 1989; Doellgast & Benassi
2014).

Individual agreement-making
A process involving a single employee negotiating the terms and conditions of
employment with the owner or representative of the employing organisation (often
 referred to as ‘individual bargaining’). The number of participants and signatories
involved in making and settling an agreement can also have different attributes.

Collective agreement-making
A process involving a group of employees (or their representatives) negotiating
terms and conditions of employment with an employer, a group of employers or a
representative of employers (often referred to as ‘collective bargaining’).

This prefaces another feature of agreement-making: the level at which the

procedures and substantive outcomes are settled and applied. It is common to think of
this in terms of a continuum of possibilities that span a centralised and decentralised
divide (see the following pages). ‘Centralised agreement-making’, or centralised
bargaining, represents one end of this continuum, in which the procedures allow for the
representatives of employers and employees to negotiate the substantive conditions of
employment that will apply to a number of firms, whether the employees concerned are
working in a common occupation or employed within a particular industry. Centralised
agreement-making also often involves outside parties in the form of peak bodies
representing the interests of employers and employees, as well as the state, which
either directly or indirectly through legally empowered institutions coordinates or
regulates the agreement-making process and the types of outcomes reached (Soskice
1990; Pontusson & Swenson 1996). ‘Decentralised agreement-making’, or
decentralised bargaining, represents the other end of the continuum, in which employees
negotiate their working conditions directly with their employing organisations, either
collectively, or, in its most extreme manifestation, individually (Hall & Gingerich
2004).
Still another feature is the scope of matters to be bargained over. Where this is a
‘wide scope’, there will typically be fewer legal or other types of restrictions placed
on what can and cannot be bargained over and included in the conditions of
employment. At its most extreme, the scope can entail any issue pertaining to the
employment relationship, either directly or indirectly, with little in the way of
restrictions being placed on the bargaining agenda that might challenge the full array of
managerial prerogatives. Conversely, a ‘narrow scope’ will be evidenced in a large
number of legal or other limitations placed on what can and cannot be negotiated. Such
limitations, for example, may legally disallow bargaining over certain union activities
in the workplace, or they may come in the form of employers simply refusing to discuss
issues that seem likely to trammel their ability to organise and allocate work as they see
fit (Bray & Waring 1998; Wooden 2000).
The degree of formalisation is another feature of agreements. This refers to the
recognition accorded the negotiating parties, as well as the institutionalisation that mark
the procedural and substantive elements of agreements. Such formalisation can operate
through a recognition agreement between the parties within the workplace over the
rules of the bargaining relationship, or it can occur through a statutory body established
to regulate the procedural and substantive aspects of agreements. When operating under
a statutory body, a ‘high degree of formalisation’ will be evidenced by the strict
governance and legal recognition of agreements, as well as a high degree of policing
and penalties being applied for non-compliance. Conversely, a ‘low degree of
formalisation’ will be apparent when the role of the law is negligible, or where
industrial bargaining and agreement outcomes are largely unregulated (Ahlstrand 1990,
p. 65, referring to Flanders, 1975).
One last feature is the ‘coverage’ of an agreement, i.e. the proportion of the entirety
of a nominated workforce for whom the terms and conditions of an agreement apply
(Traxler 1994). The coverage can refer to the agreements that apply to the non-
managerial workforce of the nation, an entire industry or within an individual firm.
When applied to a nation, it refers to the percentage of employees who have their
workplace circumstances governed by agreements, relative to all employees who may
potentially be governed by the same agreements. When applied to a firm or an industry,
the same principle applies (Huiskamp 1989). The coverage may also be applied to
ascertain the number of employees covered by collective or individual agreements.

TYPES OF AGREEMENT-MAKING
In Australia, contracts of employment concluded under the agreement-making processes
of various federal and state industrial legislation, as well as under common law, have
historically taken a variety of forms. The most common have been collective
agreements represented in awards and enterprise agreements (see Australian Industrial
Relations Commission 2006). Of the two, industrial awards have had the longer history,
dating back to the early years of the twentieth century. Industrial awards were initially
established to settle on a living wage for employees, a condition that was greatly
expanded upon over the course of the twentieth century to include a prescribed standard
working week, annual leave entitlements, penalty rates, redundancy provisions, various
allowances, and much else besides. The general claim and mandate of awards over
their history was the establishment of agreed minimum conditions for employees
engaged in similar industries or occupations. These minimums were periodically
adjusted and advanced upon under the administrative purview of legislatively
empowered state and federal industrial tribunals, with changes in their content
occurring as a result of bargaining between organisations, both public and private, and
trade unions representing the workers they employed (Isaac & Macintyre, 2004).
Enterprise agreements were the second instrument deployed in this period; as the
name suggests, these agreements were concluded at the level of the enterprise between
individual firms and those in their employ. Enterprise agreements only came into the
legislative light with the passing of the Industrial Relations Reform Act 1993. Prior to
this Act, a version of enterprise agreements existed in the form of over-award
agreements that operated outside the award system in union–dominated industries. Such
agreements were informal arrangements negotiated between an employer—or a group
of employers in a single industry or employing common occupational group—and a
union; because they were outside the award system, they were not legally recognised,
nor did they impose any legally enforceable rights and duties on the parties. Another
version existed in the enterprise agreements that operated in firms having operations in
more than one state. In such cases, the relevant constitutional provision that empowered
the federal industrial tribunal to settle disputes across state borders applied (s. 51xxx:
the ‘arbitration and conciliation’ powers), and so the force of law was given to what
were referred to at the time as ‘arbitrated enterprise agreements’. There was also the
possibility of gaining legal recognition within the arbitral system when settlements
were reached between the parties in form of ‘consent agreements’ (Stewart 2008: 150–
3). These early exceptions differ from their modern-day counterparts, which operate
under different constitutional provisions (ss. 51xx and others—the ‘constitutional
corporations’ powers) that give the federal industrial tribunal (the Fair Work
Commission) the power to approve agreements struck at the level of the enterprise,
with or without union involvement. Another difference lies in the importance of
enterprise agreements. Whereas they were either not legally recognised or ancillary to
the award system prior to the 1990s, they have now become central to the application
and expectations of the current FW Act.

Enterprise agreement
Agreements at individual enterprises that typically set employment conditions for
groups of workers.

There have also been individual agreements supported by common law and
legislation. These types of agreement govern the conditions of employment for
individual employees engaged in a single firm. Common law agreements have the
longest history of all agreement types, dating back to the establishment of English
contract law during the colonial period of Australian settlement (Quinlan 1989). They
still cover a sizable proportion of the Australian workforce. Common law agreements
are negotiated and settled outside the legislative system of workplace regulation,
gaining their legal status through civil law and their enforceability through the civil
courts. They are settled without union involvement and typically apply to senior
managers and others who fall outside the regulatory framework of industrial legislation.
The important exception was Australian workplace agreements (AWAs). AWAs were
individual agreements initially enabled by the Workplace Relations Act 1996, which
became more used under its amending instrument in the Workplace Relations Reform
(Work Choices) Act 2005 (Barneveld 2006: 165–191). AWAs have been phased out
under the present FW Act, although a variation of sorts exists under the ‘flexibility
provisions’ that are legislatively required to be included in current enterprise
agreements.
You might regard these different types of agreements as sitting along a centralised–
decentralised bargaining continuum, as mentioned earlier. Agreement-making in
relation to awards is an example of a regulated or centralised system of collective
bargaining, one that displays relatively high levels of intervention and involvement by
outside parties. Industrial tribunals, unions and employer associations are often integral
to the agreement-making process and the settlement of collective agreements in such a
system. However, agreement-making in relation to common law contracts is an example
of a highly deregulated or decentralised system, with the only reference to outside
parties being their interpretation and enforcement by the civil courts. Registered
enterprise agreements, unregistered over-award agreements and AWAs stand between
these two extremes, their ordering being determined by the parties involved in
agreement-making (collective or individual) and the extent of involvement by outside
parties, such as industrial organisations and tribunals.

FIGURE Centralised and decentralised bargaining and agreement-making

6.1

There is a long history of debate between unions and employers as to what level of
bargaining should take place, with much depending on where each side believes it can
exert the most power. Unions have typically endorsed centralised bargaining, although
the more powerful unions have at times been willing to engage in decentralised
bargaining. By bargaining centrally, whether nationally over wage increases or at
industry level, unions were able to cover more employees and exert more influence
over social and labour policies, as well as over industry–wide employment practices.
There were also logistical benefits to spreading the benefits of unionism across the
labour force in the most efficient and cost effective manner (see Ellem, Markey &
Shields 2004; Kelty 2011). Employers, on the other hand, have long been wedded to
decentralised bargaining at the workplace level, and preferably with employees on an
individual basis, although those employers confronting well-organised, militant unions
have for practical reasons been less enamoured with this preference, even if their
ideological predilections may have moved them in this direction. Decentralised
bargaining—for those employers not confronting such circumstances—meant
agreements could be reached that better served the particular interests of individual
organisations. It also allowed employers to manage their operations as they saw fit,
providing them with the opportunity to reach agreements with less bureaucracy, less
cost, and more flexibility in the employment, allocation and remuneration of labour
(Business Council of Australia 1989; Loundes et al. 2003: 1–25).
Over the course of its history, the Australian system of industrial relations has seen
a transition from a centralised system to a more decentralised system. The formal
introduction of enterprise bargaining in the early 1990s saw the number of industry
awards and those covered by this form of labour contract decline. This has been the
result of a series of legislative moves allowing for the legal enforcement of enterprise
agreements, as well as ongoing processes of award rationalisation. These moves have
been facilitated by recognition from both sides of politics—as well as by unions—that
centralised agreement-making cannot produce the types of employment outcomes and
workplace efficiencies necessary for organisations to operate successfully in an
increasingly dynamic global economy (Peetz 2012: 239–41). To give some sense of this
change, in 1987 there were about 1200 awards, of which 740 were arbitrated single-
employer awards (or enterprise agreements). By 2000, the number of industry awards
had increased to around 2300, while the number of single-employer awards had grown
to around 1700. However, the increase in industry awards was the result of the
fragmentation of pre-existing conglomerate awards (or so-called ‘parent awards’) into
new instruments that covered more limited parts of industrial sectors (Plowman 2004:
267). By the eve of the Fair Work Act 2009, there were about 1500 awards (ABS
2012). Under the Act, the Fair Work Commission has been given the mandate to
periodically review the award system with the aim of ongoing simplification of the
regulatory regime governing work (s. 156). This has seen many common provisions
contained in older, more diverse industry awards—as well as transitional provisions
contained in state and territory awards—folded into new so-called ‘modern awards’,
which now number just 122. The number of enterprise agreements over this period has
dramatically increased under this transition, with almost 20,000 agreements presently
covering about one-quarter of the non–managerial workforce (Gahan & Pekarek 2014).
 Modern award
A legally enforceable labour contract containing minimum terms and conditions of
employment for employees. Recognised in the Fair Work Act 2009, it covers
employees engaged in an occupation or industry.

AWARDS
Awards, as we have discussed, are registered and enforceable agreements that provide
a safety net of minimum pay rates and employment conditions. In their modern guise,
conditions of employment contained in awards are required to include the legislated
minimums set out in the National Employment Standards (NES), as well as ancillary or
supplementary conditions negotiated by trade unions (FW Act, ss. 136, 158). These
types of awards apply to all national system employees falling within the legal
province of the Fair Work Act 2009, and they cover employees across entire industries
or engaged in specific occupations (Owen et al. 2011: 335). As such, awards are not
confined to single workplaces in the manner of enterprise agreements, but act as a
benchmark of minimum terms and conditions against which those contained in
enterprise agreements are assessed by the Fair Work Commission to gain approval
(CCH Australia, 2011: 87). The relationship between the two types of instruments is
such that if an organisation has a registered agreement, its content will apply to all the
relevant employees it covers. If, however, an organisation has a registered enterprise
agreement, the conditions set out in the agreement supersede those in an applicable
award, and replace the award as the operable instrument. And for the sake of
completion, if an organisation has neither a registered award nor enterprise agreement,
then the conditions of employment are established through legislation alone.

Safety net
A set of minimum terms and conditions that ensure low-paid employees are not
exploited in their pay or workplace treatment.

National system employee

An employee falling under federal industrial legislation because they are employed
by a constitutional corporation, a federal public authority, a state-referred public
authority, a state-referred private employer, or a territory employer.

Registered agreement
 A labour contract in the form of a modern award, enterprise agreement or individual
flexibility agreement registered with state or federal industrial tribunals and
agencies.

Coverage and types

This chapter is primarily concerned with the federal system of agreement-making, but it
is worth acknowledging that there are still state-based awards that cover state public-
sector employees. The only exception relates to the coverage of Victorian public-sector
employees, as a consequence of that state conferring its legislative prerogatives over
industrial relations to the federal jurisdiction.
Turning to modern awards under the present federal system, there are presently 122
awards covering national system employees. The most recent ABS figures for the May
quarter of 2014 show that federal system employees paid under award arrangements
represented 18.8 per cent of Australian non-managerial employees. Of these, 44.6 per
cent were casual, 37 per cent were full-time, and 18.4 per cent were part-time.
Community and personal service workers made up the largest proportion of employees
paid by awards (21.2 per cent), followed by sales workers (20.7 per cent). The
industry coverage of awards was highest in the retail sector (17.2 per cent), followed
by accommodation and food services industries (17 per cent), and health care and
social assistance providers (15.1 per cent). The coverage of employees paid by awards
in the private sector (21 per cent) was higher than that of the public sector (9.5 per
cent) (ABS 2015). It should be noted that the coverage of modern awards is most
prominent in those workplaces where employees lack bargaining power or hold
precarious positions of employment. For example, casual employees working in the
retail sector and food and accommodation industries tend to work in small firms and
have a tenuous attachment to the labour market, both of which make them particularly
difficult to organise for the purposes of bargaining. In workplaces with fixed, regular
employment, it is more typical to find enterprise agreements governing conditions of
work.

Content
The Fair Work Commission (FWC) is charged with the responsibility to ensure, among
other things, that modern awards ‘provide a fair and relevant minimum safety net of
terms and conditions’ (FW Act, s. 134). Under the FW Act, the FWC is responsible for
ensuring the content of modern awards is aligned with this objective. The FW Act
requires the awards to include or refer to the National Employment Standards (NES);
the standards themselves can be varied or added to provided any changes augment or
advance the conditions or entitlements they entail. For example, the FW Act allows
employers to require an employee to work beyond the ‘38 ordinary working hours’
entitlement of the NES, as long as the request to do so is ‘reasonable’. It also allows
for the ordinary hours entitlement to be averaged up to a period of six months.
Moreover not all NES entitlements are applicable to all categories of employees; for
example, the family flexibility entitlement is not available to short-term casual
employees. The content of modern awards are thus capable of displaying a certain
limited flexibility that allows them to be tailored to suit the industries and occupations
they cover. This flexibility also extends to variations in how the methods by which the
regulatory expectations of certain NES are to be made operable (Owens 2011: 327–
330, 340).

Fair Work Commission

An independent federal industrial tribunal established under the Fair Work Act 2009.
It has the role of settling industrial disputes, ratifying awards, enterprise agreements
and individual flexibility agreements.

Ordinary hours
Standard or agreed hours of work, paid for at the ‘ordinary’ time rate. Under the
Fair Work Act 2009, the standard ordinary hours of work are presently set at 38
hours per week.

One of the more important functions of awards is the way they provide a means for
categorising various job roles. Each award typically contains a set of occupational
classification standards that grade and define the tasks of various job roles. Where
used, there is a list of duties that form the job role, the skills, experience or
qualifications required to undertake that role, training requirements where necessary to
support performance, as well as the rates of pay to be applied. Also provided, where
applicable, is the means for delineating between different modes of employment, with
the rates of pay or pro rata schemes set out as they apply to full-time, part-time, fixed-
term and casual forms of work, as well as to piecework (FW Act s. 139).
Within the context of these various organising categories, the FW Act provides a
framework by which the FWC establishes the substantive content of modern awards.
The powers conferred on the FWC by the Act are highly prescriptive in setting out what
must be included in the content of awards, what may be negotiated and what must be
excluded. The matters mandated for inclusion are broad—it is a legislative requirement
that some reference be made to them, with the detailed content subject to variation in
accordance with the type of industry or occupation being covered. Thus, a modern
award must include terms related to the following matters:
 i. Who is covered by the award; that is to say, the employers, employees, organisations and
outworker entities to whom the award applies.
ii. What ‘ordinary hours’ of work are for each classification of employee.
iii. What job roles are covered by the award.
iv. What base and full rates of pay apply for pieceworkers, if applicable.
v. What disputes settlement procedure is to be followed when disagreements arise over the
operation of the award and the application of the NES.
vi. What flexibility provisions are provided to enable an employer and an employee to agree on
arrangements that vary the effect of the award; these provisions ensuring that any
arrangements are mutually agreed and result in the employee being better off.
vii. What automatic variation of designated allowances are to occur when wage rates are varied,
unless otherwise indicated by the Fair Work Commission (FW Act ss. 143–149).

To these mandated terms, the FW Act also lists a range of matters that may be
included. This refers to matters that are open to bargaining and settlement between the
parties. Typically, the bargaining involves employers within a given industry or
employing a particular occupational group, as well as the relevant union(s) covering
the industry or occupation. Thus, a modern award may include terms related to the
following ten matters.
i. Minimum wages, which includes wage rates for junior employees, employees with a disability
and employees to whom training arrangements apply, as well as wages for skill-based
classifications and career structures, incentive-based payments, piece rates and bonuses.
ii. Type of employment, such as full-time employment, casual employment, regular part-time
employment and shift work, with the facilitation being made for flexible working arrangements,
particularly for those employees with family responsibilities.
iii. Arrangements for when work is performed, including hours of work, rostering, notice periods,
rest breaks and any other variation to working hours.
iv. Overtime rates for work undertaken in addition to ‘ordinary hours’.
v. Penalty rates for employees working unsocial, irregular or unpredictable hours, employees
working on weekends or public holidays, as well as shift workers.
vi. Annualised wage arrangements that have regard to the patterns of work in an occupation,
industry or enterprise, so long as appropriate safeguards exist to ensure individual employees
are not disadvantaged.
vii. Allowances that reimburse expenses incurred in the course of employment, or reward
responsibilities or skills which fall outside the normal work and associated pay classifications, or
take account of disabilities associated with undertaking particular tasks, or take account of
work undertaken under particular conditions or in distant locations.
viii. Leave, leave loadings and arrangements for taking leave.
ix. Superannuation.
x. Procedures for consultation, representation and dispute settlement (FW Act s. 139)

Superannuation
A legislatively supported scheme that requires employers to pay a proportion of an
employee’s salary or wages into a fund, to be made available upon retirement. That
proportion is presently set at 9.5 per cent.
 To these general matters, there are two of a more specific nature that may also be
included, one relating to outworkers (s. 140) and the other to industry-specific
redundancy schemes (s. 141). Matters that are not related to those listed earlier are not
open to negotiation. The FW Act also lists a range of matters and associated terms that
must not be included; they cannot even be raised during bargaining without running the
risk of incurring financial penalties. In essence the excluded matters refer to terms that
seek to revoke legislated workplace rights and industrial activities disallowed under
the FW Act, the last of which is particularly pertinent to union activities. Thus, a
modern award must not include terms related to the following matters:
i. Terms that are considered ‘objectionable’, namely those that contravene the ‘general
protection’ provisions [Part 3.1] of the Act and those seeking payment for bargaining services
fees.
ii. Terms that allow for unreasonable payments and deductions for the benefit of the employer.
iii. Terms that allow a union official to enter an organisation for the purpose of meeting employees
or inspecting the workplace.
iv. Terms that discriminate against an employee’s race, colour, sex, sexual preference, age,
physical or mental disability, marital status, family or carer’s responsibilities, pregnancy, religion,
political opinion, national extraction or social origin.
v. Terms determined by state or territory boundaries or make reference to state–based
differences, unless agreed by the Fair Work Commission.
vi. Terms dealing with long service leave (FW Act ss. 150–155).

General protections
A set of workplace rights and entitlements in the FW Act that protect employees from
discrimination and sham contracting, allow for their freedom of association and in
contacting workplace regulators, and protect them from employer retribution in the
exercise of these rights.

Disputes about the application of an award

The FWC is charged with the responsibility for making, reviewing and varying awards,
as well as resolving disputes over their application and interpretation. Every award
must contain a dispute resolution term (FW Act s. 146), and the term is expected to set
out staged procedure to be followed when disagreements occur over the application of
the NES and award provisions. The expectations of the procedure begins with the
employee(s) discussing the grievance with their direct supervisor. If no resolution is
reached at this level, the matter is then expected to be referred to more senior
management, first within the organisation and, if applicable, to still more senior
management headquartered elsewhere. If the dispute is not resolved at these levels, the
parties, either individually or jointly, can then refer the matter to the FWC (see Figure
6.2). Throughout this process the employee(s) and employer may appoint an outside
person, organisation or association to represent their interests in the discussions. The
outside person can be an independent mediator, such as industrial lawyers, who are
rarely used, while the outside organisation can be a union or employer association
(Fair Work Ombudsman 2013). A model dispute resolution cause is listed in the
regulations accompanying the Fair Work Act 2009.

Model dispute resolution process

A dispute resolution process applied in federal awards and other collective
agreements that do not specify a dispute resolution process.

FIGURE Required elements of a dispute resolution clause in modern awards

6.2

Source: Fair Work Ombudsman (2013)

ENTERPRISE AGREEMENTS
Enterprise agreements are enforceable labour contracts that contain negotiated terms
and conditions of employment. The FW Act enables these types of contracts to be
concluded as a means of realising one of its key objectives, which is to ‘provide a
simple, flexible and fair framework that enables collective bargaining in good faith,
particularly at the enterprise level, [through] enterprise agreements that deliver
productivity benefits’ (FW Act s. 171). Like awards, enterprise agreements apply to
national system employees falling within the jurisdiction of the FW Act; however, their
coverage only applies to the individual organisations in which they are settled. In other
words, they operate in single organisations rather than being applied in the manner of
awards to entire industries or occupations. Unlike the broader operation and settlement
of awards, enterprise agreements allow employers to reach agreement with their
employees on conditions of employment that best suit their particular needs and
circumstances. They therefore allow for more flexible working arrangements, broader
job classifications, wider-ranging remuneration systems, more focused family–friendly
work schemes (and much more) than their award counterparts. As mentioned earlier the
existence of enterprise agreements is predicated on the widely accepted understanding
that dynamic product markets require flexible employment, remuneration and working
arrangements if organisations are to succeed.
Agreements struck at the level of individual firms are thought to allow for this
flexibility in ways that are not possible under awards, thereby helping them to realise
greater gains in efficiency and more satisfied workforces (Peetz 2012). They have thus
become the main focus of legislative arrangements set up to govern workplace
relations, with the resulting agreements being widely used in most firms operating in
pivotal sectors of the Australian economy.

Coverage and types

There are three types of enterprise agreements. The first are ‘single-enterprise
agreements’, which typically apply to a single employer and those directly in its
employ. However, there are single-enterprise agreements that cover more than one
employer. These are far less common and are only available to multiple employers
operating in the manner of a single enterprise (often referred to as ‘single interest’
employers), such as joint ventures. The second type are ‘multi-enterprise agreements’
which involve two or more employers that are not single interest employers. The third
type are ‘greenfields agreements’. Greenfields agreements are utilised by new
enterprises that have yet to engage any employees with whom the bargaining over the
terms and conditions of employment might take place. They can be either a single-
enterprise agreement or a multi-enterprise agreement (FW Act s. 172).
The Department of Employment (2015) figures for the December quarter 2014
show that there were 18,950 federal enterprise agreements covering 2.4 million
employees (see Figure 6.3). The last ABS survey to delineate these types of agreements
was taken in May 2012, which suggested that 34 per cent of non-managerial employees
were covered by such instruments (cited in Department of Employment 2015).
Determining the current coverage of federal enterprise agreements across industries and
occupations is problematic because of the lack of available data extrapolating across
these categories. Figures in the ABS’s Employee Earnings and Hours (ABS 2015), for
example, refer generically to ‘collective agreements’, which includes both union and
non–union agreements, as well as other collective agreement-making options operating
at a state level. However, some indication of the relative weighting of the different
types of enterprise agreement operating at the national level can be given. The FWC’s
Annual Report 2013–14 (FWC 2014) stated that over the reporting year 5602 single-
enterprise agreements were approved, along with 745 greenfields agreements and 56
multi-enterprise agreements.

FIGURE Current agreements and employee coverage by quarter

6.3

Source: Department of Employment (2015)

Content
As is the case with modern awards, the FW Act sets out a range of matters that can and
cannot be included in the content of enterprise agreements, as well as those that are
open to bargaining. Thus, an enterprise agreement must include terms related to the
following matters:
i. Terms that set out a nominal expiry date that is no more than four years after the agreement is
approved by the Fair Work Commission; ‘nominal’ meaning that the agreement will continue to
operate until a new agreement is settled.
ii. Terms that make reference to a staged disputes settlement procedure, one that allows the
Commission or other independent person or organisation to settle disputes arising out of the
agreement and NES.
iii. Terms that require an employer to consult with relevant employees about any major workplace
change, as well as to allow for the representation of employees for the purposes of such
consultation.
iv. Terms that refer to individual flexibility arrangements that allow for an employer and an
individual employee to reach agreement on conditions of employment that best suit their
particular needs, as long as it is genuinely agreed by both parties and results in the employee
 being better off (FW Act ss. 186, 202–205).

Individual flexibility arrangement

An agreement between a single employer and an employee that modifies the
application of a modern award or enterprise agreement.

Outside these mandated requirements, the array of matters that may be included is
far wider than in the case of awards. Enterprise agreements can deal with almost any
workplace relations issue, provided it falls within the province of ‘permitted matters’.
What counts as permitted under the FW Act are matters pertinent to the relationship
between the employer and employees covered by the agreement and, where applicable
or relevant, the union(s) who are representing the employees. There are also ancillary
matters that may be negotiated relating to deductions from wages for any purpose
authorised by an employee and how the agreement will operate (FW Act s. 172). In
other words, the range of matters open to bargaining in enterprise agreements is not
confined to the ten areas outlined earlier that are allowed to be bargained over in
settling the content of modern awards. Despite the more open possibilities, there are
nevertheless a number of limitations prescribed by the FW Act that must be observed if
an agreement is to be approved by the FWC. Thus, an enterprise agreement cannot
contain terms that are deemed to be ‘unlawful content’, which include the following:
i. Terms that are discriminatory, meaning any reference that discriminates against an employee
on the basis of race, colour, gender, sexual preference, age, physical or mental disability, marital
status, family or carer’s responsibilities, pregnancy, religion, political opinion, national extraction
or social origin.
ii. Terms that are deemed objectionable, meaning those allowing for the payment of bargaining
service fees and terms that contravene the ‘general protections’ provisions of the Fair Work
Act 2009 (i.e. protections relating to freedom of association and other workplace rights).
iii. Terms that exclude or modify unfair dismissal entitlements under the Fair Work Act 2009.
iv. Terms that are inconsistent with industrial action provisions of the Fair Work Act 2009.
v. Terms that provide ‘right of entry’ entitlements to trade union officials.
vi. Terms referring to designated ‘outworkers’ (i.e. contractors or employees working from
home).
vii. Terms that allow for right of entry entitlements under state or territory OH&S legislation that
are inconsistent with such entitlements under the Fair Work Act 2009.
viii. Terms that enable an employee or employer to ‘opt out’ of coverage of the agreement.
ix. Terms that require superannuation contributions for default fund employees be made when
certain conditions are met.
x. Terms that provide a base rate of pay that is less than the modern award rate or the national
minimum wage order rate (FW Act ss. 194–195, 206).

These limitations placed on the substantive content of enterprise agreements are

supplemented by a range of procedural requirements that also need to be satisfied
before an enterprise agreement will be ratified by the FWC. In this regard, the FW Act
sets out specific rules relating to the bargaining process, and charges the FWC with the
responsibility to assist the process and resolve any disputes that emerge between the
parties. The procedural requirements over which the FWC presides involves a number
of steps that need to be followed before an enterprise agreement will be approved.

Initiating a bargaining period

The first step involves the opening of a bargaining period. This can be initiated by the
employer or when an employer agrees to bargain at the request of employees or their
union. It can also begin at the direction of the FWC. Thus, an employer refusing to
bargain with employees can be compelled to do so if the FWC makes a ‘majority
support determination’. This determination is applied to an employer if the majority
of employees in the organisation want a new agreement. At the request of a bargaining
representative, usually a union, the FWC can also issue a ‘scope order’ specifying
which employer or employees are to be covered by a proposed agreement. Such
requests are typically directed at employers who are seeking to exclude certain
employees from being covered by a proposed agreement. In this regard, the employees
to be covered by an agreement must have been ‘fairly chosen’ (FW Act s. 186), which
the FWC normally deems to be those who can justly be considered geographically,
operationally or organisationally distinct. The FWC can furthermore issue a low-paid
authorisation in relation to a multi-enterprise agreement (FW Act s. 176). These types
of authorisations are applied to enterprises that engage low-paid employees who do not
have access to collective bargaining, or who will have significant problems in
bargaining at the enterprise level.

Bargaining period
A time period designated by the FWC, initiated by parties on the expiry of an
existing enterprise agreement or in pursuit of a new agreement; it allows for
negotiations to begin and for legal industrial action to be taken in pursuing demands
in relation to a proposed agreement.

Majority support determination

is an order issued by the FWC when the majority of employees to be covered by a
proposed agreement want to bargain, but the employer to be covered by the
agreement has not agreed to bargain.

Bargaining representative
 is an employer or a person appointed to act as a representative on behalf of an
employer (e.g. industrial officer of an employer association) in negotiations over the
terms and conditions of a proposed labour contract.

Scope orders
is an order issued by the FWC when bargaining is considered to be not proceeding
fairly and efficiently, despite a bargaining representative having met the good faith
bargaining requirements.

Low-paid authorisation
is an authorisation made by the FWC upon application by a bargaining representative
or union negotiating for a proposed multi-enterprise agreement. It provides access to
workplace determinations for employees in weak bargaining positions.

The initiation of the bargaining period (under whatever mechanism) is known as the
‘notification time’, after which the parties are free enter to negotiate the terms and
conditions of a new agreement or a variation of the same in an existing agreement (FW
Act s. 173). Both employers and employees have the right to appoint representatives
during the bargaining process, and to appoint representatives when bargaining matters
are brought before the FWC. Bargaining representatives can include any person or
organisation selected by the parties; on the employer side, this could be a labour
lawyer or employer association; on the employee side, this could be a relevant union
that has a member who is to be covered by the agreement (FW Act ss. 176–178). The
employer must notify employees of their right to be represented in the bargaining
process, and, in doing so, must provide each employee with a copy of the Notice of
Employee Representational Rights (listed in schedule 2.1 of the FW Act). Moreover
this Notice must be provided within 14 days after the notification time has commenced
(ss. 173–174).

Representative
is a person appointed by an employee or group of employees to represent their
interests in bargaining for a proposed agreement, and in any matter before the Fair
Work Commission that relates to bargaining for a proposed agreement.

Bargaining stage in ‘good faith’

The next step is the bargaining process itself, and there are a number of legislative
requirements that both employers and employees—and their representatives—are
expected to observe. One of the most important requirements prescribed under the FW
Act relates to a range of expected behaviours that are deemed to constitute good faith
bargaining. By bargaining in good faith and maintaining open and honest lines of
communication, it is expected that the parties stand a higher prospect of reaching
agreement without resorting to industrial action. Thus, before approving an enterprise
agreement, the FWC must be satisfied that the participants have engaged in the
bargaining process in good faith, i.e. they have genuinely sought an agreement and done
so with a good measure of fairness, honesty and integrity. The legislated requirements
held to constitute good faith bargaining, as it applies to the participants and their
bargaining representatives, are as follows:
i. Attending and participating in meetings at reasonable times.
ii. Disclosing any relevant information in a timely manner, other than information deemed
confidential or commercially sensitive.
iii. Responding in a timely manner to proposals made by other bargaining representatives.
iv. Giving genuine consideration to proposals made by other bargaining representatives, and
reasons for any response to those proposals.
v. Not behaving in a capricious or unfair way that undermines freedom of association or collective
bargaining.
vi. Recognising and bargaining with other bargaining representatives for the agreement (FW Act
s. 228).

Good faith bargaining

Provisions in the FW Act that legally require employers and trade union negotiators
to engage in enterprise bargaining with the genuine intention to reach a settlement.

If one of the parties is considered by the other to be not bargaining in good faith, or
if the processes of bargaining are deemed to be proceeding inefficiently or unfairly, an
application seeking a ‘bargaining order’ can be made to the FWC. If granted, the FWC
will issue an order stating what must be done to align the bargaining process with the
good faith requirements (FW Act s. 229). If there is any sustained and serious breach of
the order, and the parties are still unable to reach a settlement, the FWC is empowered
to make a ‘bargaining-related workplace determination’ (FW Act ss. 269–271). This
type of determination compulsorily settles the terms in dispute, with the FWC taking
into account, among other things, the merits of the case, public interest, conduct of the
parties and how productivity might be affected. The outcomes are then added to those
terms already agreed upon to realise a final agreement, which then applies to the parties
(FW Act ss. 275–277). This does not mean the parties are required to reach an
agreement at any cost, nor offer concessions they do not wish to make, but it does
encourage the participants engaged in bargaining to approach the processes involved
with genuine intent to reach a settlement.

Bargaining order
An order made to the FWC by a bargaining representative negotiating for a proposed
enterprise agreement; designed to ensure good faith bargaining requirements are
adhered to, or to promote fairness and efficiency in the bargaining process.

If a settlement is unable to be reached and the bargaining has been genuine and
fairly engaged, the parties may simply choose to leave the disputed matters as they
stand. This typically means the issues settled will be included in the proposed
agreement, while those over which no resolution can be reached are omitted or left as
they are. If, however, one of the parties wishes to pursue the issues, they may refer them
to the FWC for conciliation as a means of reaching a settlement. Or they may seek
recourse through industrial action as means of putting pressure on the other party to
cede to the matters in dispute. By far the greater number of disputes during enterprise
bargaining rounds are resolved through simple conciliation. Commissioners are
allocated to particular industrial sectors and thus have a good understanding of the
types of issues that are likely to be sources of dispute. They also have wide-ranging
experiences to draw upon as a means of mediating their resolution. The manner by
which commissioners undertake the role of mediating between disputing parties can be
both formal and informal.

PRIMARY EXAMPLE 6.1

Conciliation at the waterfront
The mediation of the dispute over restructuring of the IT division in mid-2014 involved
the assistance of the Fair Work Commission, which in many ways was in keeping with
the conventional role of tribunals in Australia, with a Commission allocated to
conciliate differences over the settlement of an enterprise agreement. However there
were aspects of the Commission’s role that were less conventional.
For example, Deputy President Booth worked as a kind of advisor or counsellor to
the Managing Director and the ASU Secretary, separately and together, as well as to
many other managers and employees of Sydney Water. Her facilitation of the leadership
conferences was especially novel—she became a trainer and a coach, imparting
knowledge and developing skills, as well as chairing discussions and coaxing more
cooperative behaviours.
In performing these roles, DP Booth displayed personal qualities and skills that
were well appreciated by the parties, and they held her position as a Deputy President
of the Commission being vital to the outcome. One delegate, for example, said that the
respect she commanded came from ‘… just knowing her position. Knowing that this is
Deputy Commissioner Booth, and she’s part of Fair Work Australia, and she’s the one
who presides over us any time we have a dispute …’.
In the same vein, one manager stated ‘I think it’s not just her personal qualities but
the institution of the Commission as well that is relevant, in terms of having that trust
and faith in the person coming to assist you’.
Source: Bray & Macneil (2015)
Questions
1. What indications are there to suggest that the role of the Fair Work Commission
differs from the role of civil courts in resolving issues between disputing parties?
2. What activities were employed by Commissioner Booth in her role as a conciliator?
3. What do you consider is more important in a Commissioner’s role of facilitating the
bargaining process: their personal qualities or their legal authority?

Taking protected industrial action

If industrial action is taken, there are a number of legislative requirements to be
observed. The FW Act sets a range of requirements which, if observed, protect the
parties from civil liabilities under common law. This is necessary, as enterprise
agreements are labour contracts. Labour contracts, left to their own devices, are subject
to civil law, under which any parties who combine or conspire to break a contract are
exposed to civil prosecution. Taking collective industrial action does this very thing, so
aggrieved parties who are the subject of such action are free under civil law to sue for
compensation in the civil courts. Taking industrial action when renegotiating or
establishing a labour contract, whether an award or enterprise agreement, is viewed as
a fundamental workplace right. Hence there are provisions in the FW Act that allow for
those taking industrial action to be ‘protected’ from civil prosecution, but only if certain
conditions are met. If any of the conditions are not met, then the protection of the
legislation lapses and the aggrieved party is free to sue for common law compensation.
For both employers and employees, as well as their representatives, industrial
action is only protected under the following conditions:
i. The action is taken in response to industrial action taken by the other party.
ii. The action is not taken before the nominal expiry date of an existing agreement.
iii. The parties are genuinely trying to reach agreement.
iv. The parties are in compliance with orders or determinations issued by the FWC.
 v. The parties have observed the ‘notice requirements’ before action is taken. Employees are
required to give three days written notice to the employer before any industrial action is taken,
setting out what form the action will take and when it will commence. An employer must also
give notice of impending action to employees, as well as their bargaining representatives (FW
Act ss. 413–414, 417).

In addition, for employees and their representatives, industrial action is only

protected when the following conditions are met:
i. The action is not taken over ‘demarcation’ issues, i.e. issues that relate to inter-union disputes
over such things as membership coverage and the allocation of work.
ii. The action is not in relation to the proposed inclusion of ‘unlawful terms’, i.e. terms that provide
for such things as union right of entry and compulsory unionism.
iii. The action is not taken as part of ‘pattern bargaining’; a union tactic involving the issuing of a
common agreement simultaneously to a number of individual organisations (FW Act s. 412).
iv. The action is taken in support of claims directly related to the proposed agreement.
v. The action has been authorised by a secret ballot (FW Act ss. 409–410).

The last of these conditions requires special mention. For the authorisation of a
secret ballot, an application must be made to the FWC. If the other conditions are met,
the FWC will then issue a ‘protected action ballot order’. Such ballots are typically
run by the Australian Electoral Commission and are conducted in secret through a
mailing system. All employees to be covered by a proposed agreement are eligible to
vote. For industrial action to be authorised—and hence protected—the action must
relate to the questions asked on the ballot paper (FW Act s. 443). Such questions
typically list a range of possible actions, ranging from overtime bans to the withdrawal
of labour, which the union can draw upon to suit its bargaining purposes. For a ballot to
authorise industrial action, at least 50 per cent of eligible employees must have voted,
and more than 50 per cent of those casting a valid vote must have endorsed the
proposed action. The endorsed action must then commence within 30 days of the
declaration of the results of the ballot, unless the FWC allows for an extension on this
period (FW Act s. 459).

Protected action
A set of legal conditions set out in the Fair Work Act 2009 that, if adhered to, allow
employees to take industrial action without being prosecuted under civil law.

Once all the conditions are met, in whatever measure they apply to employers, and
employees and their representatives, protected industrial action may then be engaged as
a means of putting pressure on the bargaining process. For employers, such action
typically involves the ‘lock-out’, where the workplace is closed to employees and their
wages are not paid. For employees, the industrial action may take a variety of forms,
such as working to rule, engaging in systematic stop-work meetings, banning the
performance of certain duties or the operating of certain machinery, undertaking strikes,
and so on. If that industrial action fails to reach a settlement, the FWC is empowered to
make an ‘industrial action–related workplace determination’. This determination is
only used if the action is undertaken and an agreement over the issues in dispute is not
reached after the post–industrial action period. In making such a determination, the
FWC is required to take into account the merits of the case, the conduct of the
bargaining representatives, the interests of employers and employees, and the likely
productivity outcome of any determination, as well as the general public interest. Such
determinations operate as if they were enterprise agreements in their own right (FW
Act s. 266–268).
The FWC has the power to terminate or suspend protected industrial action if it
threatens to endanger life, personal safety or the general wellbeing of the population. It
can also intervene if the action is considered to be causing significant damage to the
economy or significant economic harm to the employer or employees engaging in
negotiations. The FWC can furthermore make an order on its own initiative or upon
application by a person affected by industrial action that is unprotected (FW Act ss.
423–426). If the order to cease the action is ignored, the penalties under the Fair Work
Act 2009 can result in fines of up to $10,200 for an individual and $51,000 for a
corporation. This type of penalty is aside from any compensation awarded to aggrieved
parties through the civil courts.

Workplace approval of a draft agreement

Once a draft agreement is reached—whether it be reached without disagreement,
through the conciliated or arbitrated assistance of the FWC or the result of failed or
successful industrial action—the next step is to ensure a number of pre–approval
requirements are met. Before a proposed enterprise agreement gains approval by the
FWC, it must be shown that the employer has explained the terms and conditions of the
proposed agreement to those it will cover. The explanation must detail how the
agreement will affect their working arrangements, and must be given in terms and
language that is understandable to the employees concerned (FW Act s. 180).
Employees must have taken a vote to accept the agreement, which itself has certain
restraints placed on the timing of when such a vote can take place. First, the vote cannot
take place until 21 days after the last Notice of Employee Representational Rights has
been issued to employees, as mentioned earlier. Second, the employees need to have
been given a copy of the proposed agreement seven days before the vote is taken. And
third, the employees must have been given adequate notification by the employer of the
time, place and method under which the vote is to be taken. For a single-enterprise
agreement, a vote is deemed successful if a majority of the employees casting a valid
vote endorsed the agreement. For a multi-enterprise agreement, it is deemed successful
if a majority of the employees who cast a valid vote of at least one of the employers
endorsed the agreement. If the agreement is not approved by the majority of employees
of all employers, then the agreement must be varied to only apply to those employees of
employers who approved the agreement. For a greenfields agreement, the terms and
conditions need only be agreed between the organisation proposing to engage
employees and the union likely to cover those workers once employed (FW Act s. 182).

Legal ratification of an agreement and the ‘better off overall

test’
Once endorsement has been gained from the employees concerned, the next step is to
submit the proposed agreement to the FWC. The submission must be submitted within
14 days of the agreement being reached, and must be accompanied by a signed copy of
the agreement, along with any other declarations required by the FWC. To approve an
enterprise agreement, the FWC must be satisfied that the agreement was genuinely made
by those involved, that it does not include any unlawful terms, and that the employees
covered by the agreement are ‘fairly chosen’. The content must also include mandatory
terms relating to a dispute settlement procedure, flexibility provisions and processes of
consultation; it must also specify a nominal expiry date no longer than four years after
the date of approval. In short, it must include and exclude those terms that relate to the
relevant provisions of the FW Act mentioned earlier. The FWC must be satisfied that
the agreement was genuinely agreed to by the employees concerned and without duress
(FW Act ss.185–188). Finally, and importantly, the FWC must be satisfied that the
agreement passes the ‘better off overall test’. Passing this test is a particularly
important hurdle for approval. It requires that each award-covered employee—as well
as each prospective award–covered employee—will be better off overall under terms
of the agreement than under the applicable award (FW Act s. 193).
If all these requirements are met, the FWC will ratify the agreement, whereupon it
will operate for a nominal period of up to four years. It is worth noting that once an
agreement is in place, industrial action taken over the course of its operation is
unprotected. It is also worth noting that the FWC is charged with the responsibility for
interpreting and resolving any disputes relating to an agreement over the life of its
operation (FW Act s. 193). By way of summarising the processes of agreement-making
at the level of the enterprise under current Australian legislation, Figure 6.4 provides a
schematic overview, while the step-by-step guide that follows is an abridged version of
Fair Work Ombudsman’s (2015) view of what constitutes best practice bargaining.

Fair Work Ombudsman

An inspectorate headed by a statutory appointee whose role is to promote an
 understanding of federal workplace laws, in particular the FW Act. It also has the
role of educating and providing advice about those laws, and enforcing compliance.

FIGURE Process of enterprise bargaining under the Fair Work Act 2009
6.4

Source: Fair Work Commission (2015)

Step 1: The employer decides to bargain with employees to reach a new enterprise
agreement. A negotiation period is opened upon application to the Fair Work
Commission.
Step 2: The employer provides the employees to be covered by the agreement with a
Notice of Employee Representational Rights. This must be undertaken within seven
days after the opening of the negotiation period.
Step 3: The employer and employees, along with any bargaining representatives, begin
to bargain with the legislative expectation that they bargain in ‘good faith’ as a means of
developing an agreement.
Step 4: During the bargaining process, account is taken of what is good for business
productivity and efficiency, as well as what benefits are to accrue to employees through
improved or varied work conditions. Proposals and counterproposals are offered and
responded to, with regular meetings taking place to explain and gather feedback from
those who will be party to the proposed agreement. Protected industrial action may be
engaged to facilitate the bargaining process, or referral made to the FWC for the same
purpose.
Step 5: Once a settlement is reached on terms and conditions, the employer provides a
draft copy of the proposed agreement to employees, explaining to them the logistics
involved that allow them to vote on the proposal, which must be undertaken no less than
seven days prior to the vote and no less than 21 days after the Notice of
Representational Rights has been issued to employees.
Step 6: The draft agreement is deemed to be approved when a majority of employees to
be covered cast a valid vote, after which an application for its legal approval is
forwarded to the FWC within 14 days.
Step 7: The FWC approves the agreement, and gives it the force of law, once it is
satisfied that its terms and conditions comply with all relevant requirements prescribed
under the FW Act.

CURRENT DEBATES ABOUT AGREEMENT-MAKING

The stated principle objective of the FW Act is to ‘provide a balanced framework for
cooperative and productive workplace relations that promote national economic
prosperity and social inclusion for all Australians’ (FW Act s. 3). ‘Social inclusion’ is
taken to mean equal access to employment opportunities and fair treatment once work
has been gained, to be realised through a safety net of conditions reflected in a floor of
minimum wages, NES, modern awards, family friendly provisions, and workplace
entitlements to consultation, representation, anti-discrimination and freedom of
association. ‘National economic prosperity’ is thought to be advanced through
cooperative and productive workplaces that are flexibly and fairly organised at the
level of the enterprise through agreements reached on the basis of good faith bargaining
and limited rights to industrial action. The twin elements of good faith bargaining and
limited rights to industrial action through which the principal objective of the FW Act
is to be achieved serve to divide opinion over its regulation of agreement-making and
the ability to deliver on its commitment.
Debate over the means of social inclusion by way of legislative action primarily
emanates from special interests, with much of it centring on the national minimum wage
and its impact on employment. The Australian Catholic Council of Employment
Relations, for example, has questioned the credentials of the FW Act in delivering on
its social inclusion claim, arguing that framing safety net minimum wage decisions
around individuals rather than families has done little to arrest real wage declines for
the very low paid (Lawrence 2014). The Australian Council of Social Service notes a
similar decline, seeing the fault laying in the limited economic benchmarks used to
frame minimum wage decisions under the terms of the FW Act (ACOSS 2012).
Conversely, the New South Wales Business Chamber sees an ‘inherent confusion of
aims between the objective of setting fair minimum wages, which are defined in terms
of social considerations (social inclusion as opposed to gaining work, relative living
standards as opposed to a safety net), and the role of bargaining under the Fair Work
Act (achieving productivity and fairness through an emphasis on enterprise bargaining’
(NSW Business Chamber 2012: 29). The Institute of Public Affairs goes even further,
arguing that the whole idea of a ‘mandatory minimum wage … is fundamentally at odds
with conceptions of social inclusion, as minimum wages discourage employment and
workforce participation’ (Land & Novak 2014).
By comparison to the social inclusion aims of the FW Act, the means by which
national economic prosperity is to be achieved through the regulation of agreement-
making has attracted far greater attention. Much of this attention is centred on the
regulation of enterprise agreements, which themselves have been central to claims that
the FW Act delivers the regulatory means that allow for ongoing productivity
improvements at the level of the firm. This claim is contentious because of the great
difficulty of measuring the causal relationship between the input of labour and output of
the work. One of the major problems is that the unmediated contribution of employees
cannot be readily disaggregated from other factors playing a role in productivity
outcomes. There are other factors that must be considered when determining the cause
of productivity growth and decline, including the prevailing state of technology, type of
leadership and managerial practices, extent of scale and scope of economies, degree of
specialisation and formalisation, and so on. When you consider that these factors are
themselves often subject to the content of agreements, the problem is made even more
pronounced. Another major problem lies in accurately calculating the productivity of
employees engaged in different roles. Calculating the productivity contribution of
labour by way of hours worked per employee in the production of a standardised
tangible output might be readily achieved (e.g. an assembly line worker), but doing so
for employees working irregularly on different tasks that produce intangible outputs
(e.g. supervisory staff) is not so easily measured (Flaschel, Franke & Veneziani 2013).
It is hardly surprising, then, that the literature dealing with this issue is mixed. In an
Australian context, qualified support for the claim that enterprise agreements produce
superior productivity outcomes has come from Tseng and Wooden (2001), who
concluded that firms operating under enterprise agreements were on balance more
productive than those operating under awards; the qualification coming from a sizable
number of contrary examples in the study. Delving deeper into the content of enterprise
agreements, Loundes and colleagues (2003) similarly found that those trading wage
increases for changed work practices were often successful in improving productivity
outcomes. However, it was also noted that the improvement was often short term,
confined only to those periods when agreements were reached. Despite their
qualifications, both studies viewed the possibility of long–term productivity
improvements being realised through enterprise agreements, provided their content
facilitated better training and more open consultation, with these seen as important for
fostering innovation and facilitating workforce adaptation to new technologies.
 Those arguing against the claim revert to the problem of identifying the causal link
between labour input and productive output, suggesting that few productivity
improvements can be directly sheeted back to enterprise agreements. Thornthwaite and
Sheldon (2012), for instance, in a wide-ranging survey of employers, found that their
expectations that productivity improvements would flow from enterprise agreements
were rarely met, largely because employers could only ever negotiate minor changes,
which had little or no real impact on productivity outcomes. Indeed, most productivity
improvements were held to be achieved through measures taken outside the bargaining
framework. Townsend, Wilkinson and Burgess (2013) came to a similar conclusion
after interviewing senior managers at two case-study worksites. Here the perception
was that the settlement and operation of enterprise agreements had provided little in the
way of removing organisational inefficiencies or improving productivity. Taking a
different approach, Hancock (2012) argued that there are good reasons for doubting the
productivity effects of enterprise agreements, since there is little known about
counterfactual situations, i.e. there is little in the way of reliable data on productivity
outcomes in organisations operating without enterprise agreements.
The nature of this debate finds its parallels among the major players in the
agreement-making process. For instance, the Fair Work Review Panel (2012: 72), when
reporting on technological innovation and human capital accumulation, stated that these
major sources of productivity ‘… are unconnected or only loosely connected with
changes in the workplace or with bargaining between employers and employees’. The
suggestion was that this need not be the case, and that more work was required by the
parties to make the connection. Interestingly, the FWC (2014) found a connection did
exist in a case study report that looked at selected terms and conditions contained in
certain enterprise agreements. The report found several clauses could be productivity
enhancing, namely clauses that increased workplace flexibility, such as when and
where work was performed; clauses that increased workplace skills, such as training
inducements and flexible classification structures; and clauses that increased employee
participation, such as consultation and incentive programs.
The debate also finds parallels among representatives of employers and employees.
The ACTU (2014) questioned the possibility of drawing any firm conclusions about the
link between enterprise agreements and productivity growth. Despite this, it has drawn
on a range of time-series data to suggest that, at the very least, enterprise agreements
have not proven harmful to national productivity growth. The ACTU also holds that
improvements in workplace efficiencies would be better served by relaxing the
‘matters pertaining to the employment relationship’ test, allowing employees the
freedom to pursue claims that support their social, economic and employment interests’.
The Australian Chamber of Commerce and Industry (ACCI) and the Australian Industry
Group (AIG) offer a contrary perspective; both insist that a link exists. Their claim is
that the present system of agreement-making under the FW Act is a major drag on
productivity growth. For example, Innes Willox (2014), the CEO of AIG, has argued
that enterprise agreements ‘impose major barriers to productivity’, and has called for,
among other measures, changes in the FW Act to tighten the range of ‘permitted matters’
that can be negotiated over, as well as extending the scope of ‘unlawful terms’ under
which protected industrial action is denied. In a similar a vein, ACCI (2012) has
argued that a major problem with enterprise agreements resides in the limitations
imposed by the FW Act, which stifle the ability of employers to link their content to
workplace changes likely to improve productivity. The key recommendation here is for
the FW Act to allow for negotiations to be agreed directly with employees regardless
of union rights of representation, as well as a list of non-negotiable matters being more
directly specified in the FW Act.

SUMMARY
Despite the debates surrounding efficacy and efficiency of agreement-making under the
present regulatory regime, there is widespread recognition among the major
participants that a safety net of employment conditions established through awards is
worthwhile. Moreover, the option of enterprise agreements offers the possibility of
tailored content likely to promote business efficiency and improve working conditions.
There is also widespread acceptance that continuous productivity improvements are
required by firms if they are to survive and prosper in an increasingly dynamic
marketplace, even if there is little agreement as to what role is or should be played by
enterprise agreements in realising this end. As such, it is clear that collective
agreement-making in the form of awards and enterprise bargaining is here to stay, as are
the legislated standards, safety-net wages and employee entitlements that inform their
content. The regulatory regime may change under different governments, which may add
or subtract to these basic elements of agreement-making, but it would seem politically
untenable in the foreseeable future to imagine wholesale changes of the order that
occurred under Work Choices Act 2005. This being the case, it is clearly important to
have a good understanding of the prevailing regulatory framework that governs
workplace relations through the agencies of modern awards and enterprise agreements.
It is important for employers, as they are legally required to employ, allocate and
remunerate labour in accordance with enforceable terms and conditions of employment.
It is important for managers engaged in the processes of agreement-making, for the
processes are steeped in legal complexities that are well understood by their union
counterparts. And it is important for employees, so that they understand their
entitlements during agreement-making, and understand what obligations flow to their
conditions of employment once an agreement has been reached.
Summing up, there are several elements of agreement-making that can be undertaken
at a national, industry, enterprise or individual level, with the bargaining agenda subject
to wide variance and different degrees of formalisation. There are also several
components in the agreed outcomes of such bargaining, as in the extent of agreement
coverage and the type of procedural and substantive rules that will apply. There have
been a range of agreements in Australian history, which have included occupational and
industry awards, certified agreements, over-award agreements, Australian workplace
agreements, enterprise bargaining agreements—and currently modern awards and
enterprise agreements. Modern awards are enforceable labour contracts covering
national system employees in different occupational and industry groups, providing
them with a safety net of terms and conditions of employment. Enterprise agreements
are also enforceable labour contracts covering national system employees at the
enterprise level, providing the means for employee and employers to tailor their
agreements to better suit their circumstances. There are also a range of provisions set
out in the FW Act that prescribe how agreement-making should proceed and what can
and cannot be included in the outcomes contained in modern awards and enterprise
agreements. And there is ongoing debate as to whether the FW Act provisions related to
the agreement-making are capable of realising its social inclusion and economic
objectives.

REVIEW QUESTIONS
1. What are the procedural and substantive elements of agreement-making?
2. How do trade unions and employers respectively view centralised and
decentralised bargaining?
3. How does enterprise bargaining begin?
4. Under what circumstances will the Fair Work Commission issue ‘scope orders’?
5. What must be included in the content of an enterprise agreement? What cannot be
included?
6. What negotiating behaviours are deemed to be evidence of ‘good faith
bargaining’?
7. What is a ‘bargaining-related workplace determination’?
8. What conditions need to be fulfilled before industrial action is protected from
civil liability?
9. What is an ‘industrial action-related workplace determination’?
10. What must the Fair Work Commission be satisfied with before ratifying an
enterprise agreement?

Visit Oxford Ascend for
 further revision material

CASE STUDY PENALTIES FOR

6.1 UNION BREACHES
PAID TO
EMPLOYER
The Federal Court has approved an agreement for the MUA and two union
officials to pay $41,000 in penalties to a stevedoring company for unlawful
industrial action the union took when the company planned to dismiss an employee
who had been on long-term leave. The industrial action occurred in 2012 and
covered three eight-hour shifts at the company’s Port Botany site. It was in breach
of the Fair Work Act 2009, as it occurred during the life of the relevant enterprise
agreement.
Justice Flick fined the union $30,000, and the officials $8,000 and $3,000. The
court said when an order was sought by a victim of the contraventions, it was
important there be no blurring of the line between the true payment of penalties
and a disguised damages claim or a costs order. Justice Flick said although the
contraventions involved deliberate conduct, they were, in essence, an overreaction
by the union and two officials to the decision to dismiss the impaired worker.
Although the response by the union and officials was unjustified, it was certainly
not conduct warranting the imposition of a penalty at anything other than the lower
range.
Source: Workplace info (2014a)

Questions:
1. Why do you think Justice Flick imposed a penalty at the ‘lower range’ on
the union officials?
2. What should the union officials have done to press their claim legally?
3. Justice may have been served in terms of the law, but was the judgement
fair?
 CASE STUDY EMPLOYEE
6.2 ENTITLED TO
PENALTY RATES
FOR RDO
WORKED
An enterprise agreement was misapplied by the employer. The employer had
requested an employee to work on his rostered day off (RDO) when another
employee called in sick. The employer told the employee he could take the
following day off and instructed him to sign a letter stating that he agreed to the
change. The agreement contained a provision for employees to interchange work
‘to meet their personal convenience’. The union submitted that the employee
should have been paid a penalty rate for working on his RDO, and that he should
also be paid for the day he did not work.
The Fair Work Commission found the employer was not entitled to stand the
employee down on such short notice. The employer submitted that the employee
had agreed to swap days, therefore penalty rates and payment for the alternative
day off did not apply. The Commission found the union’s evidence reliable in
noting that the employee was unaware of his entitlement to refuse to work on his
RDO. The relevant clauses were drafted in plain English. Shift changes were not
interchangeable for the employer’s ‘convenience’. The employee was entitled to
penalty rates for the RDO on which he worked and payment at ordinary time for
having been stood down the following day. Commissioner Stanton noted that the
case highlights the obligations placed on bargaining representatives to ensure an
enterprise agreement is distributed widely among management and employees so
that all parties clearly understood its terms and conditions.
Source: Workplace Info (2014b)

Questions:
1. Why do you think the Fair Work Commission ignored the letter signed by
the employee?
2. Was the judgement brought down by Commissioner Stanton fair?
3. Are there any issues relating to the power disparity between the
organisational positions held by the parties that might have contributed to
 the decision reached by the Fair Work Commission?

FURTHER READING
Bailey, J., & Peetz, D. (2015). Australian unions and collective bargaining in 2014.
Journal of Industrial Relations, 5(3), 401–21.
Caspersz, D., Gillan, M., & White, D. (2011). State, ideology and the emergence of
‘good faith’ collective bargaining regulation in Australia. Journal of Industrial
Relations, 53(5), 632–46.
Charlesworth, S., & McDonald, F. (2015). Women, work and industrial relations in
Australia in 2014. Journal of Industrial Relations, 57(3), 366–82.
Creighton, B. (2011). A retreat from individualism? The Fair Work Act 2009 and the
re-collectivisation of Australian labour law. Industrial Law Journal, 40(2),
116–45.
Forsyth, A. (2015). Major court and tribunal decisions in Australia in 2014. Journal
of Industrial relations, 57(3), 422–39.
Riley, J. (2012). Bargaining Fair Work style: Fault-lines in the Australian model.
New Zealand Journal of Employment Relations, 37(1), 22–9.
Townsend, K., Wilkinson, A., & Burgess, J. (2013). Is enterprise bargaining still a
better way of working? Journal of Industrial Relations, 55(1), 100–17.

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Fair Work Ombudsman. (2015). Improving workplace productivity through
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guides/best-practice-guides/improving-workplace-productivity-through-
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Transport Workers’ Union–NSW Branch v Busaways Gosford North P/L t/a
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<www.workplaceinfo.com.au/awards/agreements/cases/>.
USEFUL WEBSITES
https://www.fwc.gov.au/
Fair Work Commission
http://www.fairwork.gov.au/
Fair Work Ombudsman
 Chapter Seven
WAGE DETERMINATION

INTRODUCTION
Central to any employment relationship is the wage or salary paid by an employer to an
employee in exchange for work performed; in short, the so-called ‘work–wage
bargain’. Wages can be paid on the basis of some readily measured quantity of work
completed (piece rate), or at a set rate for each hour or day of work performed. Other
types of the work–wage bargain exist in the form of salaries, which are payments of an
agreed amount made at regular intervals, regardless of the hours of work performed or
the work completed; commissions, which are paid on the basis of individual, team,
department or company performance; and tips and gratuities, which are paid directly by
customers or clients to those performing work on their behalf or for their benefit.
Encapsulating all these modes of payment is the more generic use of the terms
‘remuneration’ and ‘compensation’. While acknowledging the existence and operation
of various modes of payment in the work–wage bargain, this chapter focuses on hourly
rates of pay—more commonly known as wages—as the vast majority of employees
subject to the Australian regulatory system governing workplace relations are paid in
this manner.

Salary
A monetary sum that represents the total pay provided over a 12-month period,
which encompasses other payments such as penalty rates, overtime rates, allowance
and annual leave loading.

Piece rate
A monetary sum paid for designated units of output (e.g. fruit pickers paid per
container of grapes harvested).

The chapter begins by reviewing the terminology of wages and their determination.
Such a review is useful in gaining an understanding of the various forms that wages
take, and the influences that impact on the fixing of pay rates. This type of understanding
can be applied in an Australian context, as well as in other national contexts as a means
of making sense of how the wages in different countries are determined. We then turn
our attention to a brief history of wage fixation in Australia, and the role and legacy of
industrial tribunals in settling pay rates across industries and occupations. Of particular
importance has been the evolution of the principles by which the federal tribunal came
to its determinations, most of which still play an important role in present-day
settlements. Also detailed is the manner of wage fixation under the current Fair Work
Act 2009 (FW Act) and the role played by the Minimum Wage Panel. The following
section surveys the current wages landscape. In so doing it looks at the wages paid to
full-time, part-time and casual employees, male and female employees, as well as
average wage rates paid to employees engaged in various industries and occupations.
The chapter concludes by listing three contentious issues related to wages: the minimum
wage rate, the gender pay gap, and decentralised wage fixing, all of which have in
recent times attracted considerable debate in Australia.

Minimum Wage Panel

is a federal tribunal attached to the Fair Work Commission with responsibility for
determining national minimum wages under the Fair Work Act 2009.

Wage rate
is a monetary sum paid per period of time worked, typically calculated on an hourly
basis (e.g. $20 paid for every hour worked).

Gender pay gap

The difference in male and female earnings, expressed as a percentage of male
earning.

TYPES AND DETERMINANTS OF WAGES

Wage rates are a monetary sums paid per periods of time worked, which are typically
calculated on an hourly basis (e.g. $20 paid for every hour worked). Piece rates are
monetary sums paid for a designated unit of output (e.g. fruit pickers paid per container
of grapes harvested). Bonus payments are financial rewards conferred on the basis of
performance. The nominal wage is the total wage paid without any consideration of the
impact of inflation on its purchasing power. The real wage is the total wage with
inflation taken into account. Both the nominal and real wages are meaningless unless
their relative purchasing power is compared over time. The gross wage refers to the
total wage before deductions (e.g. taxes, superannuation), whereas the net wage refers
to the take-home pay after deductions. ‘Salaries’ are the total pay provided over a 12-
month period, which encompass other payments such as penalty rates, overtime rates,
allowance and annual leave loading. Penalty rates are percentage increases paid
above the normal wage rate per hour when work is performed on weekends, holidays,
or outside of or in addition to normal working hours. In an Australian context, penalty
rates are typically paid as a percentage increment above the normal wage at a rate of 15
per cent for shift workers, 50 per cent for the first three hours worked and 100 per cent
thereafter for hours worked in addition to standard working hours (i.e. overtime), 100
per cent for all work performed on Sundays, and 150 per cent for work performed on
public holidays. Allowances are extra payments made to cover the costs employees
may incur during the course of their work; or as a means of remunerating their special
skills, undertaking of certain tasks, having special responsibilities, or working in
arduous or dangerous conditions; or for using personal tools, equipment, cars, phones,
and so on.

Bonus payment
A monetary sum paid on the basis of performance.

Nominal wage
is a monetary sum that represents the total wage paid over a designated period of
time without consideration of the impact of inflation on its purchasing power.

Real wage
is a monetary sum that represents the total wage paid over a designated period of
time, with consideration of the impact of inflation on its purchasing power.

Gross wage
is a monetary sum that represents the total wage before deductions (e.g. taxes,
superannuation).

Net wage
Monetary sum that represents the total wage after deduction—often referred to as
‘take-home-pay’ (e.g. taxes, superannuation).
 Overtime rate
An incremental rate added to the normal wage rate per hour when work is performed
in addition to normal working hours.

Penalty rate
An incremental rate added to the normal wage rate per hour when work is performed
on weekends, holidays, or outside normal working hours.

Allowance
A monetary sum that is an extra payment to cover the cost an employee may incur
during the course of their work.

A range of factors combine in various ways to determine the rate at which wages
are paid, as well as the timing and extent of changes in the rates that apply to different
occupations and within different businesses. The following paragraphs set out the main
factors that weigh into the determination of wage rates, none of which should be seen in
isolation.

Psychological and social factors

Wages provide for personal wellbeing, as well as for personal recognition within an
organisation and society more generally. More specifically, wages provide access to
the material necessities of life, as well as many of the symbols of status within an
organisation and society. They provide the means to access many of the pleasurable
advantages of civilisation. People are well aware of this, and so they need to have a
sense that their workplace contributions are being adequately and fairly rewarded.
They need to have a sense that their rates of pay are not being determined on the basis
of ulterior criteria, such as gender, race, religion or some other personalised prejudice.
In short, they need to believe they are not being exploited. If these feelings are not
satisfied, the employees concerned will either reduce their work efforts to align with
the wage rates being paid, challenge their wage rate or move to another organisation
where their efforts will be more adequately and fairly rewarded (Rees 1993; Davis
2003; Goldsmith et al. 1997). Employers who recognise this propensity will often
establish rates of pay on their own volition to ward off the possibility of losing
employees to competitors and to counter disruptive challenges and poorer work efforts
from dissatisfied employees.

Job requirements
Employees are normally paid at rates that accord with the job requirements. If a job
requires specialised knowledge, higher skill or extended experience—or if it attracts
certain responsibilities or involves some risk—the employee holding the job can be
expected to be paid more than employee engaged in a job that requires less knowledge,
skill or experience to perform, or involves less responsibility or risk. The suggestion
here is that jobs are graded and filled with employees having capabilities
commensurate with their satisfactory performance, with the wages paid being similarly
graded at rates that accord with these capabilities (De Beyer & Knight 1989).

Supply and demand

Like most commodities exchanged in a market system, the supply and demand
conditions of the labour market are another determinant of wage rates. So if there is a
scarcity of required skills relative to the organisational demand for such skills, then the
wage rates necessary to attract and retain employees who have those skills will be
typically higher than when the converse set of conditions prevail. In the latter instance,
the abundance of available skills relative to their demand will put downward pressure
on wage rates, as well as retard the timing and extent of any wage increases. The
demand and supply conditions of the labour market may only be pertinent to the
settlement of wage rates in a particular industry, occupation or a region. Those
industries, occupations and regions experiencing rapid technological change or growth
will often confront skill shortages that require the payment of higher wages to attract
and retain labour than those paid in industries, occupations and regions operating under
more stable conditions. The same forces can also affect wage rates across all
industries, occupations and regions within the national economy. The supply and
demand conditions in this instance are reflected in national rates of unemployment.
High unemployment rates tend to dampen wage expectations and demands more
generally for fear that increasing rates will only serve to reduce the already limited
demand for labour, regardless of the industry, occupation or region involved; the
converse again being the case when there are low rates of national unemployment
(Rothschild 2006; Coleman 2010).

Industry variations
Aside from cases where wages are nationally prescribed by government regulation or
union negotiated outcomes, it is common to find different rates paid to employees
engaged in the same occupation across different industries. This can be the case even if
the industries concerned are located in the same region. Much can depend on the nature
of work and working conditions, with more arduous or uncertain conditions attracting
higher premiums than conditions that are less onerous and more stable. Much also
depends on the centrality, importance or otherwise of an industry in the national
economy. For example, wage rates for occupations engaged in industries such as
stevedoring and mining are typically higher than for the same occupations engaged in
community services and retail. The state of the business sector in which an organisation
operates can also have a bearing on wage rates, with those engaged in highly profitable
markets able to pay higher wages than those operating under less profitable
circumstances (Kerr 1977).
The capital–labour ratio is also a determining factor in this type of wage variation.
Organisations that are capital intensive tend to be more profitable than labour-intensive
organisations, mainly because they employ more productivity-improving equipment.
The cost of wages is also often a smaller component of the cost of doing business,
which is the opposite to labour-intensive organisations. Hence, the higher profitability
and smaller cost of wages typical of capital-intensive organisations allows them to pay
higher wages than their more labour-intensive counterparts. For the latter, small
increases in the rates paid can represent in total a sizable proportion of the
organisation’s operating costs, and so will be more readily resisted, in comparison to
capital-intensive organisations where the opposite is the case (Mortensen 2003).

Economic circumstances
Apart from regional and industry variations, the state of the national economy can
generally influence the determination of wages, as well as the timing of wage increases.
For example, during periods of economic growth, wage rates tend to increase more
rapidly than in times of economic stagnation or decline. During periods of growth, the
availability of labour becomes much scarcer and the profitability of organisations is
typically higher. These conditions encourage the payment of higher rates of pay. This is
for two reasons. First, because organisations are more willing to pay higher wages to
attract the labour necessary to take advantage of the conditions of growth. Second,
because their higher profitability provides them with the ability to do so (Lazear &
Shaw 2008). The expectations of employees, often via their representative trade unions,
can also weigh into this interplay through demands for their ‘piece of action’. A further
contributing factor can be inflationary pressures associated with periods of economic
growth, which encourage wage demands by employees and their trade unions as a
means of maintaining living standards. During periods of economic stagnation or
decline, rising unemployment and tighter profit margins limit employee expectations
and trade union demands, while at the same time heightening employer resistance
towards pay demands (Lever 1995; Wachtel 2013).

Cost of living
Inflationary and deflationary pressures in a national economy can also impact on wages
rates. In an Australian context, the nature and extent of these pressures are calculated
and given form in the consumer price index (CPI). Employers and employees are both
mindful of how these pressures impact on living standards. Progressive employers may,
of their own volition, adjust wages in line with the cost of living index to maintain the
living standards of their employees. Some may even raise wages in advance of the CPI
as a means of improving the lot of their employees and encouraging their loyalty to the
firm and motivation towards the performance of work. Trade unions are also mindful of
movements in the CPI, especially when the index moves upwards; inflationary
increases in the CPI over time erode the real value of wages and thus the purchasing
power of their members. Trade unions, in addition to any other reason they may use to
justify wage demands, will invariably seek increases that align with the CPI to maintain
the living standards of their members (Ingram et al. 1999; Figart 2004). In Australia, a
ratcheting effect exists in the way wages are linked to the CPI, as decreases in the cost
of living are rarely matched by commensurate decreases in wage rates. There are also
regional differences in the costs of living between states, and between cities and
country areas. These differences can figure in the calculation of wage rates.

Consumer price index (CPI)

A measure of periodic changes in the price level of a sample basket of consumer
goods and services purchased by the average household (often referred to as the
‘inflation rate’).

Bargaining power
The relative bargaining power that exists between employers and trade unions is
another important factor in wage outcomes. The power of an employer exists in its
prerogative to hire, fire and allocate labour as it sees fit. It also exists in the simple
mobility of capital resources. This mobility, among other possibilities, allows an
employer to either withhold capital investment, move operations to other locations or
outsource operational tasks, all of which can be used to resist wage demands made by
trade unions. The power of a trade union, by contrast, depends on the legitimacy it is
afforded to conduct wage negotiations on behalf of employees, which can be either
legislatively mandated or simply conceded by employers. It also depends on the extent
of trade union coverage, and the willingness and ability of the leadership to bring
organised industrial action or reasoned argument to bear on wage negotiations. It is
furthermore dependent upon other factors already mentioned, such as the prevailing
unemployment rate, the state of the national economy and the industry sector in which
the trade union operates, as well as the profitability of the organisation with which the
trade union is negotiating. Thus, wider circumstances that favour the power of a trade
union exist in periods of high economic growth and low unemployment. The
profitability of employers under such circumstances would be high, so that an employer
faced with a trade union with an extensive workforce coverage and having the
capability to engage well-orchestrated strategies in support of wage demands, will
usually concede a higher wage rate than when one or more of these conditions is absent.
In short, the stronger a trade union is in the workplace and the more favourable are the
wider economic and industry conditions in which an employer operates, the higher will
be the wage outcome (Mishel 1986; Kaufman 2002).

Ability to pay
It is one thing to pay wages and settle wage rates as a consequence of extraneous
influences, whether they be inflationary pressures, the state of the national or regional
economy, and so on. It is quite another issue whether employers have the means for
servicing the cost of employing labour. In short, the payment of wages and any
improvements in their pay rates are highly dependent on the financial ability of
organisations to pay their employees (Lazear & Shaw 2008). For capital-intensive
organisations, where the total wage bill represents a relatively small proportion of total
running costs, the issue of pay will consequently be less of a concern by comparison to
their more labour-intensive counterparts. The same can be said of highly profitable
organisations, which will be able to pay higher wages and accede to wage demands
more readily than organisations that are operating under conditions where profit
margins are tight. The level of competition that exists in a given industry can also weigh
into the profitability and ability to pay wages at particular rates. Organisations that hold
monopolistic or duopolistic positions in the industrial and market sectors in which they
operate will be more profitable and thereby able to pay higher wages than those
organisations that face more competitive industry and market conditions. The state of
prevailing business conditions in an industrial sector or the national economy more
generally can also have an impact on profitability and the ability of organisations to pay
wages. During periods of prosperity, wage rates and wage increases tend to be higher
than in periods of relative stability or decline (Kerr 1977; Figart 2004).

The comparability of wages

Another market-based factor that plays an important role in the determination of wages
is their comparability, usually referred to as the ‘going rate’. For employers, the going
rate is that which is applied commonly, or at least broadly, to various occupations
within a given industry or region. An employer paying less than the going rate will
encourage employees to seek positions with better-paying competitors, while an
employer paying above the going rate will position themselves as an employer of
choice for those seeking work. In the context of numerous organisations typically
operating within an industry or region and the spectrum of possibilities that lie between
these differing pay options, there is a tendency for the wage in each occupational
category to gravitate towards a median; hence the going rate for employees holding
positions within these categories. For employees, the going rate is important for
deciding which organisation to work for. It is also important for the value they place on
the job, as well as the degree of endeavour and motivation they are willing to bring to
the performance of work. Another dimension of the comparability of wages exists
between the occupational categories themselves. Employees are mindful of the skills,
education and experience necessary to perform the work expected of them in their
occupational roles, and they are aware of the value of these roles relative to the value
of other occupational roles (Rees 1993; Figart 2004). Employers are also attentive of
the relative value of the work being performed. Hence a hierarchy of going rates
typically exists as a determining factor in the establishment and movement of wage
rates across different occupational categories; it gives a sense of fairness to pay
outcomes for employees and an efficient way to allocate rewards for employers.

Going rate
The standard wage paid to employees engaged in similar occupations or holding
similar skills.

Productivity of labour
Crucial to the organisational ability to pay wages is the productivity of labour. Labour
productivity is a ratio of some unit of produced output per unit of labour input. The unit
of output can be all manner of measurable goods and services provided by an
organisation, department or an individual. The unit of labour input is measured in terms
of the paid time it takes to produce or deliver the unit of output, with the time taken
typically being measured in hours (e.g. sales achieved per hour of paid work).
Organisations that have a high labour productivity will typically pay higher wages than
organisations having low labour productivity. Moreover, any increases in the
productivity of labour—if reflected in the profitability of an organisation–will allow
greater scope for increasing wage rates (Brown & Nolan 1988). However, the
productivity of labour is not simply resolved through ascertaining the tangible
productive output of the employees involved. It is also subject to other contributing
factors, such as machines, management and materials. For comparison, contrast the high
wages paid in profitable capital-intensive industries, such as oil refining and mining,
with the far lower wages paid in less profitable labour-intensive industries, such as
restaurants and clothing manufacturers. A change in the type and availability of
machines, management and materials can impact on the productivity of labour, which in
turn can impact on an organisation’s profitability and the rates at which it pays wages.
For example, an organisation that installs new machinery that increases the output of a
particular good, will also be increasing the output of the employees responsible for
producing that good; in short, the increased output realised by the new machinery will
increase the labour productivity of the machine’s operators. As long as the number of
employees both before and after the introduction of the new machinery remains the
same, the increased sale of the output derived from the machine will yield higher
profits and thereby provide the organisation with the ability to pay higher wages to the
operators of the machine (Katz 1986; Weiss 1990).

Labour productivity
A ratio of some unit of measurable goods and services produced per unit of labour
input, typically measured in hours of work effort.

Government policy
Governments operating under democratic political arrangements are always mindful of
the competing interests of labour and capital, with one of the major areas of
competition being the division of the spoils of enterprise between wages and profit.
Organisations that are immensely profitable to the widespread detriment of the living
standards and social conditions of employees can create electoral problems for an
incumbent government. Leaving the settlement of wages to the whim of market forces or
the applied bargaining power of employees alone may also not be enough to ensure the
fair payment of wages across all industries and all professions. Further, leaving wage
increases to the caprice of bargained outcomes can have damaging impacts on
employment and inflation rates, making it difficult for a government to administer
economic and social policies with any surety. It is for this reason that governments tend
to put in place legislation and associated agencies for the purpose of regulating wage
outcomes. Some of this legislation is designed to balance the bargaining power
between the two sides of industry so that any wage increases are affordable to
organisations, and at the same time provide for a decent standard of living for
employees. Other legislation may be directed towards the establishment of a minimum
wage rate for employees lacking bargaining power or those holding precarious
positions within the labour markets in which they operate (Calmfors & Drifill 1988;
Crouch 2003).

Globalisation
The global division of labour between the developed and developing worlds is a final
determinant of wages. In developed countries, evidenced by the existence of advanced
industrialisation, the wages paid are higher than those paid in developing countries,
where sophisticated industrial processes are either non-existent or in a stage of early
development. This encourages employers to move the labour-intensive parts of their
operations from the higher paying developed countries to the lower paying developing
countries. In so doing, jobs that would normally be filled by employees in the
developed world are being taken over by lower paid employees in the developing
world. In the industrialised, higher paying countries, this can create an oversupply of
displaced labour among those who do not have the skills to compete for higher paid
employment. In turn, this puts downward pressure on wages among the remaining
employees working in the same job categories, and can do so even when the
unemployment rate is low. The same tendency also has the effect of putting a brake on
wage demands by employees and their trade unions within those organisations that are
capable of moving their operations to lower-waged countries (Schulten 2002; Brown et
al. 2010).

HISTORICAL WAGE DETERMINATION

Many of the elements of the wage regulation system that has existed in Australia for
much of the last century are still apparent today, either as a direct continuation or in
modified form. Having some understanding of the history of wage regulation will
contribute to your understanding of contemporary wage setting processes.

The Harvester Judgement (1907–1983)

We begin by looking at how these processes were established by the country’s first
federal industrial tribunal (i.e. the Conciliation and Arbitration Commission) and the
judgement made by Justice Higgins over a pay dispute in 1907 at the Sunshine
Harvester factory in the Melbourne suburb of Sunshine. In seeking to resolve the
dispute, Higgins noted in his judgement that, ‘I do not regard it as my duty to fix a high
wage but a fair and reasonable wage, not a wage that is just enough to keep body and
soul together, but something between these two extremes’ (cited in Owens et al. 2011:
345) To this end, Higgins thought it was not enough to simply fix a single minimum
wage, but to also set minimum wages for different job categories contained in industrial
and occupational awards. This was aimed at recognising in remunerative terms the
special skills associated with the different types of work undertaken within these
categories. All awards thereafter came to incorporate into their content a range of
wages rates to cover the various job categories they listed, a practice that is still in
place today. For much of the twentieth century, the federal tribunal would adjust these
rates periodically through national wages cases. Such cases involved the judicial
hearing of arguments both for and against wage adjustments given by registered
industrial organisations, typically employer associations and trade unions, but at times
by the federal government as well. In reaching its decisions on any adjustments, or
more specifically what magnitude of increase was to be applied, the federal tribunal
would take into account the requirements set out in its regulating legislation. It also
deferred to its own set of wage-fixing principles which were developed over time
within the jurisdictional confines of the legislation (Macintyre & Isaac 2004).
 Wage-fixing principles
A set of principles adopted by the federal tribunal to guide its determinations in the
setting of award wages. Many of the same principles were adopted by state
tribunals.

Until the late 1980s, the legislative requirements were prone to fixate on national
economic indicators as a precursor to any wage adjustments, i.e. the federal tribunal
was required to consider in its determinations the impact that any wage adjustments
would have on such things as national economic growth, rates of inflation and levels of
unemployment. The legislative focus along these lines was quite different to the
present-day drivers of tribunal wage decisions, which are now orientated towards
enterprise-level indicators such as firm-level profitability, labour costs and
productivity. National determinations also deferred to a range of ‘wage fixing
principles’. These principles were a set of rules internally developed by the federal
tribunal to guide its wage decisions and to frame the parameters of wage demands and
counter-demands placed by employers and trade unions. They developed in a
piecemeal way over time to accommodate emerging workplace exigencies or to
address certain anomalies and inequities (Australian Conciliation and Arbitration
Commission 1981; Provis 1992). For example, differential wage rates were listed for
men and women holding the same occupation within award job categories, a practice
that was rescinded when the ‘principle of equal pay for work of equal value’ was
adopted in 1972 and applied thereafter (Pocock 1999).

Equal pay for work of equal value principle

A principle applied by the federal tribunal in wage determinations that required men
and women engaged in similar occupations within the same award categories be
paid the same wage.

Other principles have already been implied in the earlier reference to the Harvester
decision; namely, the setting of a minimum rate of pay for unskilled workers capable of
providing for a decent standard of living (the ‘needs of the worker principle’), and the
provision of additional pay for skilled workers (the ‘margin for skill principle’), a
practice that is still applied today in awards and, to a more limited degree, enterprise
agreements (Hancock 1979). The minimum rate of pay came to be the standard upon
which all other wages were set, and was periodically adjusted by the federal tribunal
to account for increases in the cost of living. Thus, the rate of inflation was considered
to be a key factor in determining the magnitude of minimum wage adjustments under the
needs of the worker principle, which in turn flowed on to all job categories in all
federal awards under the ‘margin for skill principle’. Also considered in this calculus
was the need to maintain wage relativities between different occupational groups as a
means of reducing the incidence of wage-related industrial conflicts (the ‘comparative
wage justice principle’) (Manning et al. 1972). State tribunals and associated awards
invariably followed the federal tribunal’s rulings on wage matters. Also weighing into
the tribunal’s deliberations was the capacity of the economy to pay (the ‘capacity to
pay principle’), which, in partial deference to the legislative requirements mentioned
earlier, took into consideration the impact of any wage increase on the costs of
production and levels of employment (Hancock 1979). The capacity of the economy to
pay is still considered in present-day minimum wage adjustments, with the addition of
the capacity of an industry or enterprise to pay a wage adjustment being considered in
the case of margins for skill contained in the job categories listed in industry awards
and enterprise agreements.

Needs of the worker principle

is a principle applied by the federal tribunal in wage determinations that required the
minimum rate of pay for unskilled employees be capable of providing for a decent
standard of living.

Margin for skill principle

is a principle applied by federal and state tribunals in wage determinations that
required an incremental rate be added to the base rate for an unskilled employee to
account for the additional worth of a skilled employee.

Comparative wage justice principle

is a principle applied by the federal tribunal in wage determination that required the
relative wage difference between different occupational groups was maintained.

Capacity to pay principle

is a principle applied by the federal tribunal in wage determinations that weighed the
capacity of an industry or the economy to pay adjustments in wages.

In addition to the legislative requirements and the operation of these principles,

there emerged in the late 1940s a system of ‘over-award’ rates, which were applied in
awards to account for special circumstances. Such rates were added to unskilled base
rates and margin rates for skilled workers to allow employers to attract or retain
labour, or as a result of union demands. The settlement of over-award rates were
typically bargained by employers and unions engaged in a specified industry to suit its
prevailing labour market or business circumstances. They could also be negotiated
between an individual employer and its covering trade unions; an early precursor to the
way that wage rates are settled in present-day enterprise agreements (Yerbury & Isaac
1971).

Over-award rate
A monetary sum paid as an incremental rate above the award rate to account for
special circumstances of an industry or enterprise.

This system of centralised wage fixation had its virtues and vices. The bargaining
typically involved input from the representatives of employers and employees, while
the processes and enforcement were often mediated and policed by a legislatively
empowered tribunal or agency. In Australia, the minimum wage adjustments determined
by the Minimum Wage Panel are an example of this system, with the determinations
applied to low-paid workers regardless of the economic sector in which they are
employed.

Centralised wage fixation

A system of wage bargaining and determination that applies to all industries and
occupations, or across an entire economic sector (also known as ‘centralised wage
bargaining’).

Centralised wage fixation allowed wage settlements to be undertaken in an orderly

and coordinated manner, making it easier for firms to plan for the future and compete on
grounds other than maintaining or reducing the costs of labour. It also allowed
governments to administer economic policy within a wages environment that was
relatively stable and predictable, enabling the benefits of industrial enterprise to be
spread more evenly across the workforce—thus reducing divisions of wealth between
rich and poor and between different occupational groups (Burgess 2004). However, it
also perpetuated a rigid wage structure that made it difficult for unions to make wage
claims, and difficult for firms to offer wage rates that fell outside the system of national
wage fixation.
The rigidities built into this centralised system in wage determination operated
reasonably well up until the 1970s. But during the 1970s, the Australian economy was
confronted with a series of economic problems, consisting of uncertain economic
growth, high inflation and unemployment, as well as balance of payments and public
expenditure shortfalls. Unchecked wage breakouts ensued as workers and their trade
unions sought to offset rising living costs, which in turn caused the federal government
to take a greater interest in regulating wage settlements. Because of this, a modified
form of centralised wage indexation was introduced in 1975 as a means of containing
wage increases to within the rate of inflation. This involved the application of partially
indexed wage increases for low paid workers and a set dollar increase for higher paid
workers (Rimmer & Zappala 1988). This was the federal government’s first attempt to
subordinate national wage settlements to its macroeconomic policy objectives. It was a
piecemeal attempt under trying economic circumstances and proved only partially
successful; first, because it was resisted by the labour movement both politically and
industrially; and second, because it was inconsistent with the federal tribunal’s long
established principle of comparative wage justice (Phipps 1981).

The Accord (1983–1996)

It was not until the election of the Labor Party to office in 1983 that the federal
government began to introduce wages policies as an instrumental part of its
macroeconomic management strategy. As part of this strategy, a range of political and
policy arrangements were put in place in the form of the Prices and Incomes Accord.
This Accord was an agreement between the federal Labor Government and the
Australian Council of Trade Unions (ACTU), and it operated in various formulations
between 1983 and 1996. Throughout the early years of the Accord, the wage rate for all
workers employed under occupational and industry awards was established via an
extreme form of centralised wage determination overseen by the federal tribunal. Such
determinations were directed by the federal government under its agreement with the
ACTU, and sought to stablise the rate of inflation and thereby create an economic
environment conducive to business investment and economic growth. The Accord
effectively linked pay increases to economic conditions, the result of which amounted
to cuts in real wages. Despite this, the Accord was supported by trade unions because
of offsetting federal government policies that improved the ‘social wage’ of workers.
This involved, among other things, the introduction of Medibank (now called
Medicare) and free education, taxation cuts, the establishment of active labour market
programs, and employer contributions to employee superannuation funds (Archer 1992;
Wright 2014).

Social wage
A form of income compensation delivered through government policies, such as
taxation cuts, labour market programs, and subsidised health and education.
 After 1987, the system became subject to some decentralisation, with the
introduction of a two-tiered wage system that provided for both flat rate and flexible
rate increases; it provided for flat rate adjustments based on cost of living increases, as
well as for negotiated increases based on productivity improvements at the firm or
industry levels. Such improvements could be demonstrated in various ways, but often
involved union concessions in reducing the number of occupational grades and job
classifications contained in awards. Another change facilitating these decentralised
wage outcomes was the legislative introduction of enterprise bargaining agreements.
This had the effect of relegating the wage-fixing role of the federal tribunal to the
periphery, as wage rates began to be negotiated and settled more directly between
unionised employees and their employers (Rimmer & Zappala 1988).
As a consequence, the determination of wage rates gradually evolved from a highly
centralised system to a mixture of centralised and decentralised processes. By the end
of the Accord era, the pattern of wage setting was centralised in providing flat rate
increases in accordance with the macroeconomic health of the economy, as well as
decentralised in providing for differential wage increases at the level of the firm based
on microeconomic factors pertinent to the parties concerned. This shift occurred as a
result of changes in the structure of the economy and sources of employment,
deregulation of the financial system and competitive pressures emerging from
increasingly globalised economy, and the introduction of more technologically
sophisticated capital equipment, all of which required a more educated, adaptable and
flexible labour force if firms—and the economy more generally—were to survive and
prosper (Wright 2014). In short, maintaining a rigid, centralised system of wage
determination in an increasingly uncertain business environment proved impossible to
sustain and was consequently abandoned.

Under Coalition governments (1996–2007)

The period of the Liberal–National Coalition Government 1996–2007 saw the passing
of two important pieces of reforming legislation that significantly decentralised the pre-
existing system of industrial relations, and with it the system of wage determination as
it had operated to that time. The first came in the form of the Workplace Relations Act
1996 (WR Act), which conferred a new role on the federal tribunal in fixing a safety
net of minimum pay for all ‘award reliant’ employees. The tribunal, in a difficult
political climate that sought a single minimum rate of pay, stayed true to its traditional
role of adjusting wage rates across all job categories contained in awards, but made
some concessions in its determinations in the form of flat rate adjustments rather than
percentage based adjustments. This meant that those in higher paid job categories
received a lesser pay increase in percentage terms than those in lower paid job
categories. Greater scope was provided under the WR Act for the settlement of wage
rates that were higher than those contained in applicable awards, these being negotiated
by the parties involved in enterprise bargaining agreements and in newly enabled
individual bargaining arrangements known as Australian workplace agreements
(AWAs) (Carlson et al. 2001).
The second piece of legislation came in the form of the Workplace Relations
Amendment (Work Choices) Act 2005, which represented a major change in the system
of wage fixation as it had operated over the previous century. It saw the federal
government for the first time implement new legislated working standards, part of
which allowed for skilled and unskilled wage rates to be determined by a new
institution known as the Australian Fair Pay Commission (AFPC).
The AFPC was given the responsibility for determining the national minimum
wages not only for unskilled employees, but also for junior employees, employees for
whom training arrangements applied and employees with disabilities. It also had the
responsibility for deciding on the loadings to be paid to casual workers, and
determining the minimum wage rates to be paid in various job categories contained in
awards. In setting these rates, the AFPC was legislatively required to regard the
capacity of the unemployed to obtain work and the low paid to remain in employment,
as well as the levels of employment and competitiveness across the economy more
generally (Owens et al. 2014). The AFPC applied a centralised method of wage
determination in relation to awards, leaving scope for decentralised wage outcomes to
be negotiated by trade unions or worker collectives in enterprise agreements or by
individual workers and their employers in Australian workplace agreements (Cowling
& Mitchell 2007). The biggest change, however, was procedural.
Prior to the introduction of the Work Choices Act 2005, the federal tribunal was
obliged to adjudicate on wage demands brought before it by trade unions, the timing of
which was determined by the trade unions themselves and was typically an annual
affair. Moreover, the settlement of wage rates was subject to the tribunal’s guiding
principles and the ambit of wage claims and counter-claims made by trade unions and
employer groups—and at times by the federal government as well. Under the Work
Choices system, the AFPC was not obliged to hold annual wage hearings, nor was it
obliged to justify its determination in response to the claims and counter-claims put by
trade unions and employers. Instead, it was given full discretion over the timing of
wage reviews, how the reviews were to be conducted, what evidence it would accept
and from whom, and when a wage decision would come into effect (Waring et al.
2006). In short, under Work Choices, the AFPC had a unilateral prerogative in setting
minimum wage rates.

Under the current Fair Work Act 2009

The election of the Labor Party to federal government in late 2007 was predicated on
significant public dissatisfaction with the Coalition Government’s Work Choices
legislation. It also saw another change in system of wage fixation. New legislation was
introduced in the form of the Fair Work Act 2009 (FW Act), which returned to a system
centred on awards, and returned the power to regulate wages to the federal tribunal,
now called the Fair Work Commission (FWC). The AFPC was consequently shut down
and its wage-setting responsibilities transferred to a Minimum Wage Panel (MWP). The
MWP is a branch of the FWC; its membership comprising the president of the FWC, as
well as three full-time and three part-time commissioners who only have
responsibilities relating to national wage cases. The main objective of the MWP is to
establish and maintain a safety net of fair minimum wage rates for all employees within
the national system. In seeking to realise this objective, under the terms of the FW Act,
the MWP is obliged to consider the performance and competitiveness of the national
economy, including the state of its productivity, growth, business competitiveness and
viability, as well as inflation rates and employment growth. The MWP must also take
into account relative living standards and the needs of the low paid, as well as adhere
to the principle of equal remuneration for work of equal or comparable value. It must
furthermore consider the remunerative needs of junior employees, employees with
disabilities and employees to whom training arrangements apply, as well as ensure that
any wage adjustments promote social inclusion through increased workforce
participation (Owens et al. 2014). The combination of these economic, social and
moral goals means the objectives are quite broad and quite sweeping. So much so that
they provide the MWP with far greater scope than its predecessor to justify its wage
decisions and have those decisions applied more widely.
It is in the context of these legislative requirements and objectives that the MWP has
the responsibility for setting minimum wage rates for different cohorts of employees
who fall within the jurisdiction of the FW Act. It has the responsibility to set minimum
rates of pay for trainees, apprentices and juniors (employees under the age of 21).
These rates are discounted against legal minimums applied in associated professions in
recognition of the lower work value and productivity of these categories of employee.
The FW Act allows for such differential rates so that they do not fall within the judicial
province of unlawful discrimination. The MWP also has responsibility for establishing
loadings for casuals to compensate for their lack of entitlement to various forms of
leave and superannuation, as well as the responsibility for adjusting minimum wage
rates in individual and multiple awards when such adjustments are justified on ‘work
value’ grounds. These rates are applied to unskilled and skilled job categories
contained in modern awards, but they also cover the wage rates of national system
employees for whom a modern award would apply. In addition, the MWP has the
capacity to issue Minimum Wage Orders for employees who are not covered by an
award or agreement (Owens et al. 2014). The last National Wage Order issued by the
Panel in 2014 is set out in Box 7.1.
 Minimum Wage Order
An order issued by the FWC that establishes a minimum wage for employees not
covered by an award or agreement.

Casual loading
An incremental percentage of the normal wage rate added to account for the lack of
entitlement to various forms of leave; presently set at 25 per cent.

Box 7.1 National Minimum Wage Order 2014

The National Minimum Wage Order 2014 [PR551832] set the wages listed below
for employees not covered by an enterprise agreement or a modern award. The order
took effect in relation to a particular employee from the start of the employee’s first
full pay period on or after 1 July 2014. The order includes the following:
National minimum wage—of $640.90 per week, calculated on the basis of a week of 38
ordinary hours, or $16.87 per hour.
Casual loading—of 25 per cent.
Special national minimum wage 1—for employees with disability which does not affect their
productivity: of $640.90 per week, calculated on the basis of a week of 38 ordinary hours, or
$16.87 per hour in the case of an adult (and who is not a junior employee, or an apprentice, or
an employee to whom a training arrangement applies).
Special national minimum wage 2—for employees with disability who are unable to perform
the range of duties to the competence level required of an employee within the class of work
for which the employee is engaged because of the effects of disability on their productive
capacity, and who meet the impairment criteria for receipt of a Disability Support Pension (and
who is not a junior employee, or an apprentice, or an employee to whom a training arrangement
applies): a base rate of pay set in accordance with Schedule A to the National Minimum Wage
Order.
Special national minimum wage 3—for junior employees: to be based on a percentage of the
national minimum wage.
Special national minimum wage 4—for apprentices: to be based on the provisions in the
Miscellaneous Award 2010 (clause 14) for apprentices (some transitional provisions apply; see
National Minimum Wage Order).
Special national minimum wage 5—for trainees: to be based on the provisions set out in the
Miscellaneous Award 2010 (Schedule E) for employees to whom training arrangements apply.

Source: Fair Work Commission (2014)

Before making any wage determinations, the MWP is required under the FW Act to
conduct an annual review. Such reviews are required to accept submissions presented
by almost any individual, institution or organisation, and the MWP may undertake its
own independent research, or call on outside research into wage-related matters as part
of the review process. Such reviews are not provoked by wage demands put by trade
unions—as was the case when wages were reviewed and settled via arbitrated
processes—but nor is their input considered unexceptional, as was the case under the
Work Choices system. The input of trade unions—the ACTU in particular—as well as
the input of the leading employer associations during the review process is considered
critically important in the determination of wage outcomes. Once the review is
completed, wage adjustments take effect on 1 July of the year following the decision (if
they are deemed warranted), the intention being to give businesses the opportunity to
plan for any increases. Thereafter, it is not possible under the terms of the WR Act for
employers and employees to reach alternative pay arrangements that offer less than the
WMP’s minimum. Breaches of the MWP’s wage determinations and orders are
enforced by the Fair Work Ombudsman, with penalties for non-compliance of up to
$10,200 for individuals and $51,000 for corporations (Fair Work Ombudsman 2015).

PRIMARY EXAMPLE 7.1

Coffee franchise fined for underpaying staff
Young cafe workers have been exploited and illegally paid wages as low as $8 an hour
at a Melbourne franchise of the popular Gloria Jean’s coffee chain. Twenty-two
employees were ripped off by more than $83,000 over two years, the Federal Court has
found, with individual underpayments ranging from $219 to $17,000.
Workplace investigations at Gloria Jean’s Caulfield East store uncovered illegal
underpayments of the casual staff, mostly international students aged under 21 from
non–English speaking backgrounds. The franchisees have been ordered to pay
substantial fines of more than $110,500 after the Fair Work Ombudsman won a major
lawsuit.
In the largely cash industry, where requirements on wages and working conditions
are routinely ignored, it is believed there are thousands of waiters, kitchen hands, cooks
and dishcleaners being paid well below the legal minimum. The court found the owner–
operators of the Gloria Jean’s outlet made a ‘deliberate’ decision to slash staff wages
below the legal rate to match the business’s declining cashflow.
The court dismissed the company’s claims that the workers did not express
dissatisfaction with their entitlements before the Fair Work Ombudsman’s probe. ‘It is
common for employees, particularly in industries where pay rates are low and
workforces are largely casual, to be wary of expressing any dissatisfaction for fear that
their employment will not continue,’ Judge Riethmuller said.
 Fair Work Ombudsman Natalie James said the court case sent a stern warning to
other employers who were undercutting workers’ minimum wage entitlements.
‘Successful litigations such as this also benefit employers who are complying with
workplace laws because it helps them to compete on a level playing field.’
Source: Toscano (2015a)
Questions
1. Why did the Fair Work Ombudsman dismiss the claim made by the firm that its
workers were not dissatisfied with their pay entitlements?
2. What problems are confronted by firms when competitors pay their workers less
than the minimum wage?
3. What are characteristics of workers employed by firms such as Gloria Jean’s that
make it easy for them to be exploited in the payment of wages?

The MWP thus carries over elements of its immediate forerunner in the AFPC. It
must consider a range of market-based criteria when adjusting minimum rates of pay,
and it similarly has the responsibility for setting minimum rates of pay for juniors,
trainees, apprentices and employees with disabilities, as well as setting a safety net
minimum wage for the low paid regardless of their award or agreement coverage. The
MWP also contains elements of earlier federal tribunals, with its focus on adjusting
minimum wages contained in awards, in its annualised review and adjustment of
wages, and in the weight accorded to submissions provided by key industrial
organisations when reaching decisions. Moreover, the MWP’s objectives have a social
and moral dimension in addition to the usual market-based dimension, and its review
processes are more open to wider social and intellectual interests (Waring & Burgess
2011).

AUSTRALIAN WAGE STATISTICS

The methods of wage determination have changed in accordance with the different
legislative regimes under which they have operated. Since Work Choices was replaced
by the FW Act, a higher proportion of national system employees have come to have
their terms and conditions settled via collective agreements, and a smaller proportion
by individual agreements. Moreover, a far smaller proportion are now paid at minimum
award rates. Figures from the Australian Bureau of Statistics (ABS) indicate how
employees’ wages are determined as a result of these changes. The proportion of all
employees whose pay was set by collective agreements rose from 38.2 per cent in 2002
to 41.1 per cent in 2014, with those having their pay set via awards only falling from
20.5 per cent to 18.7 per cent. Over the same period, the share of employees whose pay
was set by individual arrangements, represented in common law contracts and
Australian workplace agreements, fell from 41.3 per cent to 36.6 per cent. Thus,
increasing numbers of employees are having their wages determined by collective
agreements, with the vast majority having this determination settled through enterprise
agreements (ABS 2014a).
To lend some context to contemporary wage determination in Australia, it is useful
to have some understanding of the general wages landscape. For this purpose, we draw
on ABS figures on employee earnings and hours for May 2014 (ABS 2014a). These
figures show that the average weekly total cash earning for all Australian employees
(9,898,900 at the time) stood at $1,182.40. The average for full-time employees (60.0
per cent of all employees) was $1568.80, while for part-time employees (40.0 per cent
of all employees) the average was $602.80. For males, the average weekly total cash
earnings was $1,429.80, whereas for females the average was $940.20. For full-time
employed males, the average was $1,680.70 and for full-time employed females the
average was $1,376.80. Among part-time employees the average wage paid to males
was $608.00 and for their female counterparts the average was $600.70 (see Figure
7.1). The discrepancy between genders has a number of reasons, but has largely to do
with the different proportions of males and females represented in various occupations
and the types of industries in which they are predominately engaged. Males tend to
dominate in higher paying industries and occupations, such as mining and engineering,
whereas females are more prominently found in lower paying industries and
occupations, such as community services and nursing. It also has much to do with the
different ratios of representation in their employment status. Males are mainly
employed in full-time positions (76.6 per cent of male employees), whereas females
are more commonly found in in part-time positions (56.2 per cent of female
employees).
Turning to the methods of wage determination, the ABS figures make a distinction
between wages rates set via collective agreements, awards only, individual
arrangements and as the owner or manager of an incorporated enterprise. Of these, the
most dominant method of wage setting occurs through collective agreement (41.1% of
all employees).

FIGURE Average weekly total cash earnings: Employment status, May 2014
7.1
 Source: ABS (2014a)

The most common employees falling into this category were professionals (50.6% of
all professionals) and community and service workers (50.1%), followed by machinery
operators and drivers (48.5%), sales workers (44.0% and labourers (43.6%). The next
most common method was via individual arrangements (36.6%), with managers
(58.7%), clerical and administrative workers (49.4%), and technicians and
tradespeople (43.9%) being the most common types of employees having their wages
determined in this way. Those having their wages determined by awards only were far
fewer (18.8%), with the largest proportion being community and personal service
workers (34.2%), labourers (31.4%) and sales workers (29.7%). Very few employees
had their wages determined under contracted arrangements as the owner-managers of
incorporated enterprises (3.4%). Wages determined via individual arrangements were
highest among males (20.6% of all employees or 41.6% of male employees), whereas
collective agreements were the most common method for females (22.6% of all
employees or 44.8% of female employees). Slightly more females (10.8%) had their
wages fixed via award only arrangements than males (8.0%) (see Figure 7.3). Full-time
employees were more likely to have their wages set by individual arrangements
(41.6%), while the most common method for part-time employees was via collective
agreement (45.8%). For employees engaged on a permanent basis or on fixed-term
contract, the most commonly method of wage setting occurred through collective
agreements (42.7%), whereas for casual employees it was via award only (38.9%).

FIGURE Method of setting pay: All employees, May 2014

7.2
 Source: ABS (2014a)

The most common method of wage determination in the private sector was through
individual arrangements (44.4%), followed by collective agreements (30.4%). In the
public sector, collective agreements were by far the most common means of wage
setting (87.2%). Fixing wages via collective agreements was highest in the education
and training sector (84.1%), with award-only methods being most common in the
accommodation and food services industries (42.8%). Wages determined through
individual arrangements were highest in the professional, scientific and technical
services industries (71.2%) and the wholesale trade industries (71.2%), while wages
established through arrangements pertaining to the owner–managers of incorporated
enterprises were mostly found in the construction industry (10.8%).
The central themes revealed in these figures are that the determination of wages in
individual agreements tends to dominate in industries that fall outside the national
system of industrial regulation, or where the occupational skills to be bargained over in
setting wages rates can be undertaken on an individual basis and without the support of
organised labour. Wages determined via collective agreements and award-only
arrangements predominate in the converse set of circumstances—in industries and
occupations that are subject to the national system of industrial regulation, one that
confers on trade unions a legitimate role in negotiating wage rates for those most likely
to be disadvantaged in the bargaining process.
So how does this system of wage fixation play out in the different occupations and
industries in which it is applied? To answer this question, we once again refer to the
May 2014 ABS ‘earnings and hours’ figures. Here we find that average weekly total
cash earnings was highest for those on individual arrangements ($1,376.10), followed
by those whose rates are fixed as the owner-managers of incorporated enterprises
($1,316.70). The next were those on collective agreements ($1,214.00), followed by
those whose wage rates were determined through awards only ($711.20). The wages of
males are higher than females across all wage-setting methods (see Figure 7.3). The
average weekly total cash earnings for full-time employees was highest under
collective agreements ($1,654.90), followed by employees working under individual
arrangements ($1,648.90), the owner-managers ($1,455.30) and award-only employees
($1,072.80). Managers paid by individual arrangements had the highest average weekly
wages ($2,312.30), sales workers paid under award only the lowest ($470.60).

FIGURE Average weekly total cash earning: Method of setting pay, May 2014
7.3
 Source: ABS (2014a)

Figure 7.4 shows average weekly cash earnings by employment sector. The mining
sector had the highest average weekly total cash earnings ($2,499.60), whereas the
accommodation and food services industries had the lowest ($561.60). For private
sector employees the total average weekly earnings was $1,128.20, whereas for public
sector employees that average was $1,415.90, a reflection of the latter’s higher levels
of unionisation and lower number of part-time and casual employees.

FIGURE Average weekly total cash earning: Industry, May 2014

7.4

Source: ABS (2014a)

CRITICAL ISSUES IN LABOUR RELATIONS

There are three critical issues in Australian labour relations. The first is the rate of the
minimum wage. The second is who should decide wage rates and in what manner? The
third is why have men and women historically been paid different wages to perform the
same job?

The minimum wage

One of the major pay issues in the history of Australian labour relations has been the
settlement of the minimum wage rate. It is a history girded by strong political
inclinations and social expectations that those workers most vulnerable to the vagaries
of the country’s economic cycles be protected. Political parties of all complexions have
consequently supported the role of country’s federal and state tribunals in fixing
minimum wages as a means of satisfying these community expectations. The wellbeing
of workers on the minimum wage has been impacted on by a variety of changes, most
notably in the mix of employment status, workforce participation and working hours,
but also as a consequence of changes in taxation and income protection laws, and more
latterly through the introduction of superannuation.
The hourly rate of minimum wages has increased by almost 120 per cent in real
terms since the Harvester Judgement but, taking account of the changes noted in the
previous paragraph, the increase has been closer to 220 per cent. The trend over the
past 30 years has seen the minimum wage decline relative to other earnings, but this has
been the result of the higher rate of growth in other incomes, rather than an actual fall in
the minimum wage (Bray 2013: 5). This relationship is given in what is referred to as
the minimum to median wage ratio, which has declined from around 65 per cent in the
early 1980s to 54 per cent in 2014 (Jericho 2015). However, the real value of the
minimum wage has also been buttressed over this period through other means, such as
lower taxation rates applying to minimum wage recipients, and social policy transfers
that support low income families who have children.

Minimum to median wage ratio

The annualised minimum wage relative to the annualised average median wage,
expressed as a percentage.

Another change over the past 30 years has been the way the minimum wage is
conceived of in its determination. The male breadwinner model that originally
underpinned the Harvester Judgement was premised on the family wage structure of a
single wage earner supporting a partner and three children. This model has given way
to a new model that assumes the predominance of dual household incomes; this is
consistent with the fact that single breadwinners with dependent children have declined
significantly since the early 1980s (Hayes et al. 2010). Conceived of in this way, the
income of minimum wage employees is now considered as supplementing the income of
higher wage earners within the household. The beneficiaries of the minimum wage are
typically unskilled or inexperienced women and younger employees who are engaged
by small firms on a part-time or casual basis, with the dominant occupations being
represented in the areas of food preparation, process work, sales, hospitality and
agriculture. The number of people on the minimum wage is difficult to determine, but
different surveys suggest the range is about 4–10 per cent of the workforce (Healy &
Richardson 2006; Healy 2010).
Internationally, Australia has one of the highest minimum wage rates in the
developed world, which has been the cause of much contemporary debate (see Figure
7.5). Those suggesting the Australian minimum wage rate is too high typically argue that
it renders labour too costly for business to employ, and thus creates higher levels of
unemployment than would otherwise exist were the rate left to settle in accordance with
the demand and supply conditions of the labour market. In particular, it is asserted that a
legislatively supported minimum wage rate acts in a way that discourages the
employment of young people seeking entry into the workforce. There is also the
argument that establishing a floor of minimum wage rates diminishes the financial
flexibility required by businesses to survive and prosper in product and service
markets that are becoming increasingly uncertain under the weight of advancing
globalisation (Novak 2014; Sloan 2013; ACCI 2014).
The counter-argument is that a paying high minimum wage rate actually supports
businesses by raising the level of market demand for their products and services.
People arguing for high minimum wage rates suggest that legislative supported
minimum wages and their ongoing adjustment forces businesses to work smarter and
more innovatively, as it encourages them to invest in productivity improving technology
as a means of making the most of the labour they employ. It is further argued that paying
a high minimum wage rate gives employees a sense that their work is being adequately
and fairly rewarded. In so doing, it gives the workers and their families a practical
means of self-worth and psychological sense of self-reliance. To allow the minimum
wage rate to be determined by market forces alone would run the risk of creating a
class of working poor, with all the attendant family and social problems this involves
(Oliver & Buchanan 2014; Jericho 2014).

FIGURE Real minimum wages: International comparison

7.5
 Source: OECD (2015)

The published evidence in this area suggests there is very little proof to support the
assertion of a relationship existing between a supported minimum wage and levels of
unemployment. Comparative-based studies that have looked at this question note that
countries such as Australia, Belgium and New Zealand—each of which has comparably
high minimum wage rates—have similar levels of unemployment to countries that have
lower minimum wage rates. In some developed countries where the minimum rate is
exceedingly low, such as Greece and Spain, the levels of unemployment are
exceedingly high (see Figure 7.6). Clearly factors that lie outside the influence of
minimum pay rates are at play in determining unemployment levels. Also, in countries
where there are high minimum wages rates, the incidence of minimum wage
employment tends to be less than in countries where the minimum wages rates are
lower. This suggests that the minimum wage floor has little bearing on the financial
flexibility of business in decisions pertaining to employment and rewarding of labour.
The comparably low floor in the rate merely encourages business to employ more at
that rate because it can, with all the associated family and social problems this entails
for larger segments of the workforce when living on the margins (Oliver & Buchanan
2014; Watts 2010).

FIGURE Unemployment rate and minimum wage: Selected countries

7.6
 Source: Oliver & Buchanan (2014)

As to whether a high minimum wage rate denies the entry of younger people into the
workforce, the evidence in support is scant. If a relationship existed, the bulk of those
on the minimum wage rate would be younger employees, as it would give them entry
into the workforce, where they would move onto high wage rates once gaining
workplace skills and experiences through that employment. But the evidence shows that
the demographics of employees on the minimum wage are not significantly different
from the overall workforce. This suggests that, for many employees on the minimum
wage, it is not a transitory feature that figures only in the early years of their
employment, but one that applies regardless of their age and whatever skills and
experience they may acquire over their working lives (Healy 2010).

Centralised and decentralised bargaining

Who should decide wage rates and in what manner? This is an issue that has caused
significant debate in Australia, based on the degree of centralisation and
decentralisation that should be applied in the fixing of wages (Dawkins 1998). For
much of the twentieth century, a centralised system of wage determination was in place.
It was a system that had its advantages in limiting the frequency and extent of industrial
disputes over the settlement of pay. It also allowed for relatively predictable wage
adjustments that were affordable to businesses and able to accommodate community
expectations that employees be paid fairly. The wage fixation system allowed the
government to run policies—and economic policies in particular—with some measure
of certainty. Wage demands and counter-demands were simply put before the country’s
various industrial tribunals and wage boards by the representatives of labour and
capital. The wage outcomes reached in these courts were made by impartial
adjudicators and applied in the various industrial and occupational awards that covered
the workforce. Although not always clearly along these lines, the system saw most
disputes over wages confined to reasoned arguments given within the various tribunals
and boards, rather than manifest into industrial actions taken in the workplace. The
system worked reasonably well in a tariff–protected economic and business
environment that was for the most part stable and predictable (Hancock 1979). The
uncertain economic and business conditions that emerged over the 1970s and early
1980s elicited a political and policy response that saw the deregulation and
decentralisation of a range of governmental powers and institutions. As part of this
response, by the late 1980s thoughts began to turn towards the level of governmental
involvement deemed appropriate for regulating workplace relations, and for regulating
wages in particular (Abbott & Kelly 2005).
The debate over this question has since centred on ascertaining the extent of
regulation likely to satisfy the interests of businesses and employees, as well as the
economic and social interests of the country more generally. Both sides of the debate
accept the need for some measure of decentralised pay determination, but they disagree
over how the processes of such determination should occur and the extent of
decentralisation (Briggs 2002; Lansbury 2000). Should wage fixing be left entirely to
the market, or should a floor of minimum wages be maintained? Should industrial
tribunals and trade unions be involved in the process? Should negotiations over pay be
left solely to those concerned? These are the types of questions upon which the debate
over centralised and decentralised wage fixing presently turn.

Decentralised wage fixation

A system of wage bargaining and determination that applies to an individual
enterprise and its employees. Outcomes can be reached between the employer and
employees, or through negotiations held between representatives acting on their
behalf.

Those arguing for the maintenance of some form of ‘managed’ deregulation accept
the role of trade unions in negotiating wage rates through various modes of collective
bargaining, the outcomes of which are to be governed and legally supported through
agency of industrial tribunals (Evans 1989). This is the system as it presently stands
under the FW Act. Arguments given in support of this system have suggested that
regulating wage outcomes through a mediating agency helps to lower the level of
industrial action taken over wages. Another argument is that collective bargaining
encourages wage restraint on the part of employees, thereby offering businesses a
means to control the costs of labour. It further offers a more predictable wages
environment, which can be beneficial for businesses in terms of deciding on future
investments. Such an environment can also be beneficial for policy-makers in their
efforts to manage the economy, particularly when trying to limit wage inflation and its
employment consequences. Wage outcomes settled under a system that was partially
managed also help to spread the economic benefits of employment more widely across
to the workforce, acting against the possibility of income inequality reaching levels that
are social and political damaging. Finally, managed wage outcomes that involved the
type of coordination offered by trade unions enables a greater degree of consensus to
emerge over wage outcomes. Such a consensus can, in turn, encourage disciplined and
responsible behaviour on the part of those negotiating wages, leading to better
workplace performances and a more predictable business and economic environment
(Mayes 1996; Figart 2004).
Those arguing in favour of more decentralised forms of wage fixation than presently
exist believe that the system still creates rigidities in the labour market. They suggest
that the uniformity of wage settlements in awards limits the dispersion in relative wages
across job categories and thereby leads to a misallocation of resources, as such
settlements take little account of productivity differences between firms and are thereby
prone to be inflationary—as wage increases are simply passed on to the consumer.
Another line of argument against centralised or its currently managed decentralised
forms is that the involvement of trade unions impedes individual enterprises from being
able to adjust wages to suit the market circumstances under which they operate,
particularly during times of recession. That is, the exercise of union power at the level
of the firm acts as a ratchet that prevents any downward adjustment of wages to suit
such times which, in turn, can have damaging consequences for those employed and
those looking for work (Novak 2014; Sloan 2013; Mayes 1996).
The remedy, it is suggested from this quarter, is for more decentralised forms of
bargaining whereby wages are settled through negotiations held directly between
employers and individual employees. But there are two modes of thinking along these
lines. Milder forms are willing to contemplate the existence of a safety–net minimum
wage, with some overseeing of a single rate by a regulatory body to ensure the
emergence of a working poor is avoided. Such thinking looks to the minimum wage rate
and the manner of its periodic adjustment under the earlier Work Choices regime (ACCI
2014). Harder forms of this thinking see no place for minimum wages, regulating
agencies or trade unions. Here the remedy holds to the view that the market should be
sole determinant of the rate at which wages are paid, this being seen as the best way to
clear unemployment and reward individual employees on the basis of the worth of their
skills, education and experience to employers (H.R. Nicholls Society 2006).
The evidence of how businesses perform and how economies fare more generally
under centralised and decentralised modes of wage fixation is quite decisive. There
have been a number of empirical studies conducted in countries that operate under these
different modes of wage fixation, and at a time when the distinction between the two
was at its most pronounced (see Calmfors 1993; Chowdhury 1994; Traxler 2003). The
broad conclusion reached suggests that countries operating under centralised modes of
wage fixation tended to fare better across a range of macroeconomic indicators (e.g.
economic, inflation and unemployment rates) than countries operating under
decentralised modes (Calmfors 1993). Even where it was found that the indicators
were similar, those countries operating centralised systems were found to have far less
income inequality and far fewer social and family problems as a consequence (OECD
2004).

Gender pay inequality

A third major issue relates to the perennial gap between the genders, with debates
centring on its causes and consequences. For much of the twentieth century, the
arbitration and conciliation system of wage fixation was predicated on the standard of a
male worker being the sole household income earner. Women were regarded as not
having the same obligations to support a family and so—except in very exceptional
circumstances—they were paid less than men for doing the same or similar work. The
minimum wage for women was first struck in 1919 at 54 per cent of the minimum wage
for men, a rate that was raised over period of World War II when greater numbers of
women entered the workforce to cover the labour shortage caused by men entering the
armed forces. The 1949–50 Basic Wage Case subsequently consolidated the rate at 75
per cent. In 1959, the New South Wales government went on to legislatively endorse
pay equity, but it was not until 1969 that the federal tribunal began to apply the
principle of equal pay for work of equal value in its judgements. This was the result of
Australia signing of the Equal Remuneration Convention 1951 as a member of the
International Labour Organization. Although it took some time to filter through to the
federal and various state award systems and legislatures, women were from this point
on entitled to be paid the same as men for doing work of comparable value (Owen et al.
2011).
Since 1969 there has been a range of additional state and federal legislation—as
well as principles applied in state and federal pay tribunals and wages boards—to
ensure that men and women receive the same wages for doing the same or similar work.
There has also been a range of agencies established with the more general aim of
reducing the inequality between men and women in terms of their career opportunities.
The Workplace Gender Equality Agency (WGEA) is presently the federal
government body charged with this responsibility. These measures sought to provide
equality of opportunity in the workplace for both men and women, and by extension
reduce the pay gap that has long existed between them. Despite the worthy intentions
along these lines, there still exists a sizable pay gap between men’s and women’s
wages. Drawing on ABS (2014b) statistics, the Diversity Council of Australia reports
that the average full-time working male received 18.8 per cent (or $298) more than the
average full-time working female per week, a gap that has actually widened from a
figure of 17.8 per cent recorded in 1985. When women in all forms of employment are
taken into account, the gap is even wider (see Figure 7.7).

Workplace Gender Equality Agency

A federal government agency that advises employers and employees on gender
equality in the workplace, and works to promote and improve gender equality in the
workplace.

FIGURE Gender pay gap: 1980s–2014

7.7

Source: Diversity Council of Australia (2015)

There is debate about why this gap persists. One argument suggests the differential
is simply the product of personal choice. The assumption here is that the different
returns employees receive in the form of wages depends on how much time and effort
they are willing to invest in their careers—this includes the time and effort invested in
gaining qualifications, skills and experience, as well as in developing a career. The
gender pay gap, it is argued, is simply a reflection of the differential choices made in
these areas between men and women. Women are held to invest less in their education
and careers than men because paid work is less important to them than their personal
lives. This is apparent when comparing the workplace characteristics of male and
female employees. Women are said to be less competitive and less ambitious in the
way they approach their jobs, which reflects in their workplace performance and the
likely career opportunities made available to them. Furthermore, women have lower
levels of education than their male counterparts, and are more ready to interrupt their
careers to raise a family (see O’Neill & O’Neill 2006).
Another argument is that the gap is the product of social and cultural biases that
combine to limit women’s careers and associated pay opportunities. For example, the
lack of childcare facilities that would allow for women to return early to the
workforce. There are also organisational problems, such as the lack of flexible working
arrangements; biased assumptions about the ‘appropriate’ role and place of women in
the workplace; undervaluation of feminised work and skills; and the more general
prevalence of sexism. All of these conditions combine in various ways to generate what
is referred to as a ‘glass ceiling’ inside organisations, one that diminishes the career
prospects and pay opportunities afforded to women in comparison with men (see
Samali & Shakespeare 2014).
Still another argument is that the gender pay gap is caused by women being
concentrated in a limited range of industries and occupations that are, on average,
lower paying than male-dominated industries and occupations. Male-dominated
industries (e.g. mining and construction) and occupations (e.g. engineering and
management) pay higher wages on average than female-dominated industries (e.g.
community services and retail) and occupations (e.g. administration and nursing).
Moreover, males are more typically employed in full-time positions, whereas women
are more commonly found in part-time and casual forms of employment. This difference
in employment status and the gendered proportions involved are said to also contribute
to the gap in wages between men and women (Peetz 2012).
So how do these different views weigh against the available evidence? The
argument that the gender pay gap is simply the result of the personal choices of women
is weak. It is certainly true that raising a family falls largely to women and that this
serves to shape their choices in terms of employment and career. But such choices are
also shaped by the lack of available childcare, and gendered understandings about what
constitutes good parenting. The break in career to have a family may contribute to the
gender pay gap, but only marginally when you consider that the gap exists in the graded
earnings of women in their 20s, a period when most are yet to interrupt their careers to
have children. The claim that the gap is caused by women choosing to invest less in
their education and career is spurious. Several studies have shown that the differential
earnings between men and women are only marginally caused by differences in
education and work experience. Moreover, the assertion that women choose to invest
less in their education is countered by more women (26%) than men (22%) presently
holding degrees or some other form of higher qualification (Smith 2015).
The argument that the pay gap is caused by organisational biases and practices that
present a ‘glass ceiling’ to women in their career trajectories and earnings has more
validity. Studies by the WGEA (2015) and others (see Strachan 2010; Charlesworthy &
Macdonald 2014) suggest that the gap has much to do with the types of jobs women
perform and the methods used for determining their pay. Practices that allocate pay on
the value of work and hard performance outcomes often undervalue the importance and
output of feminised jobs and skills. Hence women in these roles attract fewer rewards
in terms of pay and career opportunities. It is a condition found to be deeply entrenched
in gendered ideas that still persist within organisations about the appropriate
workplace roles of women. The last of the arguments—sheeting the gender pay gap
back to lower paying industries and occupations being dominated by women—is more
a symptom of the aforementioned causes. The qualifications that women choose to gain
often destine them for employment in lower paying industries and positions. Many also,
either for family reasons or for reasons of organisational bias and segregation, are
corralled into part-time, casual or lower paying positions, a finding supported by the
ABS data referred to earlier in the chapter.

SUMMARY
There are a variety of means by which employees are paid for the services they render
to employers. Such means span the financial to the non-financial; from a weekly pay
based on hourly rates to an annual salary. There are also a number of ways the
remuneration employees receive is conceived of and used for the purposes of
calculation, which include its purchasing power, cost to the employer, pre- and post-tax
earnings, and so on. For this reason, it is important to consider what way the
remuneration is being considered and applied.
The same can be said for the factors that weigh into the determination of wages, as
there is often a combination of personal, organisational and environmental influences in
play. On a personal level, people like to feel their workplace efforts are being
rewarded fairly; that their pay adequately reflects their skills, experience and
responsibilities when compared with others within their places of work, as well as
with similar employees engaged by other organisations. The intensity with which
labour is used and its productivity are organisational factors that can also figure in the
determination of wages. Organisations with few employees relative to the capital
equipment they use will usually be in a better position to pay higher wage rates than
organisations where the opposite set of circumstances apply.
Wider environmental forces beyond the workplace can also figure in the wages and
salaries people receive. Much will depend on what people have to offer employers in
the marketplace for labour, and what employers are willing to pay for what is being
offered. In this regard, the state of the national economy—with economic growth and
decline, inflation and deflation, high and low unemployment—can play a varied role in
determining wage rates. It can also determine the timing and extent of wage demands, as
well as the capacity of employers to pay wages at particular rates. Much also will
depend on the type of government policies used to regulate wage outcomes; in
particular, legislative settlement of minimum wage rates and the type of legal legitimacy
conferred on trade unions to bring bargaining pressure to bear on wage negotiations.
The extent to which the national economy—or, more particularly, the business and
industry sectors therein—is exposed to the global division of labour also has a bearing
on wage determination, and increasingly so as domestic wage rates come increasingly
to be weighed against those paid overseas.
All these factors have at one time or another played a role in the history of
Australian wage determination. They still do, and successive Australian governments
right up to the present one have sought to manage the best and worst of their impact on
wages. There has been a long history of legislative and policy efforts designed to
provide a floor in the level of wage rates to support disadvantaged segments of the
labour market, as well as a legitimised role for trade unions in wage negotiations to aid
the distribution of industrial enterprise more fairly. There is a similar history of
established independent agencies charged with the responsibility to mediate and settle
the outcomes of such negotiations, while being mindful of the state of the national
economy and the capacity of industry to pay. The current FW Act may be different in the
detail and manner by which these aims are realised, but when viewed in historical
context it has much in common with a long line of its predecessors. Its provisions
provide for a ‘safety net’ of wage rates for the low paid. They confer rights of
negotiation to trade unions to bargain over wage rates in modern awards and enterprise
agreements and they provide the FWC with powers to ensure ‘good faith bargaining’
occurs during such negotiations. And they charge the FWC to settle wage outcomes
without being detrimental to employees, businesses or the economy in general.

REVIEW QUESTIONS
1. What is the difference between penalty rates and overtime rates?
2. How do changes in productivity influence wage adjustments?
3. How do changes in the rate of inflation influence wage adjustments?
4. What is meant by the ‘needs of the worker principle’ and ‘capacity to pay
principle’?
5. What legislative requirement needs to be observed by the Minimum Wage Panel
when determining wage rates?
6. What types of employees are subject to Minimum Wage Panel determinations?
7. Before making any wage determination, what is the Minimum Wage Panel obliged
to do?
8. What is meant by the ‘minimum to median ratio’ in wage calculations?
9. What are the arguments in favour of centralised and decentralised bargaining?
10. What arguments have been offered to account for the difference between the
wages paid to men and women?

Visit Oxford Ascend for
further revision material

CASE STUDY BUSINESS

7.1 REJECTS
AUSTRALIAN
UNIONS’ PUSH
FOR MINIMUM
WAGE RISE
Australian unions will push for a wage rise of $27 a week for the nation’s lowest-
paid workers, while businesses warn that granting the above-inflation claim will
force job cuts. In a claim to be lodged on Friday, the Australian Council of Trade
Unions will press for a substantial pay rise it says will halt rising inequality. The
ACTU calls for the minimum wage to be lifted to $17.58 an hour, or $667.90 a
week. That equates to an increase of more than 4 per cent, well above the inflation
rate of 2.2 per cent. The minimum wage case, which will be heard by the Fair
Work Commission, affects the pay of about 1.8 million workers who rely on
awards for their pay.
The ACTU submission states Australia had the biggest drop in the minimum
wage as a percentage of the average wage between 2003 and 2013. ACTU
secretary Dave Oliver said inequality was ballooning with the minimum wage
now at a record low of 43 per cent of the average weekly earnings. ‘A $27 per
week pay rise for our lowest paid workers is essential if Australia is to avoid
creating an underclass of working poor. There are already signs that Australia is
developing a working poor with financial stress, deprivation and poverty on the
rise among low-paid workers.’
But employer groups will vigorously oppose the unions’ claim. The Australian
Industry Group, which argues for a much lower minimum wage rise of $10.25 a
week, says the ACTU’s proposal was ‘unrealistic, unsustainable and would be
unfair to those whose jobs prospects it would damage. The best that can be said
for the Australian economy in 2015 is that it is underperforming,’ Ai Group chief
executive Innes Willox said. ‘Underemployment is trending higher … as of
February 2015, the unemployment rate was 6.3 per cent and the number of active
jobseekers had reached 781,600, the highest such number since April 1997.’ Mr
Willox said the Australian minimum wage was among the highest in the world and
any further rise ‘beyond a modest amount’ would damage Australia’s
competitiveness.
The Australian Chamber of Commerce and Industry – the nation’s biggest
business lobby – said the ACTU’s proposed wage rise was ‘unsustainable’. ‘Such
a steep increase would make it harder for employers to afford low-skill workers
and young people in entry-level positions,’ ACCI chief Kate Carnell said. ‘[It]
may prompt some employers to let go of existing staff or reduce unprofitable
hours.’ Ms Carnell said ACCI’s submission, to be lodged with the commission on
Friday, would call for a ‘cautious and restrained’ minimum wage rise.
Randolph Guinan, 57, of Faulkner, has earned the minimum wage as a cleaner
at the Melbourne Arts Centre and Hamer Hall for 18 years. He is hoping for a pay
rise this year that could help ease the financial strain he faces as his family’s sole
breadwinner. ‘I have two daughters and it does get tight sometimes, it gets
difficult,’ he said. ‘We always have to budget things … we have our good days
and bad days.’
The ACTU will also make a claim for the first time to try and claw back
superannuation increases for minimum-wage workers after the Abbott Government
put a freeze on employer contributions. With the Coalition halting compulsory
super increases until 2021, the ACTU will ask the Commission to increase
contributions by 0.5 per cent to 10 per cent for workers on award minimum wages.
Mr Willox said the trade unions’ claim was ‘nothing less than irresponsible.’
Source: Toscano (2015b)

Questions
1. Is gauging minimum wage adjustments solely against changes in the
inflation rate justified?
2. There is a subtle difference in the focus of union and employer concerns
with respect to increasing the minimum wage. What is this difference?
3. Which side of the argument do you believe would better serve Australia’s
economic and social interests, and why?
CASE STUDY YOUNG WORKERS
7.2 AND THE
MINIMUM WAGE
Student casuals were often relied on to work weekend and night shifts in retail and
hospitality worksites. Sundays were popular among students for the penalty rates
they attracted. Most students working unsociable hours were accepting of the need
to do so. They understood that it was something they would do in the short-term
but that it would stop once they were working in full-time jobs in their chosen
careers. However, some university students were concerned that working too
many shifts impacted negatively upon their studies. As one young man who lived at
home with his parents and wanted fewer hours pithily replied when asked what he
would do if he didn’t work, ‘I’d probably become an HD [high distinction]
student.’
Young non-vocational workers who lived independently had trouble finding
the time and money to undertake further training or education. A young woman
with a strong interest in studying a trade to improve her prospects in her current
area of work could neither afford nor find the time to attend TAFE. Another young
woman explained that she had left university after three years because she could
no longer afford to support herself or find time to continue her studies:
‘I want to do that one day, just too expensive at the moment to do it [TAFE
training]. I’m living by myself so it’s a bit hard to do the job, or the two things at
once.’
Q: ‘Have you ever talked about it with [your employer], doing it as part of
work?’
A: ‘Sort of and haven’t really got into it, mainly just because where the TAFEs
are located, I’d miss out on too much work travelling to the TAFEs for the night
and then all the afternoon, and then come back, and I think apprenticeships, I think
[co-worker] was mentioning that it would be lot less of a wage, whereas I can’t
afford that with living by myself rent-wise to do an apprenticeship, I just couldn’t
afford it.’
[Permanent full-time retail assistant]
‘And then I just couldn’t afford to go any more. Like, when you’re in a place
you’ve got to pay your rent and even just the contact hours, not including the study
hours you need to do at home, it was just taking too much time out of my day.’
[Casual bar and gaming attendant].
 Source: Evesson et al. (2011, p. 84)

Questions
1. What are the advantages and disadvantages of combining work and study?
2. Is the minimum wage sufficient to combine work and study?
3. In relation to employment in your present job (or a job with which you are
familiar), how would you check that your wages were being paid at the
legally prescribed rate?

FURTHER READING
Burkhauser, R. (2014). Another look at the economics of minimum wage legislation.
Australian Economic Review, 47(3): 409–15.
Healy, J. (2011). The quest for fairness in Australian minimum wages. Journal of
Industrial Relations, 53(5): 662–80.
Jefferson, T., & Preston, A. (2013). Labour markets and wages in Australia in 2012.
Journal of Industrial Relations, 55(3): 338–55.
Kumar, S., Webber, D., & Perry, G. (2012), Real wages, inflation and labour
productivity in Australia. Applied Economics, 44(23): 2945–54.
Livermore, T., Rodgers, J., & Siminski, P. (2011). The effect of motherhood on
wages and wages growth: evidence for Australia. Economic Record, 87(1):
80–91.
Sheldon, P., & Thornthwaite, L. (2015). Employer and employer association matters
in Australia in 2014. Journal of Industrial Relations, 57(3): 383–400.
Wooden, M. (2010). An unfair safety net? Australian Bulletin of Labour, 36(3):
321–6.

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USEFUL WEBSITES
Fair Work Commission: https://www.fwc.gov.au/
Fair Work Ombudsman: http://www.fairwork.gov.au/
 Chapter Eight
CONFLICT AND NEGOTIATION

INTRODUCTION
As discussed in previous chapters, Australian employment relations have undergone a
great deal of change over the last 30 years. Changes to the economy and to the type of
work performed—moving away from the traditional industries of agriculture and
manufacturing to the service sector—along with increased casualisation of the
workforce, increased female participation in the workforce and the decline of larger
organisations are just a few of the reasons for the changing nature of employment
relations in Australia. Of greatest impact, however, has arguably been the shift away
from the centralised employment relations system, which existed from 1904 until the
1990s.
Since the 1990s, the decentralisation of the system of regulation—with a focus on
the workplace as the mechanism for negotiating wage rises and resolving disputes—has
seen a dramatic change in the nature of conflict in Australian organisations. This
chapter investigates conflict, beginning with a definition of industrial conflict, looking
at the forms of conflict that exist and the theories of why conflict occurs. We then
explore the common types of conflict in Australia and their frequency, before looking at
the increasingly used alternative dispute resolution process (ADR) used by human
resource management professionals to resolve disputes in the workplace.

Conflict
Opposition between employers and employees; conflict can take shape in two
distinct ways: either overtly, in the open and easy to both see and understand; or
covertly, hidden and difficult to see.

Alternative dispute resolution

An informal mechanism used in an attempt to resolve a dispute, using an independent
mediator/conciliator who helps the parties explore possible resolutions.
 TYPES OF CONFLICT
It is inevitable that even with good intentions and the best workplace relationships,
conflict will still occur in organisations. The reasons are many and varied, but include
disputes over promotion, conditions of employment, rewards, organisational
restructuring, managerial style or even personality clashes. Some disputes are resolved
quickly as the parties find common ground; other disputes require third parties such as
the Fair Work Commission (FWC) to help find a resolution. Yet others remain
unresolved.
Kornhauser (1954) argued that it is the nature of the industrial relations system that
conflicts will occur between workers and managers, chiefly because of their differing
ideologies and opposing interests. That conflict can be defined as ‘the total range of
behaviour and attitudes that express opposition and divergent orientations between
individual owners and managers on the one hand, and the working people and their
organisation on the other’ (Kornhauser 1954: 13).
Although many different types of conflict occur in organisations, industrial conflict
has traditionally been associated with strike activity. This has partly been caused by
media attention on picketing workers standing out the front of workplaces protesting for
better pay, conditions or fighting against job losses. But strikes are only one type of
behaviour demonstrated during conflict. It is generally agreed that conflict can take
shape in two distinct ways: overtly, in the open and easy to see and understand; or
covertly, which is hidden and difficult to see.

Overt forms of industrial action

Strikes are a classic form of overt behaviour during conflict between employees and
employers. However, there are other overt forms that have been used in the past during
disputes, including lockouts, sit-ins, work bans, pickets and work-to-rule.

Lockouts
Unlike a strike, in which workers withdraw their labour, a lockout occurs when an
employer denies employees the right to access the workplace. A commonly used tactic
in the United States, lockouts are less common in Australia, although a 2011 dispute in
the airline industry—TWU v Qantas Airways Ltd (2012)—saw Qantas, Australia’s
largest airline, ground its planes, locking out all of its licensed engineers, ramp staff
and baggage handlers, along with its Australian and international pilots.

Sit-ins
Sit-ins are effectively the reverse of a lockout. A sit-in involves the workers occupying
and locking themselves in a workplace. This tactic is sometimes used in situations
where the workers fear that their employer is planning to employ strike-breakers
(whom unionists commonly refer to as ‘scabs’) to break a strike.

Work bans
Work bans (sometimes called black bans) were common in the Australian building
industry, and were used with success by the former Builders Labourers Federation in
the 1970s and 1980s. A work ban occurs when employees refuse to perform a specific
task, such as working on a piece of machinery or refusing to work overtime. Legislation
introduced in the 1990s declared such activity as unlawful, with penalties for
employers who continued to pay employees who engaged in such actions. As a result of
such laws, work bans are used much less frequently than before.

Pickets
Pickets are protests that occur outside the perimeter of a workplace, particularly at the
front gates, and are often associated with strike activities. The aim of a picket line is to
either prevent products from leaving the workplace, or to prevent employees who are
not participating in the dispute (‘scabs’) from entering the workplace. Generally
associated with strike action, the picket is illegal in Australia if it actually stops traffic
entering the workplace—and employees and union representatives engaged in the
picket are liable for damages if employers pursue the matter through the legal system.
This has resulted in recent years in the emergence of ‘community groups’—people not
employed by the organisation—maintaining the picket line and attempting to prevent
access to the workplace.

Work-to-rule
Another form of overt action common in Australia in the later part of the twentieth
century, the ‘work-to-rule’ action involved employees only carrying out duties
specified in their contract of employment. The introduction of the clause ‘and other
duties directed by the employer’ was used to overcome this tactic and, similar to work
bans, work-to-rule action has become a less common activity used by employees in
conflict with their employers today.

Covert forms of industrial action

For the reasons previously mentioned in this chapter, including the changing nature of
Australian industry and the rapid decentralisation of the industrial relations system
since the 1990s, overt activity in Australia and across the Western world is declining.
In its place has grown the phenomena of covert activity. Covert activity, or hidden
activity, can take a number of different forms including absenteeism, labour turnover,
and sabotage.

Absenteeism
Absenteeism refers to employees being away from work on paid or unpaid sick leave
who are not entitled to be away, i.e. they are not ill. It is increasingly the most common
form of activity used by employees in conflict with their employer. In Australia, this
phenomenon is commonly referred to as ‘taking a sickie’ or sometimes ‘a mental health
day’.

Labour turnover
Another covert activity is when an employee resigns from their position in search of
another job outside the organisation. This is an extension of absenteeism. Organisations
with high rates of labour turnover—apart from those in seasonal industries, such as
agricultural harvesting—are commonly considered to be poor employers. High rates of
employee turnover generally indicate a high level of employee dissatisfaction.

Employee turnover
The number of employees voluntarily terminating their employment in an
organisation; often used as an indicator of employee dissatisfaction.

Sabotage
Perhaps the least commonly acknowledged or discussed of covert actions is industrial
sabotage. ‘Sabotage’ refers to behaviour that can ‘damage or disrupt the organisation’s
operations by creating delays in production, damaging property, the destruction of
relationships, or the harming of employees or customers’ (Crino 1994: 312). Although
little is known about the cost or effect of sabotage, it is increasingly becoming a
research focus, particularly in industries in which customer service is important.

THEORIES ON CONFLICT
Deery, Iverson and Walsh (2002) noted that conflict can be either proactive or
defensive. Proactive conflict occurs when workers, either individually or as a
collective, engage in activities to improve their working conditions, as well as other
aspects of their employment relationship. Defensive conflict occurs when workers,
either individually or as a collective, protest decisions made by their employer that
alter the terms of conditions of employment to the employees’ detriment.
A review of the literature on industrial conflict in Australia and internationally over
the last hundred years has established a number of themes about the causes of industrial
conflict, which are outlined below.

Centralised and decentralised collective bargaining

Clegg (1976) argues that the more centralised union authority and involvement is in the
collective bargaining process, the less likely they will be to organise and engage in
industrial conflict at the firm level as a means of improving workers’ wages and
conditions. Conversely, the less centralised union authority and involvement in such
processes, the more likely workers will resort to decentralised forms of industrial
conflict to win such gains.

Political involvement
Others, such as Shorter and Tilly (1974), identified a correlation between union
involvement in the political process and the decreased likelihood of unions organising
and engaging in industrial campaigns at the workplace level to realise their goals (and
vice versa). In other words, unions in democratic societies tend to rely on the
certainties of the political processes to win gains for their memberships (and often for
non-members as well).

The business cycle

Creigh and Makeham (1982) found that the higher the level of unemployment, the lower
the incidence of industrial conflict, as workers seek to maintain their employment (and
vice versa). Other business cycle factors that can have an impact on the level of
industrial disputation include higher levels of inflation or economic growth, which can
lead to workers seeking wage outcomes to keep pace with cost of living increases or
seeking a larger share of the perceived growing prosperity.

Organisational factors
Paldham and Pederson (1982) found that the greater the pace of organisational or
technical change, the higher the incidence of industrial conflict, as workers seek to
resist changes in their employment status and workplace understandings. Other
organisational factors thought to impact on the propensity to take industrial action
include gender, size of the organisation, and the proportion of wages relative to capital
deployed in a firm—the higher the relative wages bill, the more likely management will
resist the wage demands of labour.

Social factors
The more isolated a firm, the higher the incidence of industrial conflict. This conflict is
a product of limited alternative employment opportunities that diminish the prospect of
worker ‘exit’ (i.e. fleeing a grievance by going to another job) while heightening the
prospect of worker ‘voice’ (i.e. confronting a grievance via a union) (Kerr & Siegal
1954). This explanation has been offered as one reason for strong union traditions in
remote mining communities, among seafarers and among workers on oil rigs.

Capitalism
Finally, it is worth recalling from the earlier discussion of ‘frames of reference’, that
Marxists view workplace conflict as an inherent feature of capitalism; an historical
socio-economic formation founded on the division of society into two competing
classes: the capitalist class (owners of industry) and the proletariat or working class
(with only their labour power to sell for a living). According to the Marxist view,
issues around technological change, business cycles, organisational factors, politics
and regulatory structural factors, although relevant, simply hide the fundamental cause
of conflict, which is the irreconcilable class structure of capitalism itself.

INDUSTRIAL CONFLICT IN AUSTRALIA

The unique Australian industrial relations system was set up to help prevent the type of
disputes that were witnessed prior to Federation, particularly in the last decade of the
nineteenth century (see Chapter 3 and Chapter 5). Since 1904, the system, through its
tribunals and powers to intervene in workplace conflict, has largely managed to help
the nation avoid the prolonged, bitter and often violent industrial conflicts often seen in
other countries, such as the United States and Great Britain. However, this does not
mean that strikes, work bans and pickets did not occur, even though they were illegal
activities until recently.
Industrial disputation in Australia has gone through several phases over the last
century. Disputes have reflected major events, such as the Great Depression and the
two World Wars, when conflict declined, through to the period of the 1970s until 1982,
when strike activity peaked. Since the mid-1980s, beginning with the introduction of the
Accord, the number of industrial disputes in Australia has declined rapidly. A number
of studies since the Accord have attributed its introduction as being responsible for
between a 60 per cent reduction in disputes (Beggs & Chapman 1987) to as much as 70
per cent (Chapman & Gruen 1990). This reduction is attributed to the pact made
between the Labor Government of the day and the union movement to resist seeking
wage rises in favour of a ‘social wage’. However, debate remains about the impact of
the Accord (Perry & Wilson 2000).
Perhaps the most significant decline in industrial disputes was in the early 1990s.
This decline occurred at the same time as the introduction of the decentralised
bargaining system. At the time, the likely impact of the introduction of workplace
bargaining was debated within the union and wider labour movement. Some argued that
the focus on the workplace for gaining wage rises would lead to an increase in
disputation and union activity, as workers would have to become active to force
employers to pay wage increases; while others, particularly from the left of politics and
sections within the union movement that had traditionally struggled to collectively
bargain at the workplace—such as in the white collar and service sectors—argued the
new system would see a decline in union power.
Whether the introduction of enterprise bargaining—and, for a short period, the
introduction of individual contracts Australian Workplace Agreements (AWAs)—led to
the decline of disputation is not yet fully known. What is certain, however, is that since
the decentralisation of the Australian industrial relations system, there has been a
continued decline in the number of workers engaging in overt industrial action at the
workplace, as measured by the Australian Bureau of Statistics (ABS).
From ABS data (ABS 2015a; 2015b) a number of factors relating to industrial
disputes in Australia can be established. These are outlined in the following
paragraphs.

Industry
In the period 2005–15, strikes were for the most part concentrated in a small number of
industries, including manufacturing, transport, storage, mining (especially coal mining),
communication, construction, and the education and health sectors.

Length of disputes
Unlike disputes in other Western countries such as the United States and Great Britain,
the duration of strikes has typically been quite short, with the vast majority lasting only
one or two days. This was especially the case when industrial tribunals had far greater
discretion to use compulsory arbitration to resolve disputes. Reforms over the past
decade or so have reduced the ability of the FWC (and its predecessors) to intervene
and impose a resolution to industrial disputes.

Cause of dispute
The main cause of industrial disputation in Australia is over enterprise-bargaining
negotiations. Disputes during enterprise-bargaining negotiations can be broken up into
two distinct categories. The first and second most common reasons for disputes, as
recorded by the ABS, are:
conditions of employment
remuneration.
Other reasons for industrial disputes, as recorded by the ABS, include health and
safety, job security, and managerial policy and union issues.
How disputes are resolved
Despite the existence of legislative created machinery for the resolving of disputes,
such as the services provided by the FWC—including formal mediation, conciliation
and arbitration—most industrial disputes in Australia are settled between the parties
before the need to revert to such machinery. However, the existence of the FWC’s
possible involvement is itself often an important factor in encouraging the parties to
resolve the dispute themselves.

Mediation
An alternative dispute procedure involving a third party (the mediator) who assists
the parties come to an agreement.

Covert activity
The frequency of workers engaging in overt industrial disputation in Australia is clearly
declining, and has been doing so for a number of years. The reasons for the decline are
many, but the continued fall in trade union membership provides part of the reason. In
many ways, the lack of representation for employees and the ability to raise concerns
with employers, at the same time as human resource management becomes far more
sophisticated in monitoring employees’ behaviour and performance, means that for
many employees articulating concerns or disagreement with their organisations is
articulated in a covert, or hidden, way. This following section looks at three covert
activities that Australian workers are increasingly undertaking as a means of expressing
their dissatisfaction: absenteeism, turnover and the relatively new concept,
presenteeism.

Presenteeism
When workers attend work and perform their role, but at a less than fully productive
level because of illness or lack of interest.

Absenteeism
Absenteeism, which refers to ‘the failure to report to work as scheduled’ (Johns 2008:
160), is a major contributor to reduced workplace productivity and has considerable
financial costs through health insurance claims, overtime wages and legal claims (Darr
& Johns 2008). It is difficult to fully establish how many days are lost to absenteeism in
Australia every year from employees not genuinely ill or entitled to sick leave.
Detailed and centralised records, similar to those for industrial disputes, are not kept
by the ABS, but it is generally agreed that absenteeism is a growing problem.
Previous research in Australia has found high levels of absenteeism occurring
among Australian workers. An Audit Office of New South Wales report (2010) found
average rates of absenteeism range from four days per year (private sector employees)
to eight days per year (public sector employees) and vary by age, length of service,
income, gender, organisation size, and industry type. More recently, a 2013 private
study by Direct Health Solutions—a private absence management and organisational
wellbeing organisation—found that of the over 108 organisations (employing
approximately 450,000 employees) who participated in their survey, absenteeism
levels (sick and carer’s leave) was at 8.93 days per employee per annum. The
Telecommunications and Utilities Sector had the highest levels of absence, at 11.5 days
per annum, followed by the Contact Centre/Call Centre Industry, who had 10.9 days per
annum. Absenteeism costs the call centre industry over $1 billion per annum. Absences
rose 17 per cent in Transport and Logistics, and Healthcare absenteeism climbed to
nine days annually (Direct Health Solutions 2013). This confirms an earlier study
conducted by auditing firm PricewaterhouseCoopers (2010), which estimated the cost
of absenteeism in Australia at around $7 billion each year.
A large number of studies internationally have examined absenteeism behaviour and
underlying antecedents. Some antecedents found to have strong correlation include
demographic factors such as age (Labriola, Lund, & Burr 2006; Ng & Feldman 2008)
gender (Labriola et al. 2006) and socio-economic status. Job dissatisfaction has also
been demonstrated to be strongly related to absenteeism (Ybema, Smulders, & Bongers
2010). Other factors such as low job control (Nielsen, Rugulies, Christensen, Smith-
Hansen, & Kristensen 2006), poor role clarity (Rugulies et al. 2007) and workplace
bullying (McTernan, Dollard, & LaMontagne 2013) have also been found to impact
significantly on the decision to be absent from work or not.
A number of studies have also found trade union presence and effectiveness to be
related to the decision to be absent from work. Deery, Erwin and Iverson (1999) found
that perceptions of union effectiveness were associated with improved worker
attendance. In contrast, other research has identified a positive relationship between
union status and absenteeism (Allen 1984; Leigh 1981).

Employee turnover
The decline in overt forms of industrial conflict in Australia has seen not only the rise
of absenteeism in Australian organisations but also a rise in employee turnover. Of
course, not all employee turnover can be considered as a consequence of the decline in
overt disputes helping to resolve workplace conflict. Much has been made of the
growing difference of attitudes among young Australian workers—‘Gen Y’—and their
supposed reticence to stay employed in one organisation for an extended period. The
increased number of employees ‘downsized’ in Australian industry over the last decade
as well as the large number of casual workers must also be acknowledged.
Increasingly, however, employee turnover is being recognised by HR practitioners and
managers generally, across many industries, as a significant challenge. Employee
turnover costs Australian employers a significant amount of time and financial
resources. Costs include recruiting new employees, training, lost productivity,
administrative costs and low morale among remaining employees.
A number of models have been developed over the last half century that attempt to
predict employee propensity to resign from a position voluntarily. Holtom et al. (2008)
developed a model identifying individual differences, nature of the job, traditional and
newer attitudes, organisational context, and person–context factors that influence
decisions. Booth and Hamer (2007) found that factors such as fair pay, job satisfaction,
management’s treatment of employees, morale, manageable workload, career
development, and trust and respect between employee are important. Similar results
were found by Allen and colleagues (2010), who identified factors such as
characteristics of the job, individual characteristics, the work environment, and
leadership.
Similar to the impact on absenteeism, union presence has been found to be strongly
linked to an employee’s decision not to leave an organisation (Deery, Iverson et al.
2014). The theory is that the protection provided by a union encourages workers to
remain at a workplace that they might otherwise leave.
ABS statistics on labour mobility (2013) provide an insight into the frequency and
reasons for Australian employees leaving their workplace. The evidence supports the
contention that many Australian workers have left employment due to an inability to
negotiate, persuade or change their employers’ attitudes, behaviours or conditions of
employment. In 2013, as shown in Table 8.1, the number of Australian employees
ceasing work every year has remained fairly constant, at roughly two million per year,
since 2008.

Table 8.1 Persons who ceased a job during the year (February 2008–February 2013)

Source: ABS (2013)

The major reason for the employees ceasing work was unsatisfactory work
conditions (31% for both men and women). In addition, 31 per cent of men also left to
obtain a better job or conditions. For people whose previous job duration was one year
or more, the most common reason for leaving was to obtain a better job or conditions,
or seek a change (34%) (ABS 2013). The extent of turnover is not uniform across
industries, with some industries experiencing much higher rates of inflow and
movement within the industry than others. Turnover was highest in the accommodation
and food services (‘hospitality’) industry and lowest in public administration and the
safety industry.

Presenteeism
Although absenteeism and employee turnover are difficult to measure, they are
increasingly identified by HR practitioners as important indicators of employee
dissatisfaction with the workplace. Of course, in many workplaces where absenteeism
is monitored carefully and employees’ use of entitlements may result in disciplining or
punishment, increased unemployment is likely to reduce the incidence of dissatisfied
employees leaving their jobs. In its place, a newer form of covert behaviour is
emerging as a new concept in the field of employment relations: presenteeism.
‘Presenteeism’ has been described as workers attending work and performing their
role, but at a less than fully productive level due to sickness or medical conditions
(Hemp 2004). The limited research on the topic has found that the result may be more
harmful to productivity and performance than choosing to just stay home for the day
(Berger et al. 2003; Hemp 2004; Stewart et al. 2003; Wang et al. 2003). Although it is
difficult to measure the impact of presenteeism, a PricewaterhouseCoopers report
found in 2005–06 that the cost of presenteeism—not fully functioning at work because
of medical conditions—was estimated at almost $26 billion (PricewaterhouseCoopers,
2010). More recently, the Medibank study Economic Modelling of the Cost of
Presenteeism in Australia: 2011 Update estimated the figure even higher, at $34.1
billion in 2009–10.
Increasingly, it is not only illness-related presenteeism that is costing organisations
in terms of productivity, but another form of presenteeism. This newer form occurs
when employees go to work but spend a portion of the workday engaging in personal
business while on the job, such as surfing the internet, engaging in personal business or
socialising. Simpson (1998) describes this form of presenteeism as an employee who is
present at work but is no longer performing effectively on the job due, for example, to
lack of concentration.
The reasons for presenteeism can be many, including personal problems, lack of
interest in the work, current conflict in the workplace or previous conflict in the
workplace that is unresolved. What is agreed is that presenteeism is becoming a bigger
problem for organisations internationally; it is estimated to be costing organisations in
America US$8,875 per employee per year based upon the fraction of lost productivity
from reported salary figures (D’Abate & Eddy 2007).
 Little is known about the impact of non–illness-related presenteeism in Australia,
but with the decline of overt conflict behaviours and employers’ focus on the costs of
absenteeism and turnover, people working in the human resource management area are
likely to focus on the causes and costs of presenteeism in coming years.

DISPUTE RESOLUTION IN AUSTRALIA

Conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond
the limits of any one State;
(Source: Australian Constitutions s. 51 xxxv)

The previous chapters have outlined the history of the unique industrial relations system
in Australia and its origins leading up to Federation in 1901. The bitter disputes of the
1890s provided the impetus for the newly formed Australian Government to involve
itself in the regulation of workplace industrial disputes through powers provided by the
Constitution.
For the next 90 years, the role of the government and its apparatus—the various
tribunals that had been created to help regulate conflict—assisted, influenced, coerced
and penalised parties that ignored (or attempted to ignore) the ‘umpire’s decision’. The
‘umpires’ were the judges and commissioners who determined the outcomes of disputes
ranging from issues as small as rostering complaints, promotion disputes at small
businesses and individual unfair dismissal cases, right through to the resolution of
nationwide industrial disputes and the determination of wage rises for all Australian
employees. Conciliation involved the regulator (such as the FWC) bringing the disputed
parties together to reach an agreement and resolve the matters in dispute. Failing that,
the regulator had sweeping powers to arbitrate by imposing a legally binding
resolution.
However, by the early 1990s, political acceptance of the need for reform of
industrial relations to help deliver productivity increases saw the gradual move away
from the perceived third-party intervention of the state to place greater emphasis on
organisations resolving disputes at the workplace itself. The rationale for such a move
was that those at the workplace were best suited to be able to make decisions that
reflected the environment from which the dispute emerged. As discussed earlier, such a
view also reflected the mainstream acceptance—by the major political parties at least
—of a neoliberal ideology, with its praise of market-driven outcomes and suspicion or
antipathy towards government intervention in economic affairs. This outlook also
considered trade unionism as an unnecessary impediment to efficient market-driven
outcomes.
The introduction of the Work Choices Act, as well as changes in dispute resolution
procedures in most awards, saw the further erosion of powers of AIRC (later to
become the Fair Work Commission), to intervene in workplace disputes. Although
minor changes have been made to the powers of the state to intervene in workplace
disputes, the infamous old days when the so-called ‘IR Club’—represented by the
unions, employer associations and the tribunals—have largely disappeared. The
remaining part of this chapter explores the current situation in Australia in attempting to
address conflict in the workplace. The section commences with an exploration of the
legislation that attempts to resolve conflict, predominantly the Fair Work Act and safety
legislation, concluding with a discussion of contemporary workplace processes aimed
at dispute resolution.

The Fair Work Act 2009

As discussed in Chapter 6, the Fair Work Act 2009 (FW Act), the major piece of
legislation regulating Australian workplaces, has a number of objectives. Underpinning
the legislation is an attempt at creating ‘a balanced framework for cooperative and
productive workplace relations that promotes national economic prosperity and social
inclusion for all Australians’ (Fair Work Act 2009). Two specific objectives of the FW
Act (e) and (f), relate to the subject of conflict in the workplace:
(e) enabling fairness and representation at work and the prevention of discrimination by recognising the
right to freedom of association and the right to be represented, protecting against unfair treatment and
discrimination, providing accessible and effective procedures to resolve grievances and disputes and
providing effective compliance mechanisms; and
(f) achieving productivity and fairness through an emphasis on enterprise-level collective bargaining
underpinned by simple good faith bargaining obligations and clear rules governing industrial action.

Almost all Australian employees (apart from those excluded) have their conditions
of employment at their workplace regulated by the FW Act via the National
Employment Standards (NES), modern awards and enterprise bargaining agreements.
These will be looked at to gain an understanding of how each plays a role in addressing
conflict in the workplace.
Under the FW Act, industrial activity or ‘industrial action’ includes the following
actions:
employees performing work in a manner different to how it is normally performed
employees adopting a practice that restricts, limits or delays the performance of work
a ban, limitation or restriction by employees on performing or accepting work
a failure or refusal by employees to attend for work or perform any work
the lockout of employees from their employment by their employer (Fair Work Ombudsman
2015a).

Industrial action under the FW Act can be divided into two parts: protected and
unprotected industrial action.
Protected action
As previously discussed in Chapter 5, protected action provides for legitimate
industrial activity. Protected action is called ‘industrial action’ if takes place during the
negotiation of an enterprise bargaining agreement. In order for protected action to be
deemed legal, certain prerequisites must be met by either the employers or employees
wishing to engage in the action. The FW Act requires that a bargaining representative
must give written notice of ‘employee claim action’ (s 414(1)); the notice must be at
least three working days—or longer where specified by a protected action ballot order
—(s 414(2)); and the notice must specify the nature of the action and the day on which
it will commence (s 414(6)). Sections 435–469 of the FW Act require that for the
protected action to be legal, a secret ballot must be conducted by the Australian
Electoral Commission after approval for the process has been given by the FWC.
Section 459 of the FW Act provides that once the secret ballot has been conducted, the
proposed industrial action will be deemed to be authorised and legal if:

Protected action
A set of legal conditions set out in the Fair Work Act 2009 that, if adhered to, allow
employees to take industrial action without being prosecuted under civil law.

at least 50% of the employees on the roll of voters for the ballot voted;
more than 50% of those votes validly cast approved the action;
the proposed action relates to the questions put in the ballot; and
it commences within 30 days of the declaration of the result of the ballot.

Table 8.2 details the number of applications made in a particular year for an
application for a protected ballot order. The number has been declining for a few years,
dropping from 1011 applications in 2011–12 to 627 applications in 2013–14.
If the party seeking the ballot is successful in achieving the conditions described
above by attracting 50 per cent of votes cast (assuming 50 per cent of eligible voters
cast a vote), then they may commence protected action to advance their workplace
demands. However, the FWC may, if a party makes an application under s. 418 of the
FW Act, order a cessation to the action being conducted on very limited specific
grounds, including damage to the economy, economic harm to the employer or
employees or endangering safety or causing harm to a third party.

Table 8.2 Number of applications for industrial action 2011–14

Type of application 2011– 2012– 2013–

12 13 14
 s. 418—Application for an order that industrial 138 168 145
action by employees or employers stop, etc.

s. 419—Application for an order that industrial 2 2 3

action by non-national system employees or employers
stop, etc.

s. 423—Application to suspend or terminate 7 5 1

protected industrial action—significant economic harm,
etc.

s. 424—Application to suspend or terminate 16 11 11

protected industrial action—endangering life, etc.

s. 425—Application to suspend protected industrial 4 2 6

action—cooling off

s. 426—Application to suspend protected industrial 0 1 3

action—significant harm to third party

s. 437—Application for a protected action ballot 1011 915 627

order

s. 447—Application for variation of protected 17 12 12

action ballot order

s. 448—Application for revocation of protected 57 38 54

action ballot order

s. 459—Application to extend the 30-day period in 156 115 124

which industrial action is authorised by protected
action ballot

s. 472—Application for an order relating to certain 9 2 3

partial work bans

Source: Fair Work Commission Annual Report (2014)

Unprotected industrial action

Unlike ‘protected action’, which provides for parties that gained approval via a secret
ballot, the use of ‘unprotected action’ has always been illegal in Australia. Until the
concept of protected industrial action was introduced into industrial legislation in the
1990s—as a necessary requirement for the shift towards more decentralised enterprise
bargaining—all strike action was illegal from a purely legal perspective.
If an employer does not formally object to action being taken at the workplace then
the matter is for them and their employees to deal with, and not relevant to the federal
regulator. However, if an application is made by either party, then the FWC can make
an order regarding unprotected industrial action:

Unprotected industrial action

Illegal industrial activities not approved by the Fair Work Commission.

to stop the unprotected industrial action when it is already occurring

to prevent the unprotected industrial action from occurring when it is threatened,
impending, probable, or being organised.
The FWC can make this order on its own initiative, or upon application by either a
person affected by the industrial action or an organisation representing that person.
Where the FWC has issued an order to stop or prevent unprotected industrial action, it
is unlawful for that industrial action to occur or continue in contravention of the order.
Part 3–3 of the FW Act provides penalties for parties that ignore the orders of the FWC
of up to $10,200 for an individual and $51,000 for a corporation. It is also possible for
damages to be awarded against parties that have financially injured others through
taking industrial action.

Dispute resolution
Most disputes in Australia will not generally end in strikes or lockouts. Unions in fear
of being awarded damages will attempt to resolve the conflict at the workplace where
possible, or by utilising the FWC. Since the 1990s—and most recently with the
introduction of the FW Act—a number of mechanisms have been developed to ensure
that where possible, disputes are resolved at the workplace in the first instance, rather
than being decided through the umpire (the FWC).

Modern awards
Since the 1990s, a number of awards have had procedures for dealing with disputes in
the workplace. However, the award modernisation process has now meant that every
modern award contains instructions or a process on how disputes in every industry
must be dealt with.
 In the first few stages of the conflict, the process will typically involve the
grievance being escalated through the organisational structure, from the direct
supervisor, to the manager and, ultimately, through to the most senior person in the
organisation—generally the CEO. Disputes that still fail to be resolved at the
workplace can then be taken to the FWC for conciliation or arbitration, with
representation from unions and employers associations allowed.
The FWC takes a strong position on the process needing to be followed. Any
dispute that has not followed the correct procedure, except in exceptional
circumstances, will not be dealt with within the jurisdiction. Box 8.1 provides an
example of a dispute resolution procedure contained within a modern award.

Box 8.1 Fast Food Award 2010

Dispute resolution
9.1 In the event of a dispute about a matter under this award, or a dispute in relation to the NES, in
the first instance the parties must attempt to resolve the matter at the workplace by discussions
between the employee or employees concerned and the relevant supervisor. If such discussions do
not resolve the dispute, the parties will endeavour to resolve the dispute in a timely manner by
discussions between the employee or employees concerned and more senior levels of management
as appropriate.
9.2 If a dispute about a matter arising under this award or a dispute in relation to the NES is unable
to be resolved at the workplace, and all appropriate steps under clause 9.1 have been taken, a party
to the dispute may refer the dispute to the Fair Work Commission.
9.3 The parties may agree on the process to be utilised by the Fair Work Commission including
mediation, conciliation and consent arbitration.
9.4 Where the matter in dispute remains unresolved, the Fair Work Commission may exercise any
method of dispute resolution permitted by the Act that it considers appropriate to ensure the
settlement of the dispute.
9.5 An employer or employee may appoint another person, organisation or association to
accompany and/or represent them for the purposes of this clause.
9.6 While the dispute resolution procedure is being conducted, work must continue in accordance
with this award and the Act. Subject to applicable occupational health and safety legislation, an
employee must not unreasonably fail to comply with a direction by the employer to perform work,
whether at the same or another workplace that is safe and appropriate for the employee to
perform.

Source: Fast Food Industry Award (2010)

Enterprise agreements
With similar requirements to awards, the FW Act requires employees and employers
creating an enterprise agreement to include a dispute resolution clause that clearly sets
out the process to be undertaken when a dispute arises. Enterprise agreements lodged
with the FWC without such a clause will not be approved.
The dispute process—outlined in Box 8.2—details how parties should approach
resolving disputes. Unlike the modern award dispute resolution provisions, enterprise
agreements acknowledge the right of the employee to have a representative—normally
a union representative, such as a delegate—to represent them.

Box 8.2 Model dispute resolution process in Enterprise

Agreements
1. If a dispute relates to:
a. a matter arising under the agreement; or
b. the National Employment Standards;
this term sets out procedures to settle the dispute.
2. An employee who is a party to the dispute may appoint a representative for the
purposes of the procedures in this term.
3. In the first instance, the parties to the dispute must try to resolve the dispute at the
workplace level, by discussions between the employee or employees and relevant
supervisors and/or management.
4. If discussions at the workplace level do not resolve the dispute, a party to the
dispute may refer the matter to Fair Work Commission.
5. The Fair Work Commission may deal with the dispute in two stages:
a. the Fair Work Commission will first attempt to resolve the dispute as it
considers appropriate, including by mediation, conciliation, expressing an
opinion or making a recommendation; and
b. if the Fair Work Commission is unable to resolve the dispute at the first stage,
the Fair Work Commission may then:
i. arbitrate the dispute; and
ii. make a determination that is binding on the parties.
Note: If Fair Work Commission arbitrates the dispute, it may also use the
powers that are available to it under the Act.
A decision that Fair Work Commission makes when arbitrating a dispute is a
decision for the purpose of Div. 3 of Part 5.1 of the Act. Therefore, an appeal
may be made against the decision.
6. While the parties are trying to resolve the dispute using the procedures in this
 term:
a. an employee must continue to perform his or her work as he or she would
normally unless he or she has a reasonable concern about an imminent risk to
his or her health or safety; and
b. an employee must comply with a direction given by the employer to perform
other available work at the same workplace, or at another workplace, unless:
i. the work is not safe; or
ii. applicable occupational health and safety legislation would not permit the
work to be performed; or
iii. the work is not appropriate for the employee to perform; or
iv. there are other reasonable grounds for the employee to refuse to comply
with the direction.
7. The parties to the dispute agree to be bound by a decision made by Fair Work
Commission in accordance with this term.
Source: Fair Work Regulations 2009 s. 6.1

The role of the Fair Work Commission in disputes

The evidence provided in the first part of this chapter reveals that there has been a
dramatic decline in the number of strikes in Australia over the last 30 years. For a
number of reasons already discussed, conflict is increasingly manifesting itself in
covert ways rather than the traditional open overt forms. Yet disputes do commonly
arise in Australian organisations. For the most part, they are quickly resolved with little
or no external assistance from third parties needed. However, some disputes still
require the intervention of outside parties, such as mediators, or the traditional means
of solving workplace conflict using the available state regulatory processes.
Although the role of the regulator, the FWC, has changed dramatically over the last
30 years, it still assisted parties in resolving disputes, although not as frequently or
with as much authority as in previous generations. Depending on the circumstances, the
FWC can exercise statutory powers that enable disputes to be resolved on a final basis.
The main types of disputes that may be referred to the FWC are:
disputes under the terms of an award, collective or enterprise agreement
bargaining disputes
disputes arising under the general protections provisions of the Fair Work Act 2009.
As shown in Table 8.3, the majority of disputes dealt with by the FWC in 2014
related to section 739 of the FW Act—applications to deal with a dispute. These
comprised 94 per cent of total dispute applications lodged at the FWC. A small number
of applications (18) were lodged under section 526 of the FW Act. These are disputes
where employees have been stood down because of industrial action or a breakdown of
machinery or equipment, or any other stoppage of work where the employer cannot
reasonably be held responsible.

Table 8.3 Fair Work Commission dispute applications—lodgments 2011–14

Type of application 2011– 2012– 2013–

12 13 14

s. 526: Application to deal with a dispute involving 29 19 18

stand down

s. 699 of repealed WR Act: Application to the FWC 11 4 13

to have an alternative dispute resolution process
conducted

s. 709 of repealed WR Act: Application to the FWC 319 162 69

to have a dispute resolution process conducted under a
workplace agreement

s. 739: Application to deal with a dispute 1643 2124 2366

s. 739: Application to deal with a dispute in 27 37 50

relation to flexible working arrangements

Total 2029 2346 2516

Source: Fair Work Commission Annual Report 2015

The general protections provisions in the FW Act relate to the individual

protections that all employees as individuals are entitled to in the workplace. The
general protections have been introduced to:
protect workplace rights
protect freedom of association
provide protection from workplace discrimination
provide effective relief for persons who have been discriminated against,
 victimised, or have experienced other unfair treatment (FWC 2015).
This means that an employer must not take any ‘adverse action’ against employees
because they have a workplace right, have exercised that workplace right or are
intending to exercise that workplace right. Adverse actions that can be taken against an
employee or potential employee might include:
dismissing them
not giving them their legal entitlements
changing their job to their disadvantage
treating them differently than others
not hiring them
offering them different (and unfair) terms and conditions, compared to other
employees (Fair Work Commission 2015).

Employment dispute resolution

The decline in trade unionism and the diminishing role of the state in regulating
workplace conflicts has had enormous implications for HR managers, as well as
providing many challenges. On one hand, many Australian organisations would
welcome the decline of the once-frequent workplace disputes, particularly strikes and
activities that halted production and resulted in economic harm. On the other hand,
more organisations are coming to understand the enormous impact that covert activities
such as presenteeism and employee turnover can have on an organisation’s bottom line.
To address the threat of covert activities, HR managers engage a number of
strategies to reduce conflict in the workplace, and to address it if or when it does occur.
Although not the focus of this book or of ER specifically, it is worth briefly looking at
HR strategies aimed at addressing conflict in the workplace that do not involve the use
of traditional mechanisms such as the state regulator.
Much of the focus of HR is on developing jobs that are interesting, challenging and
rewarding for their employees so that they are committed to the organisation and
satisfied with their employment. A great deal of the focus of HR practitioners is
developing participatory structures for employees so that their voice can be heard
within the organisation. From team meetings through to updates from the CEO and
involvement in strategic plans, the aim of these HR strategies is to empower employees
and encourage the employee voice so that the threat of conflict dissipates.
But, as discussed in previous chapters and demonstrated in this chapter, conflict in
organisations, in some form or another, is inevitable, even in the most successful
organisations. Acknowledging the importance of resolving conflict in the workplace in
the context of the decline of union membership and a diminished role of the state
regulator, many organisations in Australia are turning towards Alternative Dispute
Resolution (ADR) procedures to address employee concerns.
An increasingly common ADR procedure used in Australian organisations is
mediation. Dispute resolution procedures have been found to be effective in providing
management in organisations with an understanding of issues and potential issues that
can impact on employee absenteeism and turnover (Lewin & Mitchell 1992). However,
to be effective, the process needs to be perceived as fair by the employees using it
(Peterson & Lewin 2000).
There are many issues related to the use of mediation in the workplace setting to
resolve conflict. The first issue concerns the types of conflict or workplace issues that
it is used for. A cursory glance at the internet shows that many private Australian
providers of mediation services at the workplace will mediate on disputes involving
issues such as employment terms and conditions, changing work practices and
interpersonal conflict, through to allegations of bullying, harassment and discrimination.

PRIMARY EXAMPLE 8.1

Mediating a resolution
Jenny had worked as an administration assistant at Samstone Industries for three years.
Samstone Industries is a medium-sized company located in an industrial estate in
Melbourne. With the business expanding, Samstone recently employed an accountant,
Barry, to help improve the invoicing processes, after complaints from customers that it
was inaccurate and too slow.
Although Barry has helped to dramatically improve the office with his skills and
experience at several other factories, Jenny and her two other workmates believe that
his communication skills and behaviour towards fellow employees needs improving.
A few encounters with Barry in recent weeks led to Jenny taking sick leave on four
occasions. First, Barry made crude jokes about Jenny’s appearance with the ‘boys’
from despatch. Second, he made suggestive comments about her at the Friday night
drinks. These comments made Jenny extremely uncomfortable. Third, he sent an explicit
email with pornographic images that left Jenny in tears.
With encouragement from her two workmates, Jenny finally complained to the
general manager. After receiving advice from his local employer association, the
general manager offered Jenny the chance of mediation to help resolve the issue
involving Barry and herself.
Jenny agreed to the mediation and a few days later met with the mediator, Kerry, to
discuss what she wanted from the mediation. Kerry also met with Barry, to explain the
process and to establish that he was in agreement that the process should take place.
 The following Friday morning, Jenny, the union representative, Sandra, Barry and
the mediator Kerry met in the company boardroom. Jenny explained how she was upset
by Barry’s behaviour, which she felt was unacceptable. Barry argued that Jenny had
misinterpreted his behaviour and that it was all just a ‘bit of a laugh’.
After both sides had a chance to explain the history of the conflict, Kerry then led a
discussion about how the conflict could be resolved. Finally, after many ideas had been
put forward, Jenny agreed to accept Barry’s apology and a promise that he would not
behave in such a manner again. Jenny also wanted the general manager to review the
situation after a month to ensure that Barry’s behaviour had stopped.
Questions
1. Do you think the mediation was appropriate in the circumstances described?
2. What potential dangers were there utilising mediation in this case?
3. What alternatives could the general manager have chosen?

ADR has been criticised, particularly by trade unions, for attempting to ‘sweep
problems under the carpet’ rather than permitting employees to utilise the formal
processes permitted by state and federal legislation. Any attempts at using mediation
must consider the legal consequences of the issue being mediated. For example, if the
issue related to legislated rights—such as a safe workplace or employees not being
subjected to discriminatory behaviour or sexual or racist harassment— then the process
may not be appropriate.
To establish suitability requires a trained mediator able to identify potential legal
and ethical issues that may jeopardise the rights of the employee. This is often linked to
the mediator chosen for the process. Boulle and Nesic (2001) argue that it is crucial
that the mediator used for ADR is neutral and trained to identify potential instances in
which the legal entitlements of the employee/s may be impacted. Accordingly, a number
of factors must be determined when choosing a mediator. They include that the
mediator:
has no direct interest in the outcome of the dispute
has no prior knowledge of the dispute
will not sit in judgement on the parties, either directly or indirectly
will not use their substantive expertise to influence the decision-making
will act even-handedly, fairly and without bias towards the parties (Boulle & Nesic
2001: 17).
The ADR process generally has a number of common steps. The Chartered Institute
of Personnel and Development (CIPD)—the international professional body for HR and
people development—describes five distinct stages of the process. These stages are
outlined in Box 8.3.

Box 8.3 Stages of mediation

Step 1: First contact with parties
Step 2: Hearing the issues
Step 3: Exploring the issues
Step 4: Building and writing an agreement
Step 5: Closing the mediation
Source: CIPD (2015)

First contact with parties

The first step involves a mediator making contact separately with each party involved
in the dispute. This normally involves mediators gathering basic information about the
parties and the dispute, and explaining the process and gaining an understanding of what
each party is seeking from the mediation process. At this stage, experienced mediators
consider the suitability of the mediation process and the potential legal implications of
the dispute, such as whether a crime has been committed and what legislation is
necessary, e.g. Equal Employment Opportunity (EEO) or Occupational Health and
Safety (OH&S) legislation.
This part of the process will also establish the functional aspects of the process,
such as location of the mediation and timing of the process. Depending on the severity,
complexity and sensitivity of the dispute—as well as the involvement of other parties,
such as unions—mediation sessions are sometimes conducted away from the workplace
to provide a more relaxed and less official environment for those participating in it.
Likewise, some mediations are conducted outside work hours, particularly when the
parties want the process to remain confidential.

Hearing the issues

The second step involves bringing the parties together. The first part of this process is
gaining commitment from both parties to the process, by getting agreement to the
mediator’s rules, such as being polite and giving each party the opportunity to speak.
The mediator then provides a summary of the known facts, gathered from the first part
of the process. Both parties are then given the opportunity to describe their positions
and belief of the facts in the dispute.

Exploring the issues

The third step is exploring the issues. The role of the mediator is to assist the parties in
communicating, understanding each other’s positions and discussing possible solutions
to address the conflict. Again, the experience of the mediator and their skills in
understanding the laws impacting on the workplace relationship are crucial. Solutions
that do not have the full commitment of both parties, or that have been achieved by
either party bullying or misleading, are more likely to fail. The mediator helps the
parties to understand the consequences of the solutions proposed and their
achievability.

Building and writing an agreement

Once each party has agreed to potential solutions, in the fourth step the mediator writes
an agreement for both parties to consider and then sign. This is important, because often
parties in mediation can forget what they agreed to after leaving the mediation session,
or argue that they did not agree to them. Although a signature is not binding on parties in
mediations, it demonstrates a commitment to the solutions proposed in a voluntary
process. It is common for a mediator to ask the parties to wait as they write or type up
the agreement and photocopy or print it, so that each party is clear on the outcome of the
mediation.
Many mediations conclude with an agreement about the next steps for the parties. In
some personal disputes it may be that the employee complaining about the behaviour of
another employee agrees to meet with an HR consultant once a fortnight for a month to
monitor the agreement, and to raise any issues related to any ongoing conflict that may
occur after the mediation.
As already discussed, mediations can be successful processes for resolving
disputes in the workplace, particularly interpersonal conflicts; however, they do
provide challenges for organisations. Apart from being costly, ADR can be disruptive
for the organisation, and might fail if neither party is committed to the process. Of
course, failure is a reality in this process, and for those organisations where mediation
has failed, the consequences can result in further covert activity, such as absenteeism,
presenteeism or employee turnover.
An example of ADR utilising professional mediators from the Fair Work
Ombudsman (FWO) is provided in Box 8.4.

Box 8.4 Mediation helps resolve workplace disputes early

Fair Work Ombudsman mediators are helping more employees and employers to
resolve their workplace disputes voluntarily. In the past two years, mediators have
assisted almost 11,000 workers to come to an agreement with their employer. The
workers have collectively been back-paid more than $16 million without the need
for the Agency to formally intervene. Mediation is a free, confidential and voluntary
process conducted by an accredited Fair Work Ombudsman mediator.
The mediation occurs soon after an employee lodges a request for assistance and
is conducted over the telephone, usually taking less than 90 minutes. A settlement is
often reached on the day of mediation. ‘It’s becoming an increasingly effective way
for us to resolve workplace disputes quickly, efficiently and in a non-adversarial
way,’ says Fair Work Ombudsman Natalie James. ‘Participants appreciate the neutral
approach from a professional mediator who is not an advocate for either party. The
process gives people the opportunity to discuss their dispute and find mutually
acceptable solutions themselves.’
Ms James says a communication breakdown is often central to a workplace
dispute. ‘It is important employees receive their minimum lawful entitlements, but
we are also conscious that most employers try to do the right thing and we are
committed to helping them comply with workplace laws,’ she said.
Small business, in particular, is finding the Fair Work Ombudsman’s mediation
service a timely and efficient way of dealing with issues. ‘Mediation is helping us to
build a culture of compliance throughout the community because it equips employers
and employees with the information they need and empowers them to resolve issues
in their workplace.’
The Fair Work Ombudsman has recently released a two-part video series, which
explains what mediation is, what happens and possible outcomes. The Fair Work
Ombudsman first trialled mediation as a means of resolving workplace disputes in
2009, and after encouraging results, adopted it as a core dispute resolution service in
2012.
In 2013 the Fair Work Ombudsman resolved 4625 matters through mediation,
increasing to 6294 last year. ‘Mediators help the parties focus on the relevant issues
in order to reach an amicable outcome,’ Ms James says.
Most matters being resolved by mediation are the result of requests from
assistance from employees in the retail, accommodation and food services,
construction and manufacturing industries. The majority of matters are about
underpayment of wages and penalty rates, non-payment of annual leave, wages in
lieu of notice and redundancy. ‘The goal is to arrive at an agreed resolution and
terms that suit both parties,’ Ms James says. ‘Sometimes, parties require written
terms of settlement, but on other occasions, a verbal agreement is often all that’s
needed.’
The Fair Work Ombudsman has a number of tips on how parties can improve
 their chances of a successful mediation:
Address situations early, as unresolved conflict can be damaging for businesses.
The key to a successful mediation is good preparation.
Allow sufficient time and choose an appropriate location for the mediation so you’re not
interrupted.
If decisions need to be made, involve someone with the authority to make them.
Understand that mediation is a confidential process and discussions in mediation remain
confidential

(Fair Work Ombudsman 2015b)

SUMMARY
This chapter has explored industrial conflict in the Australian employment relationship.
As noted, conflict in Australian workplaces has changed dramatically over the last 30
years, predominantly because of the decline of trade unionism and the rise of
decentralised bargaining. Industrial activity can take place in two ways: overtly or
covertly. Australia has in the past hundred years seen periods when overt strike activity
was common; however, in recent years, action is far more likely to be covert, such as
taking sick leave when not sick or leaving the organisation.
The decline in overt industrial activity comes at a time when the powers of the state
regulator—currently the FWC—have been significantly eroded over the last two
decades, and their once important role in intervening in industrial disputes has been
greatly diminished. The introduction of dispute resolution procedures into modern
awards and enterprise agreements has seen the need for employers to provide better
structures and mechanisms for dealing with workplace conflict. Although some disputes
still get decided in the tribunals, many workplaces are yet to deal with internal
organisational conflict—and the result is a workforce that is in many cases disengaged,
with workers taking days off work when not sick, working relatively unproductively, or
simply leaving their employment.
However, some organisations are embracing the increased responsibility of
addressing workplace conflict rather than denying its existence, and are implementing
ADR procedures. The evidence, although limited in Australia, indicates that for those
organisations willing to invest in the ADR process and provide their employees with
fair, effective and timely processes to deal with their complaints, the benefits can be
significant for both the individuals involved and the organisation as a whole.

REVIEW QUESTIONS
 1. How would you define workplace conflict?
2. What is the difference between covert and overt conflict?
3. How can absenteeism be a symptom and constitute a cost of conflict?
4. What is presenteeism?
5. What is the difference between protected industrial action and unprotected
industrial action?
6. What are the some of the steps in a modern award dispute resolution procedure?
7. What role can the Fair Work Commission play in settling disputes?
8. What is mediation?
9. What role does the mediator play in mediation?
10. What is the difference between conciliation and arbitration?

Visit Oxford Ascend for
further revision material

CASE STUDY PARAMEDICS

8.1 REACH PAY DEAL
AFTER YEARS OF
DISPUTE
Victorian ambulance workers have reached an agreement with the state
government over a long-running pay dispute.
The deal included a 6 per cent pay increase from January 1 next
year, followed by 3 per cent pay increases in 2015 and 2016. There
will also be a $3,000 sign-on bonus, and Fair Work Australia will hold
a full hearing next year to assess the ambulance union’s ‘work value
case’ to decide whether further increases are warranted. The
Government said the agreement had been signed by Ambulance
Victoria and the unions representing paramedics.
Resolving the pay dispute was one of the Labor Party’s key
election promises and came after a two-year industrial dispute with the
previous Coalition Government. The deal was similar to one the
 Coalition Government offered before the election, but which the union
turned down.
Premier Daniel Andrews said he was delivering on his promise.
‘It’s fair to say we have achieved in two weeks what the previous
government failed to achieve in two long years—and I think that’s
down to one key point: Labor respects the work our paramedics do,’
Mr Andrews said.
Ambulance Employees Australia state secretary Steve McGhie
said the deal was not the same as the one offered by the previous
government. ‘On an average per annum basis it’s a higher percentage
increase, because it averages out at 3 per cent per annum, where as the
previous offer was only averaging out at 2.4,’ Mr McGhie said. ‘It’s
actually a two-year agreement, rather than the Coalition offer of a
three-year environment.’
The Opposition’s spokesperson for health, Mary Wooldridge,
criticised the Government for making a deal with ‘no productivity
benefits’ and no benefits in ‘services for the Victorian community’.
‘What secret deals have been done to increase the pay without
improvements, without better services?’ Ms Wooldridge asked.

Deal takes ‘pressure off paramedics’

Mr McGhie said he expected paramedics to receive a further pay
increase once the case had been sent to Fair Work Australia. He also
said the deal was a relief for Ambulance Victoria employees. ‘Just in
the last few weeks alone, paramedics have really had a weight lifted
off their shoulders just because of the hostilities that were in our
negotiations prior to the election,’ Mr McGhie said. ‘Obviously seeing
the light at the end of the tunnel … clearly there’s a lot of pressure off
paramedics now and we’ll be able to concentrate on making sure that
there’s a better ambulance service for Victoria.’
Mr McGhie said the union had not played politics with the
Coalition Government during the previous term. ‘We tired to resolve
this two years ago, I wrote to the premier at the time—Ted Baillieu in
2012—and said that we would take 2.5 per cent if they sent the matter
to the Fair Work Commission back then; that was rejected,’ he said.
‘When Denis Napthine took over I wrote to him and offered the same
offer … and he rejected that also. We were prepared to allow the
umpire to decide what paramedics were worth, we were prepared to
run that case and take our risk in that case and neither of those premiers
 accepted that deal.’
Mr McGhie said the union had been in negotiations with the
Department of Health and Ambulance Victoria for the past two weeks
to reach the deal. ‘One thing we have noticed in the last two weeks, the
hostilities that were there have not been there … it’s been a lot easier
to communicate between the parties and try to resolve issues that were
outstanding,’ he said. ‘Prior it was very hostile, very toxic.’
Victorian ambulances have been painted with colourful slogans for
the past two years, but paramedics washed them off as a sign of good
faith ahead of negotiations with the new government. Ambulance
Employees Australia said it had suspended all industrial action since
reaching the agreement.
Source: Australian Broadcasting Corporation (2014)

Questions
1. What were the main issues in dispute in this case?
2. What does the length of this dispute reveal about Australia’s dispute
resolution procedures?
3. Why didn’t Fair Work Australia (now the Fair Work Commission)
intervene and arbitrate a settlement?

CASE STUDY MEDIATION HELPS

8.2 RESOLVE
WORKPLACE
DISPUTES EARLY
Fair Work Ombudsman mediators are helping more employees and employers to
resolve their workplace disputes voluntarily. In the past two years, mediators have
assisted almost 11,000 workers to come to an agreement with their employer. The
workers have collectively been back-paid more than $16 million without the need
for the Agency to formally intervene. Mediation is a free, confidential and
voluntary process conducted by an accredited Fair Work Ombudsman mediator.
The mediation occurs soon after an employee lodges a request for assistance
and is conducted over the telephone, usually taking less than 90 minutes. A
settlement is often reached on the day of mediation. ‘It’s becoming an increasingly
effective way for us to resolve workplace disputes quickly, efficiently and in a
non-adversarial way,’ says Fair Work Ombudsman Natalie James. ‘Participants
appreciate the neutral approach from a professional mediator who is not an
advocate for either party. The process gives people the opportunity to discuss their
dispute and find mutually acceptable solutions themselves.’
Ms James says a communication breakdown is often central to a workplace
dispute. ‘It is important employees receive their minimum lawful entitlements, but
we are also conscious that most employers try to do the right thing and we are
committed to helping them comply with workplace laws,’ she said.
Small business, in particular, is finding the Fair Work Ombudsman’s mediation
service a timely and efficient way of dealing with issues. ‘Mediation is helping us
to build a culture of compliance throughout the community because it equips
employers and employees with the information they need and empowers them to
resolve issues in their workplace.’
The Fair Work Ombudsman first trialled mediation as a means of resolving
workplace disputes in 2009, and after encouraging results, adopted it as a core
dispute resolution service in 2012.
In 2013 the Fair Work Ombudsman resolved 4625 matters through mediation,
increasing to 6294 last year. ‘Mediators help the parties focus on the relevant
issues in order to reach an amicable outcome,’ Ms James says.
Most matters being resolved by mediation are the result of requests from
assistance from employees in the retail, accommodation and food services,
construction and manufacturing industries. The majority of matters are about
underpayment of wages and penalty rates, non-payment of annual leave, wages in
lieu of notice and redundancy. ‘The goal is to arrive at an agreed resolution and
terms that suit both parties,’ Ms James says. ‘Sometimes, parties require written
terms of settlement, but on other occasions, a verbal agreement is often all that’s
needed.’
The Fair Work Ombudsman has a number of tips on how parties can improve
their chances of a successful mediation:
Address situations early, as unresolved conflict can be damaging for
businesses.
The key to a successful mediation is good preparation.
Allow sufficient time and choose an appropriate location for the
mediation so you’re not interrupted.
If decisions need to be made, involve someone with the authority to make
 them.
Understand that mediation is a confidential process and discussions in
mediation remain confidential.
Source: Fair Work Ombusman (2015b)

Questions
1. What is mediation?
2. Why would an employer or employee participate in the Fair Work
Ombudsman’s mediation service?
3. What role does the Fair Work Ombudsman play in mediation?

FURTHER READING
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changed Australia’s industrial relations. Melbourne: Heidelberg Press.
MacDermott, T., & Joellen, R. (2011). Alternative dispute resolution and individual
workplace rights: The evolving role of Fair Work Australia. Journal of
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Peetz, D., & Barbara, P. (2009). An analysis of workplace representatives, union
power and democracy in Australia. British Journal of Industrial Relations
47(4): 623–52.
Quinlan, M., and Richard, J. (2009). The implications of de-collectivist industrial
relations laws and associated developments for worker health and safety in
Australia, 1996–2007. Industrial Relations Journal 40(5): 426–43.

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WEBSITES
www.dnh.net.au
Direct Health Solutions Absence Management Survey Summary
www.fairworkgov.au
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Fair Work Commission Annual Report 2015
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Chartered Institute of Personnel and Development
 Chapter Nine
EMPLOYMENT RELATIONS AND
DIVERSITY

INTRODUCTION
The changing nature of the Australian workforce, with the increasing participation of
women, migrants from both Europe and Asia—as well as evolving attitudes towards
differing characteristics in the community, from sexual orientation through to religious
beliefs—has, since the early 1980s, resulted in successive federal and state
governments creating extensive legislation to regulate the behaviour of employers and
employees. This has been done to protect the individual’s rights at work, and to provide
the opportunities and rewards that would otherwise not be possible to those in the
workforce who may otherwise have faced discrimination or harassment. Because of the
array of anti-discrimination and equal opportunity laws and regulatory requirements,
discrimination has become a subject that overlaps other areas of employment relations,
including conflict resolution and dispute settlement.

Discrimination
Treating a person unfavourably because of a personal characteristic. Discrimination
can be direct, in which the actions are obvious, or indirect, where an organisation’s
practices, policies or procedures cause the discrimination.

The differing characteristics of employees in an organisation are commonly

referred to as representing diversity. There is no universal definition of ‘diversity’, and
the term is open to interpretation. Thomas and Ely (1998) argue that diversity should be
understood as the varied perspectives and approaches to work that members of
different identity groups bring. Another definition is provided by Cox (2001), who
claims diversity is the variation of social and cultural identities among people existing
together in a defined employment or marketing setting. When we think of diversity in the
workplace, most people think of ethnicity and race, i.e. the changing country of origins
of the employees in the Australian workforce. But, as this chapter explains, diversity is
more than that.

Diversity
The differing characteristics of employees in an organisation, such as gender,
ethnicity and religious beliefs.

Diversity encompasses many attributes, but is often categorised along two

dimensions. The first of those are the observable differences that are easy to see, such
as race, ethnic background, nationality, gender, age, and verbal and nonverbal
behaviours. The second dimension involves less observable differences, which include
differences in values and beliefs (e.g. cultural values, work style, orientation, social
values), skills and knowledge diversity (e.g. specialisation, experience in an area or
industry), as well as organisational cohort diversity (e.g. group tenure, employment
status).
Over the last 30 years, a plethora of research has been conducted in Australia and
internationally in an attempt to understand the implications and impact, if any, of the
differences among employees within organisations. Research has focused on individual
employees and their experiences and attitudes, as well as on organisations and the
possible influence that diverse employee characteristics have on organisational
performance. As could be expected with such a complex issue, the findings have
differed enormously.
Most research and debates about diversity in the workplace have agreed that, in
general, having employees with a wide group of attributes and backgrounds provides
many benefits to organisations, such as broadening employee perspectives,
strengthening their teams, and offering greater resources for problem resolution (Cox
2001), as well as providing a more complex learning environment and, arguably, better
solutions to workplace problems (Gurin, Dey & Hurtado 2004). Konrad (2003) states
that there are three main reasons why diversity is seen as being of benefit to
organisations. First, diversity helps to attract the best quality candidates from all groups
in the community; second, diversity helps organisations connect with the community in
ways that homogenous groups do not; and third, the limited evidence available suggests
that in some circumstances diverse groups can outperform their counterparts because of
the skills, experiences and other factors that they bring to the organisations (Konrad
2003).
However, having diversity within organisations is not without its problems.
Milliken and Martins (1996) argue that ‘diversity appears to be a double-edged sword,
increasing the opportunity for creativity as well as the likelihood that group members
will be dissatisfied and fail to identify with the group’ (Milliken & Martins 1996: 403).
Other research has found that when the workplace environment changes and greater
diversity occurs, so too do the problems that governments and employers attempt to
minimise through legislation; this is discussed in more detail later in the chapter. Jehn,
Northcraft and Neale (1999), Pelled (1996), Pelled, Eisenhardt and Xin (1999) and
Skerry (2002), have also found that diversity policies in organisations can incur
significant potential costs. Another negative result of diversity identified by Tsui
(1992) is that it has the potential to diminish group cohesiveness and, as a result,
increase employee absenteeism and turnover. Importantly, organisations that fail to
create a suitable environment for their diverse workforce can have an impact on the
career prospects of the individual employees, as well as on their mental and physical
health and wellbeing (Pascoe & Smart 2009).
This chapter investigates workplace diversity in Australia by providing an insight
into the changing workforce, including ethnicity, gender, age, Indigenous Australians
and disability; it then discusses the strategies employed by federal and state
governments to protect those at work from discrimination and harassment,
predominantly through legislation. It also looks at the strategies used by progressive
Australian employers to gain competitive advantage of their diverse workforce. The
chapter concludes with emerging trends in diversity management.

THE DIVERSITY OF THE AUSTRALIAN WORKFORCE

This section provides an investigation into the changing characteristics of the
Australian workforce. Although there are a number of different characteristics that
could be explored, the major areas of workplace diversity focused on in this chapter
are those pertaining to migrants, age and Indigenous Australians.

Migrants
Since British colonisation began in 1788, Australia has been largely populated by
migrants. At first the migrants came from Great Britain (England, Wales, Scotland) and
Ireland, then from New Zealand, as well as a small number of migrants from Pacific
islands, who predominantly worked on the canefields in Queensland. Migration from
China began during the 1850s gold rush. Migration from ‘non-traditional’ sources first
occurred after World War II, with an influx of migrants from war-torn Europe,
especially Italy, Greece and Yugoslavia, as well as some migrants from Eastern
Europe. In the mid-1970s, Vietnamese refugees led an influx of migrants from South-
east Asia, followed by people fleeing the war in Lebanon. More recently—reflecting
Australia’s migration policy and as part of organised refugee programs—migrants from
a myriad countries including Burma, Cambodia, Iraq, Sri Lanka, Ethiopia, Eritrea and
Sudan have arrived. In addition, several thousand refugees from Afghanistan have made
their way to Australia by boat from Indonesia.
 Further migration as part of skilled migrant schemes introduced by the Howard
Government has resulted in a growing number of migrants from India and China. This is
reflected in figures provided by the Department of Immigration and Border Protection
—between July 2012 and June 2013, 152,414 people immigrated to Australia. These
migrants came from more than 200 countries. Most of them were born in one of the
following four countries:
New Zealand (17.7 per cent)
India (12.1 per cent)
China (11.8 per cent)
United Kingdom (7.7 per cent).
(Department of Immigration and Border Protection 2015)

The result on Australian workforce diversity has been astounding compared to

many countries with homogenous populations. Recent ABS statistics highlight that in
2011, Australia had a population of 21.5 million people; 46 per cent of whom were
either born overseas or had at least one overseas-born parent (ABS 2012a). This
included 13 per cent of workers in Australia’s workforce being born in non–English
speaking countries, and 23 per cent being born overseas. Reflective of the importance
placed by the federal government on skilled migration schemes, since 2006 more than
44 per cent of people entering Australia possess a Bachelor Degree, compared to only
15 per cent of those who arrived before 1991 (ABS 2012a).
From the late 1990s, the skilled migration scheme became an important tool for the
Australian Government to help address skills shortages in a number of different
occupations in Australia. Each month a skills shortage list is published by the federal
Department of Employment, which carries out research to identify skill shortages in the
Australian labour market. For example, for the year 2013–2014 a number of jobs were
identified as being difficult to fill for Australian employers and used to attract overseas
migrants; these include farm managers, software engineers, motor mechanics roof tilers,
bakers, hairdressers and childcare workers (Department of Employment 2014).
In addition to the skilled migration scheme, a more controversial scheme was the
introduction of temporary (up to four year) visas for migrant workers, in which
employers can sponsor overseas workers in occupations deemed by the (then)
Department of Immigration and Citizenship to be in demand (ACTU 2015). These visas
are called ‘457 visas’. The scheme has attracted a great deal of support from
employers, as well as a great deal of criticism from the Australian union movement for
a number of reasons, as the visas are sometimes used to exploit foreign workers, with
them often being underpaid, abused and subjected to sub-standard working conditions
(ACTU 2015).
Women at work
Since the late 1960s there has been significant growth in employment and workforce
participation by women. The role of women in the workforce, in all fields from
manufacturing to agriculture, during World War II, is well documented. According to
Strachan (2010), such was the presence of women in the factories and offices across
the country, that by 1944 women formed 25 per cent of the workforce, with almost one-
third of all women between the ages of 15 and 65 in paid employment. However, at the
end of the war, many women reverted to traditional roles of being primary carers for
children after marriage. Nevertheless, even after World War II, many women remained
in the paid workforce because of a shortage of labour (Nolan 2003), making up a
quarter of the labour force by 1961 (Sheridan & Stretton 2004). By the 1970s women
had become a large proportion of the workforce, coinciding with trade unions and
women’s groups successfully lobbying and campaigning for and gaining equal legal
rights to men.
Indicative of this growth, women’s participation in the Australian labour force in
August 2011 was 59 per cent, almost double that of August 1961, when it was 34 per
cent.

FIGURE Female labour force participation

9.1

Source: ABS (2009)

A number of reasons have been given for the increase in participation including
greater community support, achievements by women’s lobby groups and better access
to childcare. As a result of these changes and greater participation, women now
comprise 45.9% of all employees in Australia (ABS 2009). However, reflective of
women’s roles as primary carers, women constitute 69.4 per cent of all part-time
employees, 35.6 per cent of all full-time employees and 54.8 per cent of all casual
employees (ABS 2009). Although these figures are an encouraging sign that the barrier
to work is decreasing, women still suffer significant discrimination when it comes to
pay. ABS data show that, on average, annualised full-time earnings for women are 18.2
per cent less than for men, including 9.4 per cent less for female graduates, and that
women have 45.7 per cent less in superannuation compared to men, at a time when the
ageing population means that personal finances on retirement are increasingly important
(ABS 2014b).
The financial and insurance services industry had the highest gender pay gap
(31.9%), followed by health care and social assistance (31.7%) and professional,
scientific and technical services (26.6%). The lowest gender pay gaps were in the
wholesale trade (7.2%), public administration and safety (7.3%), and other services
(8.0%) industries (ABS 2014b). The gender pay gap has been estimated to be $93
billion each year, equivalent to 8.5 per cent of Gross Domestic Product (Cassells et al.
2009). There are a number of reasons for the gap in women’s pay, apart from being
carers of children and the time taken from work for that purpose. Research has found
that 60 per cent of the gap has been attributed to gender alone (Cassells et al. 2009).
An important factor in the gender pay gap, according to some researchers, can be
attributed to the introduction of enterprise bargaining in the early 1990s. Enterprise
bargaining saw the focus of wage rises shift from centralised decision-making—
predominantly through tribunals with the minimum wage and award wage increases—to
decentralised enterprise or workplace bargaining, which involves workers and their
employers reaching agreement on wage rises and conditions of employment, frequently
traded through productivity increases.
Another problem contributing to the disparity of pay between men and women is the
concentration of women in certain sectors of the economy. ABS data (2015) shows that
women are disproportionately overrepresented in the so-called ‘caring’ (and lower-
paid) industries such as health, community welfare and education, and underrepresented
in traditionally male dominated (and higher-paid) industries such as construction,
mining and transport and the trades. Although women (53.1%) make up a larger
percentage than men in the financial services sector—which is a relatively higher
paying sector than many others—they are a minority in positions of seniority and high
pay (ABS 2015).
In the workforce, women still lag behind men in positions of power. A great deal of
focus in recent years has been on the number of women in leadership—or lack of it.
Successive governments have committed to addressing the glaring lack of senior
women leaders in charge of or on boards of major Australian corporations. Yet figures
show that much still needs to be done to overcome the ‘glass ceiling’ that prevents
women from participating at the top levels of business. Demonstrative of the gap
between women and men in power, the 2012 Australian Census of Women in
Leadership found that women held only 3.0 per cent of chair positions in the ASX 200,
and 2.6 per cent in the ASX 500. Furthermore, only 3.5 per cent of CEOs in the ASX
200 were women and only 2.4 per cent in the ASX 500. Encouragingly, women held
41.7 per cent of government board appointments as at 30 June 2013 (Workplace Gender
Equality Agency 2012), although it could be argued that this is because the government
wants to be seen promoting women into leadership roles.

Age
Older Workers
Increasingly, the issue of age is coming to the forefront when we talk of a diverse
workforce, as the average age of Australian workers grows. There are a number of
reasons for this, including better health, increased retirement age and a willingness (or
financial need) to work until an older age than previous generations. However, just as
the gender of the workforce needs to be taken into account when creating strategies for
engaging and managing a diverse workforce, organisations also need to protect the
older workforce from discrimination, to assist in their retention and provide them with
suitable training opportunities.
Highlighting the ageing workforce, Figure 9.2 reveals that in 2009–10, there were
almost 5.5 million Australians aged 55 years and over and around one third of them (or
1.9 million) employed in the workforce (ABS, 2010). People aged 55 years and over
made up 16 per cent of the total labour force, up from around 10 per cent three decades
earlier. Significantly the participation rate of Australians aged 55 and over has
increased from 25 per cent to 34 per cent over the past 30 years, with most of the
increase occurring in the past decade (ABS, 2010).

FIGURE Labour force participation of people aged 55 years and over 1980–2010
9.2
 Source: ABS (2010)

ABS data show that labour-force participation declines with age. In the year to June
2010, 71 per cent of Australians aged 55–59 years were participating in the labour
force. This compares with half (51%) of 60–64 year olds and a quarter (24%) of 65–69
year olds. The participation rates for each of these age groups increased considerably
between 1980 and 2010.
Reflecting the gender division in work discussed earlier, older women and older
men worked in different areas of the economy. In 2010, almost 40 per cent of employed
men aged 55 years and over worked as managers (23%) or professionals (20%), and
were less likely to be employed in more physically demanding occupations such as
technicians and trade workers (18%) and labourers (11%). The most common
occupations among women aged 55 years and over were clerical and administrative
workers (28%), followed by professionals (25%). While these were also the most
common occupation groups among younger women, those aged 55 years and over were
more likely to be employed as managers and clerical and administrative workers than
their younger counterparts, and less likely to be employed as salesworkers (ABS
2010).

Younger workers
As the Australian population grows older, more attention is focused on the rights of
those workers in the 50+ age bracket and attempts to retain them in the workforce or
find jobs for them. At the other end of the age scale, the challenges for young
Australians are also of great concern. Prior to the global financial crisis (GFC), youth
unemployment in Australia had been declining since the early 1990s recession, when
more than 220,000 young Australians were out of work. However, since the GFC, many
young Australians have been unable to find work. Although it is difficult to measure
unemployment among young Australians—as many of them do not claim social security
benefits—recent figures suggest that 12.4 per cent of all young people between 15–24
years of age are looking for work. Youth unemployment is particularly high in some
Australian regions, such as west and north Tasmania (21.0%), Cairns (20.0%) and
North Adelaide (19.7%) (Australian Workforce and Productivity Agency 2014).
Evidence suggests that those young Australians able to find work are in precarious
employment that is poorly paid, insecure and unprotected. Recent research has found
that ‘casual work among young people [aged 15–24 years] has increased considerably’
in recent years. Of particular concern is the age bracket of teenagers (aged 15–19
years) who in 2012 made up one-fifth (20 per cent) of all casual workers in Australia
(Foundation for Young Australians, 2013, p. 6). Other issues for younger workers are
the rates of pay. The Australian Council of Trade Unions claims, for example, that
under the retail award and most modern awards, workers aged 18 earn only 70 per cent
of an adult wage. Those aged under 18 earn even less, with similar outcomes in
superannuation, which is not extended in full to those aged under 18 years of age and is
only available to those working more than 35 hours a week (ACTU 2012).

Indigenous Australians
There is a considerable gap between the labour force outcomes of Aboriginal and
Torres Strait Islanders (ATSIs) and those of non-Indigenous Australians. Indicative of
the lack of job opportunities for Indigenous Australians, because of location, education
and training, and both direct and indirect discrimination, in 2011 only 56 per cent of
ATSI people of working age were participating in the labour force. At the same time,
the unemployment rate was highest for ATSIs aged 15–19 (30.5%) and 20–24 (23.0%).
The top three industries of employment for ATSIs were the health care and social
assistance industry (21,160 people), public administration and safety (18,510 people)
and the education and training industry (12,970 people).

Direct discrimination
Overt or explicit discrimination because of a certain characteristic, such as gender
or ethnicity.

Indirect discrimination
Work practices that are ostensibly non-discriminatory, but have the effect of
discriminating against people on one of the grounds prohibited under legislation,
such as parental status or pregnancy.

However, there remain entrenched differences at a community level and in terms of

labour-force outcomes in terms of pay, employment and promotion opportunities
between Indigenous Australians and the rest of the community, including those who
have migrated from other countries.

THE LAWS AND DIVERSITY

Since the mid-1970s, a range of laws has been created by both federal and state
governments to help prevent discrimination in the workplace. The objective of these
laws is to encourage processes, policies and strategies in individual Australian
organisations to enhance opportunities for an increasingly diverse workforce, as well
as to provide penalties for employers and employees who discriminate against people
on a range of characteristics. The laws reflect changing community attitudes and the
changing community itself, such as the increase of migrants from countries other than
Europe in the 1970s and the increased workforce participation of women, as well as
more welcoming and accepting attitudes among the community to people who are
‘different’ to the norm.
The various laws create workplace responsibilities for both employers and
employees to ensure that everyone in the workplace is given the opportunity to reach
their full potential and obtain the rewards provided by organisations, such as
promotion, training, salary and other benefits, free from prejudice. Since the first
legislation was introduced in Australia to prevent discrimination, the Racial
Discrimination Act 1975, four other Acts have been created to help regulate
workplaces. The five main Acts are outlined in the following paragraphs.

Australian Human Rights Commission Act 1986

This Act provides for breaches of human rights by any Commonwealth body or agency
and discrimination in employment on the basis of a number of areas, including race,
colour, sex, religion, political opinion, national extraction, social origin, age, medical
record, criminal record, marital status, impairment, disability, nationality, sexual
preference or trade union activity.

Age Discrimination Act 2004

The most recent piece of legislation introduced by the federal government provides for
remedies against breaches of human rights because of age; it applies to both younger
and older employees in the workplace.

Disability Discrimination Act 1992

This Act provides for remedies against breaches of human rights because of physical,
intellectual, psychiatric, sensory, neurological or learning disabilities; physical
disfigurement; disorders, illness or diseases that affect thought processes, perceptions
of reality, emotions or judgement, or result in disturbed behaviours; presence in body of
organisms causing disease or illness (e.g. the HIV virus).

Racial Discrimination Act 1975

The first legislation of its type introduced into Australia, this Act outlaws breaches of
human rights because of race, colour, descent, national or ethnic origin.

Sex Discrimination Act 1984

This Act provides for remedies against breaches of human rights based on gender,
marital status, pregnancy and family responsibility (dismissal only), as well as for
sexual harassment.
 In addition to the Commonwealth Acts described above, each state has, since the
introduction of the first federal Acts 40 years ago, also created legislation to prevent
discrimination in the workplace. Much of this legislation replicates the federal
legislation, but in some cases it creates extra categories. Broadly, the state legislation
covers a number of similar categories in each jurisdiction including race, gender,
religion, political opinion, physical and mental ability, as well as membership of a
trade union, family responsibilities, marital status, sexual preference, age, pregnancy
and breastfeeding.
The federal body that regulates Commonwealth legislation is the Australian Human
Rights Commission (AHRC). AHRC plays an important role in providing education
and public awareness, processing and investigating discrimination and human rights
complaints, human rights compliance as well as developing human rights policies and
legislation (www.humanrights.gov.au 2015). Each state and territory also has an agency
that performs similar roles to AHRC. The state-based agencies across Australia
include:
ACT Human Rights Commission
Anti-Discrimination Board of New South Wales
Anti-Discrimination Commission of Queensland
Equal Opportunity Commission Western Australia
Northern Territory Anti-Discrimination Commission
Office of the Anti-Discrimination Commission (Tasmania)
South Australia Equal Opportunity Commission
Victorian Equal Opportunity and Human Rights Commission
Discrimination can occur in two ways: direct and indirect. Direct discrimination is
when a person is discriminated against overtly because of a certain characteristic, such
as gender or ethnicity. Indirect discrimination is more difficult to establish, but occurs
when an organisation’s practices, policies or procedures have the effect of
disadvantaging people who share certain characteristics.
The state and territory legislation relating to discrimination provides remedies for
both direct and indirect discrimination. Each state and federal agency has a similar
process for dealing with alleged workplace discrimination. For example, the AHRC
provides a free dispute resolution process to help people resolve discrimination
complaints. Complaints are assessed by the Commission to ensure that the allegations
are relevant to the legislation and jurisdiction, after which the complaint is then
reviewed to decide if it should be administratively closed, terminated or whether it is
suitable for conciliation. Those complaints suitable for conciliation result in the parties
to the dispute—normally the employee and employer—attempting to resolve the issue
to the satisfaction of both parties, with assistance from a Commissioner. Although the
AHRC and state agencies provide a valuable service, sometimes neither party is
willing to accept a resolution to the issue. This can result in the complainant taking the
next step within the relevant tribunal or court. In the federal sphere, this can involve
either the Federal Court of Australia or Federal Magistrates Court. Within state
jurisdictions, unresolved matters are normally heard by civil and administrative
tribunals.
As well as providing resolution to allegations of discrimination, each state and
federal agency is empowered to grant exemptions to the legislation for employers who
can provide unique reasons for needing to discriminate in the course of their business.
For example, in Victoria the Equal Opportunity Act 2010 (EO Act) allows the
Victorian Civil and Administrative Tribunal (VCAT) to grant temporary exemptions,
allowing discrimination to be legal in some circumstances. VCAT can grant a
temporary exemption to employers if it is established that the exemption would further
the Act’s goal of promoting equal opportunity. Exemptions can be granted to a person or
group of people, or an activity or group of activities. VCAT recently granted an
exemption to a government department to run a recruitment drive limited to Indigenous
people to improve the rate of Indigenous people employed in the public sector in
Victoria. An important legal case regarding exemptions is provided by Stevens & Ors v
Fernwood Fitness Centres Pty Ltd (1996) EOC 92-782, in which the respondent to the
matter, a women-only fitness centre, was found to have not discriminated in providing a
service for women only by the then Victorian Equal Opportunity Board.
Apart from anti-discrimination legislation, since the introduction of the Affirmative
Action (Equal Opportunity for Women) Act 1986, the Australian Government has
attempted to impose a number of duties on employers to help eliminate barriers to the
participation—and assist the advancement—of women in the workforce. The principles
of that early legislation identified the need for organisations to take a series of steps to
help promote equality of opportunity for women in the workplace. Employers with
more than 100 employees were required to institute an affirmative action program
‘based on a systematic and planned approach to the identification of existing structural
barriers which prevent or inhibit women from fully and equally participating in the
workforce’ (Ronalds 1988). That Act was later replaced with the Equal Opportunity
for Women in the Workplace Act 1999 (EOWW Act), and more recently the Equal
Opportunity for Women in the Workplace Amendment Act 2012 (the Amendment Act).
The principle objects of the Amendment Act are:
to promote and improve gender equality (including equal remuneration between
women and men)
to support employers to remove barriers to the full and equal participation of women
in the workforce
 to promote, among employers, the elimination of discrimination on the basis of
gender in relation to employment matters (including in relation to family and caring
responsibilities)
to foster workplace consultation between employers and employees on issues
concerning gender equality
to improve the productivity and competitiveness of Australian business.

PRIMARY EXAMPLE 9.1

A sporting chance for promotion
Peter stormed into his manager’s office. After 10 years working in the marketing
department of Darcy’s Sporting Goods, a large sporting manufacturer in Adelaide, he
had just found out that his application for a promotion had been unsuccessful.
‘How come I didn’t get an interview for the supervisor’s job? You know I am the
best sales rep in this place—and have nearly twice the experience of Jane.’
‘Mate,’ said his manager, ‘I know you are the best. But head office said that the
supervisor needs the certificate in marketing that you wouldn’t do last year when you
were offered the opportunity.’
‘How the hell was I able to do it?’ said Peter. ‘You know I have two kids I care for,
and without a partner it is impossible for me to go away for two weeks to Sydney and
leave them alone.’
The manager shifted in his chair. ‘Look, mate, I know you do it hard since Andrea
died, but I don’t make the rules. Perhaps it is better that you focus on your current job
without the hassles that being a supervisor brings.’
‘Can’t I decide for myself about what I can or can’t do?’ said Peter. ‘If I were a
woman you would bend over backwards to help me have some work–life balance. I’m
going to my lawyer about this. I am so sick of this place.’ He walked out of the
manager’s office and slammed the door.
Questions
1. What is the potential issue in relation to discrimination in this case?
2. What rights does Peter have?
3. Should the company offer Peter the opportunity to receive training without having to
travel interstate?
Equal Opportunity for Women in the Workplace Amendment
Act 2012
Although the Equal Opportunity for Women in the Workplace Amendment Act 2012
(Cth) (Amendment Act) is applicable to all Australian employers and employees, it
provides increased duties for ‘relevant employers’ with more than 100 employees in
the workplace. Since the introduction of the Amendment Act, relevant employers are
required to report the following information about their workforce: gender
composition, leadership gender composition, employees’ remuneration, employees’
flexibility arrangements, and information on how the organisation consults with
employees on issues concerning gender equality. Once the employer has lodged their
report with the Workplace Gender Equality Agency (WGEA), they must notify their
employees, members, shareholders and any relevant unions representing workers in the
workplace.

Workplace Gender Equality Agency

A federal government agency that advises employers and employees on gender
equality in the workplace, and works to promote and improve gender equality in the
workplace.

There are a number of penalties for employers who fail to comply with the
Amendment Act, including being ‘named-and-shamed’ in a report prepared by the
WGEA for the Minister, which might be tabled in Parliament and released to the media,
as well as potentially disqualifying a firm from tendering for Commonwealth and state
contracts, and other financial penalties for providing misinformation.
The agency that oversees the Amendment Act is the WGEA. The WGEA has a
number of functions, including advising employers and employees on gender equality in
the workplace, benchmarking gender equality indicators, research on gender equality,
promoting and improving gender equality in the workplace, collecting and analysing
information and a number of other activities to help improve the status of women in the
workplace (WGEA 2015).

At the workplace: The role of employers

The role of the employer and those charged with providing safe workplaces where all
employees have the same opportunities, such as Human Resource Managers and Equal
Employment Opportunity officers is crucial. Aside from the benefits of having a diverse
workplace, the employer is legally responsible for ensuring that discrimination in the
workplace does not occur by an employer’s representative (i.e. supervisor or manager)
or by any employees or contractors, etc. Under the anti-discrimination legislation
mentioned earlier in this chapter—as well as other forms of legislation, such as work
health and safety Acts—employers are responsible for the actions of their employees.
This legal principle is called ‘vicarious liability’. The only way that employers can
avoid responsibility for vicarious responsibility is if they have shown that they have
taken ‘all reasonable steps’ to prevent discrimination from occurring at the workplace.
Although the various anti-discrimination Acts provide little direction on what are
considered ‘reasonable steps’, each state agency overseeing the various Acts—along
with the AHRC—provide extensive materials for employers and employees to help
them meet the common challenges of providing a safe workplace free from forms of
discrimination, such as racism, sexism, ageism, etc. (AHRC 2015a).
When developing strategies to prevent discrimination in the workplace, employers
need to consider those factors that can impact on their actions, including the size of the
organisation, the type of work, the current workplace culture, previous discrimination
cases, hours of work and employees’ gender (AHRC 2015a). Once those factors have
been identified, employers need to then implement a number of general steps suggested
by the AHRC, including:
obtaining high level support from the chief executive officer and senior management
developing with staff or their union a written policy that prohibits discrimination
and harassment
consulting staff, employer organisations, unions, industry and professional
associations
regularly promoting the policy at all levels of the organisation
translating the policy into relevant languages
ensuring that managers discuss and reinforce the policy at staff meetings
providing the policy to new staff as a standard part of induction
periodically reviewing the policy
displaying posters on noticeboards in common work areas
training all line managers on their role in ensuring that the workplace is free from
discrimination and harassment
removing offensive, explicit or pornographic calendars, literature, posters or other
materials from the workplace
developing a policy prohibiting inappropriate use of computer technology, such as
email, screensavers and the internet (AHRC 2015a).
A good example of an organisation that has developed a diversity policy is Flight
Centre, as shown in Box 9.1. The policy shows Flight Centre’s commitment to create an
inclusive work environment for all its employees. The policy provides reasons for
wanting to achieve a diverse workforce, including the benefits. It also provides a
commitment to developing measurable objectives and provides examples of the types
of measurable objectives to be implemented. Importantly, as has been discussed in
other chapters, such as on work health safety, any initiative that is to be implemented in
organisations needs the commitment of those in senior positions. This includes not only
senior leaders but also where boards are present the support of all board members and
practised by them in the selecting of prospective board members.

Box 9.1 Flight Centre diversity policy

Flight Centre is committed to promoting diversity among employees, consultants and
senior management throughout the Flight Centre Group and keeping shareholders
informed of Flight Centre’s progress towards implementing and achieving its
diversity objectives.
Purpose
The purpose of this policy is to outline Flight Centre’s commitment to fostering a
corporate culture that embraces diversity and, in particular, focuses on the
composition of its Board and senior management. The policy also provides a process
for the Board to determine measurable objectives and procedures which Flight
Centre will implement and report against to achieve its diversity goals.
Diversity
This policy does not just apply at work. It also applies anytime that you are involved
in work matters at other places, such as at a supplier’s site. It also applies at work
functions (including social functions) related to or organised by Flight Centre.
What is diversity?
Diversity includes, but is not limited to, gender, age, ethnicity and cultural
background.
Corporate culture
Flight Centre aims to actively promote a corporate culture that supports diversity in
the workplace, in the composition of its Board and senior management and
throughout the Flight Centre Group as a whole.
A corporate culture that embraces diversity seeks to encourage and facilitate
opportunities for the employment of women and people from different backgrounds,
provide skills and career development initiatives, increase workforce participation
and create an inclusive environment where employees feel they are valued. In
building a corporate culture where diversity is encouraged, Flight Centre also
recognises that employees at all levels have responsibilities outside the workplace.
Flight Centre acknowledges the known corporate benefits that flow from advancing
employee and Board diversity, in particular gender diversity, including identification
and rectification of gaps in the skills and experience of employees, enhanced
employee retention, greater innovation, and maximisation of available talent to
achieve corporate goals and better financial performance.
By focusing on diversity, Flight Centre aims to promote an environment that is
conducive to the appointment of well-qualified employees, senior management and
Board candidates so that there is appropriate diversity to maximise the corporate
goals of the Flight Centre Group.
While the key focus of this policy and the ASX recommendations is on promoting the
role of women within organisations, Flight Centre recognises that other forms of
diversity are also important and will seek to promote and facilitate a range of
diversity initiatives throughout the Flight Centre Group.
Implementing diversity commitments
The Board will aim to ensure that appropriate procedures and measures are
introduced and responsibilities delegated to the Remuneration and Nomination
Committee to ensure that Flight Centre’s diversity commitments are implemented
appropriately.
Measurable objectives
The Board, in consultation with the Remuneration and Nomination Committee, will
set measurable objectives for achieving diversity, in particular gender diversity, in
accordance with this policy and the diversity profile set by the Board and will
review the effectiveness and relevance of these measurable objectives on an annual
basis.
The measurable objectives should identify ways and, where applicable, specify
benchmarks against which the achievement of diversity is measured, in order for the
Board to assess and report annually on Flight Centre’s progress towards achieving
its diversity goals.
How will the measurable objectives be determined?
In order to set meaningful objectives, the Board (in consultation with the
Remuneration and Nomination Committee) will assess its current diversity levels
and identify where gaps exist. Measurable objectives will then be developed which
are tailored towards improving diversity in areas where most work is needed.
 Types of measurable objectives
Flight Centre acknowledges that there are a number of different types of measurable
objectives which may be implemented to assist in meeting its diversity goals,
including:
procedural and structural objectives – for example, implementing internal
review and reporting procedures or ensuring that candidates are interviewed by a
diverse selection/interview panel
diversity targets – setting targets for the number of women throughout the Flight
Centre Group or to increase the proportion of women within senior management
positions and implementing timeframes for this to occur by
initiatives and programs – for example, identifying appropriate initiatives and
programs and determining how the initiative will operate, who will be
responsible for implementing it and setting a timetable for its introduction.

Measurable objectives as key performance indicators

The Board, in consultation with the Remuneration and Nomination Committee, will
consider the extent to which the achievement of these measurable objectives should
be tied to key performance indicators for the Board, the chief executive officer and
other senior management.
Source: Flight Centre (2015)

DIVERSITY AND EMPLOYMENT RELATIONS

The concept of diversity in workplaces being beneficial for organisations, the
community and individuals has garnished increasing support in Australia and
internationally. But there are many obstacles to implementing diverse workplaces, as
well as a reluctance of some in positions of power of organisations to assist those
workers needing additional consideration than that provided to other workers if the
organisation is to succeed in addressing potential issues that perpetuate a homogenous
workforce. The following section discusses three important areas of concern in relation
to diversity in the workplace: sexual harassment, maternity leave and work–life
balance. All of these employment relations issues are increasingly becoming important
to the Australian community as well as to employers, unions and governments. The first
issue, because of the importance of the role that women play in the Australian
workforce and the well-established obstacles they face in returning to careers after
child birth, and the second issue, being the ability of women to access flexible work
arrangements in order to be able to maintain their careers and juggle the
responsibilities of often being the primary child carer in the family.
 Work–life balance
A broad concept that includes attempting to balance work (including career and
ambition) on one hand, and life (including areas such as health, leisure, family,
pleasure and spiritual development) on the other.

Sexual harassment
Although sexual harassment was outlawed in Australia in 1984, it remains a serious
problem in Australian workplaces; it has an enormous impact on workplace diversity
and on the individuals experiencing it. Increasing usage of new technologies in the
workplace—mobile phones, email and social networking websites—has meant
redefining the meaning of sexual harassment, which now includes unwelcome touching,
hugging or kissing; suggestive comments or jokes; unwanted invitations to go out on
dates or requests for sex; sexually explicit emails or SMS messages; and accessing
sexually explicit websites.
Employers are required to ensure that their employees do not unlawfully harass an
employee or prospective employee, a fellow or prospective employee, a fellow or
prospective partner in the same partnership, or another workplace participant at either
or both of their workplaces. In 2012, AHRC conducted a telephone survey on sexual
harassment, which found that a large number of women and men had experienced sexual
harassment in the workplace at some time during their career. Other findings from the
survey are outlined in the following points.
Just over one in five (21%) people in Australia have been sexually harassed since
the age of 15, based on the legal definition of sexual harassment; this was a slight
increase since 2008 (20%). A majority (68%) of those people were harassed in the
workplace.
Just over one in five (21%) people aged 15 years and older have experienced sexual
harassment in the workplace in the past five years, based on the legal and
behavioural definitions of sexual harassment.
Alarmingly, the same survey also found that:
only one in five (20%) respondents who were sexually harassed made a formal
report or complaint; a slight increase in the rate of reporting from 2008 (16%).
almost one-third (29%) of respondents who were sexually harassed sought support
or advice; almost the same as in 2008 (30%) (AHRC 2012).
The process for preventing sexual harassment is one that can be incorporated into a
diversity policy and strategy. The principles of both are similar, i.e. senior leadership
commitment to a harassment-free workplace, training for employees, as well as having
elected and trained representatives from the workforce to assist those individuals
wanting information or to make a complaint against someone within the organisation.
Many workplaces commonly use independent consultants to investigate complaints of
harassment to avoid influencing the outcome or being seen as biased. Many harassment
cases—where the complainant is willing—proceed to a mediation, where an apology is
offered and the situation monitored for a period of time. Some cases proceed to
conciliation at the relevant human rights tribunal; if that process fails, a court-style
hearing occurs. The jurisdiction changes from state to state; for example, in Victoria,
the Victorian Civil and Administrative Tribunal (VCAT) is empowered to hear sexual
harassment cases, although when these cases are appealed they can go to the Federal
Court for resolution. As an indication of the size of the problem, workplace sexual
harassment is one of the most common types of complaints received by VCAT under the
Sex Discrimination Act 1984. In 2009–2010, of all complaints to the Australian Human
Rights Commission, 21 per cent were under the Sex Discrimination Act 1984, and 88
per cent of those complaints related to sex discrimination in the workplace (AHRC
2015b).

Maternity leave
Historically, rather than providing individual maternity leave for pregnant women or
new mothers, Australian governments have taken the route of providing welfare as
financial support rather than legislating universal paid maternity leave (O’Neill 2009).
Change came late for women in the workforce. Less than 50 years old, maternity leave
in Australia is a relatively new concept. The ACTU fact sheet History Of Parental And
Family Leave Provisions In Australia (ACTU n.d.), documents the first formal
provision for maternity leave as the Australian Public Service Maternity Leave
(Australian Government Employees) Act 1973. That legislation provided three months’
(12 weeks) paid maternity leave for women in the Commonwealth Public Service and
statutory authorities. However, it wasn’t until 1979 that maternity leave became
available for all Australian women. This was despite maternity leave being determined
as an important right by the International Labour Organization since 1919, when the
United Nations body created the Maternity Protection Convention 1919 (No. 3).
The introduction of unpaid maternity in 1979 came about as a result of a test case by
the ACTU in the Australian Industrial Relations Commission, and provided for 12
months’ leave. Since that case, subsequent federal governments have legislated further
rights for women and their partners, most notably the Keating Labor Government in
1996 with the introduction of the Maternity Allowance as part of the Social Security
Legislation Amendment (Family Measures) Act 1995, which provided a basic payment
for a period of six weeks; and the Howard Coalition Government’s ‘Baby Bonus’
scheme, which provided new parents with a $3000 payment (later indexed to CPI).
However, it wasn’t until 2011 that a universal paid maternity–leave scheme was
introduced into Australia. The scheme was introduced by the Gillard/Rudd Labor
Government and provided 18 weeks of paid parental leave. To qualify for Labor’s
scheme, the nominated parent must work at least 330 hours in 10 of the 13 months
before the child’s birth or adoption, with a maximum two-month break and their income
could not exceed $150,000 a year (Karvelas 2010).
More recently, the Abbott/Turnbull Coalition Government was elected on a policy
of introducing a paid maternity leave scheme for women of 26 weeks, although that
proposal was later abandoned, with no alternate policy to replace it.
With the inclusion of enterprise bargaining in industrial relations legislation since
1991, organisations have been able to make agreements with their employees as part of
enterprise bargaining regarding paid or unpaid maternity leave provisions. This
continues today and, in lieu of the failure of successive governments to adequately
address the issue, is the most frequent method used by employees and their
representatives, the trade union movement, to achieve gains for women and their
partners beyond the legislated minimum.
Recent data from the ABS helps us to understand the experience of pregnant women
in the workforce and their ability to access fair and reasonable support from their
employer both during pregnancy and after birth. ABS data (2012b) found that there was
a disparity over when pregnant women took leave from their employment, with those in
full-time work, particularly in the public sector, more likely to take leave earlier than
their counterparts in the private sector. Those women in casual employment, with no
entitlements to maternity leave, were more likely (56%) to take leave a week from the
date of the birth of their child. After the birth of their child, ABS data found that 80 per
cent of mothers who worked as employees while they were pregnant had access to paid
leave entitlements in their job. Half (49%) of those with paid leave entitlements took a
combination of paid and unpaid leave for the birth of their child, while smaller
proportions took paid leave only (20%) or unpaid leave only (10%). The remainder
either permanently left their job before the birth (18%), while a small proportion did
not take any leave (2%). With increasing community acceptance and legal rights gained
from legislation, heterosexual and same-sex partners now have access to leave when
their child is born. ABS research also found that four out of five (81%) partners took
leave for the birth of the child. Of those partners who took leave, nearly two-thirds
(63%) took paid leave only, while a third (33%) took unpaid leave only. The remainder
took a combination of both paid and unpaid leave (ABS 2012b).

Flexible work arrangements

After the birth of children there are many obstacles to women—the traditional primary
carers of children—returning to work, including employer and community attitudes,
structural problems—such as lack of adequate child care—and a lack of rights in
relation to balancing work and family life.
Apart from the legislation addressing discrimination in the workplace that needs to
be considered, the current legislation regulating workplaces, the Fair Work Act 2009,
provides employees with the right to request flexible working arrangements from their
employer, such as changing starting and finishing times. An employer can only refuse
such a request on ‘reasonable business grounds’.
The Flexible Working Arrangements provision is contained in the National
Employment Standards (NES) and is available to employees if they:
are the parent, or have responsibility for the care, of a child who is of school age or
younger
are a carer (within the meaning of the Carer Recognition Act 2010)
have a disability
are 55 or older
are experiencing violence from a member of their family
provide care or support to a member of their immediate family or household, who
requires care or support because they are experiencing violence from their family
(Fair Work Ombudsman 2015).
Employers are required to provide flexible hours unless certain reasons on
‘reasonable business grounds’ are provided. For example:
the new working arrangements requested by the employee would be too costly for
the employer
there is no capacity to change the working arrangements of other employees to
accommodate the new working arrangements requested by the employee
it would be impractical to change the working arrangements of other employees, or
recruit new employees, to accommodate the new working arrangements requested by
the employee
the new working arrangements requested by the employee would be likely to result
in significant loss of efficiency or productivity
the new working arrangements requested by the employee would be likely to have a
significant negative impact on customer service (Fair Work Ombudsman 2015).
Flexible work arrangements are not only beneficial for individual mothers and their
families. Research has found that women employed in highly flexible roles are more
productive than the rest of the working population. Organisations that fail to provide
flexible arrangements could be missing out on the opportunity to harness the skills,
experience and productivity of women who need to balance work and family
responsibilities. Flexible arrangements may be in the form of part-time work or flexible
work hours, working from home, shift work, job share or leave arrangements.
ABS statistics (2012b) highlighting the importance of flexible hours found that most
mothers (86%) who had started or returned to work following the birth of their child
used flexible work arrangements in order to care for their child. While many mothers
worked part time when they started or returned to work, not all considered part-time
work as a flexible arrangement to care for their child. However, working part time was
the most commonly reported flexible work arrangement for mothers returning to work
(65%). Over a third (35%) of mothers returning to or starting work after the birth of
their child made use of flexible work hours, while a quarter (26%) worked from home.
Women who worked in part-time roles were almost twice as likely to use flexible
arrangements (93%) than those working full-time (48%). Indicating that the Australian
workforce still has a long way to go in accommodating women returning to work after
childbirth, of the 15 per cent of mothers who did not use flexible arrangements in their
first job after the birth, around half (49%) did not have access to these arrangements.

Work–life balance
However, it is not only parents who can be discriminated against in the workforce
because of their responsibilities. With an ageing population, the increased role of males
in caring for children, and a host of other reasons, Australians are increasingly pursuing
what is termed ‘work–life balance’ (WLB). It is often assumed that work–life balance
is aimed at older workers who have children, but recent research shows that although
age has an impact on WLB, the relationship between work and non-work may be even
more important to young employees than it is to other groups of workers. In the United
States, Sutton (2002) found that younger people prioritise work less than people of the
same age a generation earlier.
Work–life balance is also important for organisations as they try to attract and retain
the best talent in the market, as employees are becoming increasingly focused on such
policies. As such, the area is becoming an increasingly important area for business, as
well as for the community, governments and academics (Russell & Bowman 2000).
There is still debate about what ‘work–life balance’ actually means. Guest (2003)
defines it as ‘a broad concept that encompasses prioritising between work (including
career and ambition) on one hand, and life (including areas such as health, leisure,
family, pleasure and spiritual development) on the other’. Others consider it
‘satisfaction and good functioning at work and at home with a minimum of role conflict’
(Clark 2000) or ‘the absence of unacceptable levels of conflict between work and non–
work demands’ (Greenblatt 2002).
Apart from the broad benefits of not working long hours and being disconnected
from family, friends and external responsibilities away from the organisation, previous
research has established a number of consequences for both workers and organisations
when poor WLB (called ‘work–life conflict’) occurs, including psychological strain
(Brough et al. 2009), higher rates of relationship problems, poor health, low self-
esteem, labour turnover and absenteeism, and poor job satisfaction (Thompson, Brough
& Schmidt 2006).
As previously discussed in this chapter, there are a number of laws and conventions
that regulate the ability of employees to meet their family responsibilities including the
International Labour Organization (ILO) Convention 156 on Workers with Family
Responsibilities, the Sex Discrimination Act 1984, Equal Opportunity for Women in
the Workplace Act 1999 and state EEO legislation as well as the Fair Work Act 2009.
There are an enormous number of documented strategies that Australian employers
have used to increase WLB in organisations, including negotiated start and finish times,
time off in lieu, paid maternity leave, carers’ leave, flexible start and finishing times for
picking up kids from school, and many others. Following are strategies suggested by
WA Health (2015) to improve employees’ WLB:
flexible working hours
part-time work
reasonable working hours
access to childcare
flexible leave arrangements
casual work.
The benefits of WLB are not only for employees. Research has found that effective
WLB employment policies can reduce turnover, increase employee satisfaction,
improve organisational commitment, increase productivity, and decrease physical and
emotional disorders associated with work–life conflict (Brough & O’Driscoll 2005).
Abbott, De Cieri and Iverson (1998) found that within a large Australian professional
services firm, the main reason for the voluntary turnover of female staff was the lack of
family-friendly programs and a culture that did not recognise non-work commitments.
Others, such as Eaton (2003), have established perceptions of usability of a WLB
policy as being important for both productivity and commitment.
However, at present there is clear evidence that most Australian organisations do
not provide a great deal of WLB for their employees, although research on the topic of
hours worked has found conflicting outcomes. In 2007, Mackay identified the
following:
More than 10 per cent of Australian male employees work more than 11 hours a day.
More than 15 per cent of Australian female employees report feeling rushed and
 stressed.
Seven out of eight Australian employees (i.e. more than 85 per cent) felt life was
becoming and had become more frantic.
68 per cent of Australian fathers felt they did not spend enough time with their
children; 60 per cent attributed this to ‘barriers in the workplace’ (e.g. inflexibility
and expectations of long working hours).
When it comes to the imbalance between work and family life, Australia ranks at the
bottom of the entire developed world.
(Mackay 2007)
These figures have been confirmed in more recent analysis by the OECD in its 2011
Better Life Index, finding that about 14 per cent of Australian employees work very
long hours, much higher than the OECD average of 9 per cent, with 21 per cent of men
working very long hours compared with just 6 per cent for women (OECD 2014).
Although the idea of flexible work hours and WLB are recent concepts in
employment relations, there are indications that more Australians are requesting
alternative working hours from their employers. Figure 9.3 shows that of employees
requesting flexible hours from their employer in 2010, almost 20 per cent requested
changes to their work days; this was followed by reduced hours (15%); however at the
other end of the scale, reflecting the traditional attitudes of most employers (and
possibly employees), less than 5 per cent requested flexibility to care for a family
member or child.

FIGURE Reasons for requesting flexible working hours 2010

9.3

Previous research in Australia and internationally (Eaton 2001; Evans 2001; Evans
2001; Dex & Scheibl 1999; Galinsky & Johnson 1998; Eaton 2001; Galinsky &
Johnson 1998; Comfort, Johnson & Wallace 2003) has identified a number of benefits
for employers when they implement policies associated with WLB initiatives for their
employees. These include lower recruitment and training costs associated with reduced
turnover, better recruitment of employees and a wider range of employees from diverse
backgrounds, reduced absenteeism, reduced illnesses of employees, such as from stress
and other workers–compensation payable related diseases. Importantly for employers,
there has been evidence that WLB policies increase employee job satisfaction and
commitment.
Of course, developing WLB policies and strategies is not without cost for
employers. Setting up WLB policies and strategies takes a great deal of time for
employers, and they need the support of HR professionals (which many small
businesses lack), they take time and are an administrative burden on organisations, in
both formation and implementation. Internationally, debates continue about WLB
policies and their costs and benefits for employers.
The costs of implementing WLB policies include both direct and indirect costs.
Direct costs for employers include parental leave payments or providing equipment to
telecommuters, such as laptops and mobile phones. Indirect costs—which are not
commonly acknowledged in debates about WLB—include costs related to recruitment
of temporary employees needed to perform the positions of those absent from work
who have utilised WLB policies, as well as the associated reductions in productivity
arising from disruptions.
Previous research supports the contention that WLB policies and strategies can
impact negatively on organisations. Miller (1984) argues that there is no credible
research showing a positive relationship between employer-provided childcare and
absenteeism, turnover, recruitment or job satisfaction. Bloom, Kretchmer and Van
Reenen’s (2006) research with 700 European and American large manufacturing
organisations found that ‘there is no systematic relationship between productivity and
work–life balance once good management is accounted for’. Meyer, Mukerjee and
Sestero (2001) found that working from home (‘teleworking’) increased productivity
but job sharing decreased productivity. Other research has found added costs for
employers for facilities such as breastfeeding rooms or childcare facilities (Evans
2001).

SUMMARY
This chapter investigated the complex issue of workplace diversity in Australia. The
chapter began by identifying the people who make up the Australian workforce. Since
the 1970s, there has been a dramatic increase in the number of migrants from non-
traditional (i.e. non-British) countries, such as India, China and Vietnam, as well as
from countries within Europe and the Middle East such as Greece, Turkey and Lebanon.
At the same time, changing community attitudes and the aspirations of women saw an
enormous increase in the number of women entering the workforce; an increase that
continues today. The changing characteristics of the Australian workforce provide great
opportunities for organisations, including greater creativity, innovation and other
benefits. But, as research has shown, diversity can lead to issues of discrimination and
harassment. It is for this reason that the federal and state governments have attempted to
regulate workplaces through legislation, to ensure that all Australians are provided the
best opportunity to be recruited to organisations based on merit and to have equal
opportunities for advancement. However, this is only the first step that will allow an
organisation to reap the benefits of diversity. Good recruitment strategies, professional
development and a commitment from the senior leadership provide the best chance for
an organisation to not only enforce government legislation in their workplace, but to go
further and proactively implement their own strategies. There is still a great deal for
Australian organisations to do in this area of employment relations if other members of
the community who are inadequately represented in workforce statistics—including
Indigenous Australians and people with disabilities—are to be provided with the same
opportunities that most Australian workers take for granted.

REVIEW QUESTIONS
1. What does ‘diversity’ mean? What are the benefits?
2. How has the Australian workforce changed over the last 50 years?
3. What industries do women predominantly work in, and how are they
discriminated against in the workforce?
4. What are some of the categories of discrimination that equal opportunity
legislation attempts to prevent?
5. What can employers do at the workplace to prevent discrimination?
6. What is direct and indirect discrimination?
7. What is a diversity statement?
8. What laws are in place to prevent discrimination in Australia?
9. What role does the WGEA play in helping to prevent discrimination?
10. What is work–life balance? What can employers do to create work–life balance
policies?

Visit Oxford Ascend for
further revision material
CASE STUDY GOVERNMENT
9.1 MUST DO MORE
TO STOP FRAUD
AND RORTING OF
457 VISAS
Australian unions have genuine concerns that foreign workers on
temporary visas are being exploited, and that unscrupulous employers
are rorting the scheme at the expense of Australian jobs.
While unions welcome the federal government’s recognition that
widespread rorting of the 457 visa program exists with the introduction
of new penalties for dodgy employers, much more needs to be done.
Source: ACTU (2015)

Key issues
Introducing a new integrity check on 457 visas is pointless
without the resources to properly monitor it.
457 visas are only one type of temporary work visas being
abused—others include working holiday visas and student
visas.
Requirements for employers to try to hire local workers before
recruiting overseas (labour-market testing) are weak and getting
weaker through free-trade agreement exemptions.
These labour–market testing requirements only cover nursing,
engineering and some trades.
Lowering English language standards is a serious health and
safety risk. Since the 457 visa program came into place, there
have been 12 reported deaths of 457 visa workers—all but one
of these deaths occurred when lower English language standards
were in place prior to 2009.
The training fund the government is considering will
 significantly reduce the amount of money employers are
required to invest in training within their organisation to offset
the use 457 visas—from 1 per cent to 2 per cent of payroll to
just $400–$800 per 457 visa worker.
ACTU Secretary Dave Oliver said:
‘Tinkering at the edges of the 457 visa program will do nothing to
stamp out the widespread fraud and rorting of the system.
‘The ACTU, health, resource and service sector unions are calling for
a Senate Inquiry into the whole temporary visa system to ensure foreign
workers are not being exploited, and that employers are genuinely
trying to hire Australian workers first.
‘With unemployment at 6.4 per cent and youth unemployment at 14.2
per cent, the government should be strengthening the rules for
employers to hire local workers and investing in skills and training.
‘Across the country we are seeing employers cutting apprentice
numbers and graduate nurse positions as well as their investment in
training, then complaining they are unable to find skilled workers as a
justification for bringing in workers on 457 visas.
‘Australia’s migration program should not be at the beck and call of
big business.’
Source: ACTU (2015)

Questions
1. What are the concerns of the Australian union movement about the use of
the temporary 457 visa scheme?
2. What is likely to be the position of Australian employer groups on 457
visa schemes?
3. Is the use of temporary visa schemes by the Australian Government a
successful process for attracting highly skilled employees to Australia? Or
should the scheme be eliminated?

CASE STUDY WHEN IS A

9.2 WORKPLACE NOT
 A WORKPLACE?
Companies can be liable for sexual harassment charges by their
employees even if it happens outside the workplace after a 2014
Federal Court ruling—which found that the workplace ‘may be a fixed
or moving location’ —could have far-reaching ramifications in a
digital age where people used laptops and smartphones as mobile
workstations.
The harassment began at the Melbourne CBD office that the
complainant and the accused shared. One night the accused worker
turned the lights off, walked behind her in the dark and tried to touch
her hand.
The complainant and the accused then went to a local hotel to
discuss the matter during which the accused made further approaches
of a sexual nature.
Further accusations of sexual harassment at other times were made
by the complainant, who was awarded damages of almost $500,000 by
the Federal Court.
The arguments in the Federal Court case revolved around the
argument made by the accused that the hotel in which some of the
approaches had been made could not be considered a workplace.
In a majority decision, the court found the hotel met the statutory
definition of a ‘workplace’ because they had gone there to talk about
what happened at the office.
Source: Toscano (2014)

Questions
1. Why is this case considered to have important implications for Australian
organisations?
2. Which law or Act applies to the case?
3. What should organisations do to prevent cases such as this occurring?

FURTHER READING
Barid, M., & Williamson, S. (2009). Women, work and industrial relations in 2008.
 Journal of Industrial Relations, 51(3): 331–45.
Chang, J., Connell, J., Carney, T., Burgess, J., & Travaglione, A. (2014). Gender
gaps in Australian workplaces: Are policy responses working? Diversity &
Inclusion, 33(8): 764–75.
Gaze, B., & Chapman, A. (2013). The human right to non-discrimination as a
legitimate part of workplace law: towards substantive equality at work in
Australia. International Journal of Comparative Labour law & Industrial
Relations, 29(4): 355–74.
Smith, B. (2014). How might information bolster anti-discrimination laws to
promote more family-friendly workplaces. Journal of Industrial Relations,
56(4): 547–65.
Waring, P. (2011). Keeping up appearances: Aesthetic labour and discrimination
law. Journal of Industrial Relations, 53(2): 193–207.

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 Chapter Ten
WORKPLACE HEALTH AND SAFETY

INTRODUCTION
Health and safety laws play an important role in protecting Australian workers from
injury in the workplace. Although the nature of work in Australia has changed
dramatically over the last 30 years, with a shrinking manufacturing base and a fast-
growing service sector, workplace injuries still continue to take a toll on workers, their
families, the community, business and the economy. This chapter investigates the health
and safety laws in the workplace and their origins, the cost of poor safety approaches to
employees, the workers’ compensation systems developed since the 1970s to assist
injured workers, and concludes with a discussion of newly emerging health and safety
issues.

Workers’ compensation
A form of insurance paid by employers that provides wage replacement and medical
benefits to employees injured in the course of their employment. Australia has a
federal scheme (Comcare), as well as state-based schemes.

WHAT IS HEALTH AND SAFETY?

Given the many misconceptions, exaggerations and myths commonly cited in the media,
political arena and community about what health and safety actually involves, it is a
worthwhile exercise to explore the definition before analysing the laws that govern it.
Although many people get sick or injured in their daily lives, it is the connection with
work that provides the focus for health and safety in the employment relations context.
As a general working term, health and safety is concerned with the safety, health
and welfare of people engaged in work or employment. Of course, health and safety in
practice is much more complex than this definition. Many illnesses and injuries at the
workplace can be difficult to connect, and are often blamed on external factors related
to the individual’s lifestyle. Although a crushed limb sustained by machinery at work is
easy to identify, illness and injury present in a far more overt form for many Australian
workers, such as stress, back pain—and even cancer. Each illness or injury may or may
not have been caused by the workplace but by individual life choices or—creating even
more complexity—a combination of both. As will be shown later in this chapter, the
cost of injury at work is enormous; thus the focus of Australian governments is on
prevention rather than cure, to minimise the cost and suffering caused by poor health
and safety practices.
A good starting point for understanding about health and safety and the focus on
preventing workplace injuries is the United Nations agency the International Labour
Organization (ILO). Since 1950, the ILO and the World Health Organization (WHO)
have shared a common definition of occupational health:
‘The main focus in occupational health is on three different objectives: (i) the maintenance and
promotion of workers’ health and working capacity; (ii) the improvement of working environment and
work to become conducive to safety and health and (iii) development of work organizations and
working cultures in a direction which supports health and safety at work and in doing so also promotes
a positive social climate and smooth operation and may enhance productivity of the undertakings’ (ILO
2008).

This broad definition has been adopted, in parts, then modified and improved by
Australian state governments, and most recently the federal government. The definition
has been used to develop laws that help regulate the behaviour of those in control of
workplaces and those who work in them, including employees, contractors and the
general public. The following section provides an historical analysis of the
development of the laws in Australia, prior to discussing the current laws that regulate
the employment relationship in Australian workplaces.

FEDERAL AND STATE LEGISLATION

Because of the ‘late’ creation of a federal parliament in Australia in 1901, health and
safety (H&S) laws in Australia have been—until the recent attempt at the introduction
of national safety legislation, which is discussed later in this chapter—characterised by
different approaches in each state and territory.
The result of this fragmented approach to making workplaces safer is that every
Australian state and territory had its own separate laws. Although the state laws have
traditionally applied a basic model of health and safety, Johnstone (2008) claims
‘closer scrutiny reveals sometimes quite major differences in form, detail and
substantive matters between the OHS statutes and the regulations and codes of practice
made under those statutes’.
The lack of consistency in approach resulted in a complex web of laws that proved
an administrative nightmare for employers with operations in more than one state
jurisdiction. Before exploring the current legislation, it is important to gain some
context by investigating the development of legislation prior to Federation in both
Australia and Great Britain.
Australian H&S legislation and the approach taken to workplace safety by
regulators owes much to the British system (Gunningham 1984). The first piece of
legislation addressing H&S occurred in 1802, with the introduction of the Health and
Morals of Apprentices Act in Britain (Dunne 2012). The Act attempted to regulate the
appalling conditions that young chimney sweeps worked in. This was followed by the
Act for the Regulation of Cotton Mills and Factories 1819, similarly focusing on the
safety of young children, and later the Factories Regulation Act 1833 and the Factories
Act Amendment Act 1844, which addressed the guarding of machinery and the
introduction of penalties for employers guilty of safety offences.
Further Acts in English Parliament aimed at creating safer workplaces were
introduced over the next 50 years. Many of these Acts were adopted in Australia
beginning with the Supervision of Workrooms and Factories Act 1873 in Victoria
(Creighton & Stewart 2010). Gunningham (1984) details the plight of ‘sewing girls’ in
the regional Victorian city of Ballarat, working long hours in sweatshop conditions,
being the impetus for community pressure on state MPs to change their conditions. The
resulting Act attempted to regulate workers’ working hours, warmth, ventilation,
cleanliness and sanitation (Gunningham 1984).
The failure of the Supervision of Workrooms and Factories Act 1873 led to the
introduction of the Factories and Shops Act 1885, which replicated the legislation of
the UK 1878 Factories Act and focused on sanitary requirements, inspectors and
fencing off machinery (Dunn 2012).
Over the next century in Australia, the approach of parliament attempting to regulate
workplace safety by laying down minimum standards became the norm. In the late
1960s, this method of regulation was increasingly being questioned in the UK.
Creighton and Rozen (2007) summarised seven perceived failings of the legislative
enforcement method used by both the British and Australian Governments, and they are
worth analysing prior to introducing the major changes to health and safety that
occurred in the 1970s. They include:
failure to keep pace with social, economic and technological change
the rigidity and complexity of some of the statutory standards
lack of uniformity in legislative and administrative arrangements
failure to involve those most directly affected by standards (employers and workers)
in the standard-setting process
lack of resources for administration and enforcement
the inadequacy of the sanctions that could be imposed for even serious breaches
the adoption of highly equivocal attitudes to the use of legal sanctions on the part of
 the enforcing authorities.
(Creighton & Rozen 2007)

Robens and safety

The growing concern of the perceived failure of safety in workplaces in Britain led to
the establishment of the Robens Inquiry into Safety and Health at Work in 1970. The
committee, charged with investigating health and safety, led by Lord Robens,
investigated the impact and effectiveness of the legislation in preventing workplace
accidents. On conclusion of his extensive investigation of British workplaces, Lord
Robens handed down his findings, which led to the greatest changes to health and safety
regulation since that first piece of legislation aimed at protecting chimney sweeps
almost 170 years earlier.
The Robens Report, as it became known, called for drastic changes to the approach
to health and safety, including the introduction of a more effectively self-regulating
system. That system, as Robens described it, was to be one in which the two main
stakeholders in the employment relationship—the workers and the employer—would
work together to identify and resolve safety risks in the workplace. This would be
achieved by introducing general duties of care, employee participation and
representation (Brooks 1993), as well as increased penalties for those employers who
failed to embrace the new model (Creighton & Stewart 2010).
Legislation in the UK was created shortly after the report was published, with the
Health and Safety at Work Act in 1974. In Australia, state governments introduced
legislation that, for the most part, implemented Robens’ ideas and approach. The
legislation began at different times in different states and territories: South Australia in
1972, Tasmania in 1977, Victoria in 1981, New South Wales in 1983 and Western
Australia in 1984, with the Commonwealth in 1985, over a decade later, finally making
changes to their laws to reflect this new approach (Brooks 1993).
Since the transformation of the approach to H&S in Australian workplaces from the
1970s—and although incoming state governments have made various changes to the
state-based health and safety laws—the ideas contained within the laws about the best
possible way to protect workers has remained largely unchanged. That approach
continues in Australia, and in many ways has become more consistent across the states
with the introduction of the Model Work Health and Safety Act.

Model Work Health and Safety Act

Federal legislation regulating health and safety in Australian workplaces. Created
following agreement between the various state governments and territories in 2008,
model legislation was created and adopted by most state and territory governments
 between 2011 and 2012 (but not Victoria or Western Australia).

A NEW DIRECTION FOR HEALTH AND SAFETY IN

AUSTRALIA?
Following agreement between the various state governments and territories in 2008,
model legislation was created and then adopted by all state governments and territories
(between 2011 and 2012) with the exception of Victoria and Western Australia. That
legislation is the Model Work Health and Safety Act (WHS Act).
The WHS Act, created by incorporating many of the different aspects of the various
state laws, is almost a replica of the Victorian Occupational Health and Safety Act
2004.

Duties of employers to employees

Employers play a crucial role in the prevention of workplace accidents. They have
responsibilities as part of their common law obligations, as well as the relevant state
H&S legislation to be proactive and consultative in their approach to protecting
employees, contractors and the public from injury.
The WHS Act adopted by the various states (as well as the Victorian and Western
Australian legislation) prescribes a number of employer duties that employers must
undertake, called a duty of care.

Duty of care
The prescribed duties that an employer (and employee) must fulfil in the workplace
to ensure as far as practicably possible that the workplace is safe from injury.

The changing nature of organisations over the last 50 years has resulted in changing
the definition of an ‘employer’, as identifying who should be in charge of safety is a
complex issue in many Australian workplaces, as many businesses now have boards
and a CEO, or are franchises or alternative company structures, compared to the
traditional workplaces of a century ago.
As a result of the evolving nature of organisational responsibility and governance,
the WHS Act adopts a slightly different definition than that used previously by state
regulators. The WHS Act considers the responsibility for H&S to be the ‘person
conducting a business or undertaking’ (or PCBU). Unlike the traditional definition of an
employer being the owner of a business, a PCBU includes other persons such as sole
traders, bodies corporate, unincorporated bodies, associations, partnerships and
volunteer organisations with any employed workers (WorkCover NSW 2015b).
The duties of an employer remain consistent across the states. The following is a
summary.
Employers must ensure as far as reasonably practicable:
the provision and maintenance of a work environment without risks to health and safety
the provision and maintenance of safe plant and structures
the provision and maintenance of safe systems of work
the safe use, handling, storage and transport of plant, structures and substances
the provision of adequate facilities for the welfare at work of workers in carrying out work for the
business or undertaking, including ensuring access to those facilities
the provision of any information, training, instruction or supervision that is necessary to protect all
persons from risks to their health and safety arising from work carried out as part of the conduct
of the business or undertaking
that the health of workers and the conditions at the workplace are monitored for the purpose of
preventing illness or injury of workers arising from the conduct of the business or undertaking.
(Model Work Health and Safety Act, ss. 19–28)

Legislation since the introduction of the Robens approach has also provided
employees with duties when at work. Broadly, these include employees taking care of
their own health and safety and following orders of employers in the performance of
their work.
The duties of employees are also extended to the safety of fellow employees by not
acting in a reckless manner in the performance of their work, use of equipment, or
behaviour such as bullying or impacting on the mental health of others (WHS Act, s.
28).
A key feature of the approach to H&S since the major changes in the 1970s through
the Robens Report is consultation between employers and employees on potential risks
within the workplace. The WHS Act continues this approach, with a number of
requirements, rights and responsibilities for employers and employees in the
workplace. What constitutes ‘consultation’ has been debated since it was first
introduced into Australian legislation; briefly, consultation involves employers
providing employees with the opportunity to discuss and contribute ideas and solutions
to potential workplace hazards in a meaningful way.
A strategy employers commonly use to address workplace issues is to create health
and safety committees (HSCs), although under the WHS Act these can also be
requested by health and safety representatives (HSRs) or five or more workers.
Health and safety committees are commonly used to help employers and employees
develop and review H&S policies and procedures for the workplace. There are no
legislated guidelines about how HSCs should be constructed, but each state regulator
provides guidelines and advice about structure to facilitate discussion and provide the
best safety outcomes. For example, the NSW WorkCover guidelines state that the make
up of the committee can be agreed to between the workers and the PCBU (which
includes employers). The PCBU can only nominate up to half of the members of the
HSC. An HSR is a member of the committee, if they agree. If there are two or more
HSRs at a workplace, then they can choose one or more who agree to be members of
the committee (WorkCover NSW 2015a).

Health and safety committees (HSCs)

Committees used to help employers and employees monitor, develop and review
health and safety policies and procedures for the workplace.

Health and safety representatives (HSRs)

Elected representatives of employees; through legislation, HSRs are able to raise
issues with the employer and represent employees on health and safety issues.

Box 10.1 Health and safety committees

Membership comprises equal number of members from employer and employees,
and should include the HSR where applicable.
Frequency of meetings depends on how much work needs to be undertaken by the
HSC; this will be determined in a number of ways, including:
the size of the workplace or area covered by the committee
the number of employees
the type of work carried out
the nature of risks in the workplace.
The WorkSafe Victoria guide Employee Representation provides a good
understanding of the role of HSCs. The functions include:
facilitating cooperation between employers and employees in instigating,
developing and carrying out measures designed to secure the health and safety of
employees in the workplace
formulating and reviewing the health and safety standards, rules and procedures
that are to be carried out or complied with at the workplace, and making them
known to employees. (These should be in other languages, where appropriate.)
In addition, other functions may be determined and agreed on by the committee
 and the employer, provided they are consistent with the relevant health and safety
legislation (WorkSafe Victoria 2006).

The WHS Act (and Victorian and Western Australian legislation) gives employees
the ability to elect representatives within their ‘work group’, which is commonly
defined as the direct area where an employee works, such as the administration area in
a factory, or the dispatch area. HSRs and their deputies (people who assist HSRs), are
elected by employees during an election held shortly after a request has been made.
The new model legislation under the WHS Act differs slightly from previous state-
based legislation. It introduced compulsory training for HSRs, involving a five-day
course before they can utilise their legislative powers (WHS Act ss. 68–69) for taking
action on any workplace hazards they identify. Once HSRs have completed the five-day
training, their powers include being able to issue a Provisional Improvement Notice
(PIN), and being able to direct work to stop if they have reasonable grounds to believe
that a worker could be exposed to a serious risk to their health or safety by continuing
that work.

Regulations
In addition to the WHS Act (and Victorian and Western Australian legislation), each
state has developed regulations and compliance codes. The relationship between the
WHS Act, the regulation and the codes is shown in Figure 10.1. Regulations are more
detailed requirements to support the duties in the relevant Health and Safety Act. The
same process of state governments coming together to create the model WHS Act has
occurred with the development of the regulations that each state (apart from Victoria
and Western Australia) has adopted as part of their safety prevention regime.
Regulations set out mandatory requirements under the Acts and provide details as to
how the employer must comply. The risks contained both within the Model regulations
(and the Victorian and Western Australian regulations) range from working from
heights, asbestos removal and major hazards through to construction and the mining
industry. The same regulations also provide direction on licences needed by those
performing the work. Failure to abide by regulations is often used as evidence by state
regulators in court cases when prosecuting employers for breaches of health and safety.

Codes of Practice
‘Codes of practice’ are practical guides developed by state regulators to help
employers achieve the standards of health, safety and welfare required under the WHS
Act and its accompanying regulations. In Victoria, some are called codes of practice,
and others are called Compliance Codes, such as Removing Asbestos in Workplaces–
Compliance Code. In most cases, employers following the instructions and solutions to
risks of an approved code of practice would achieve compliance with the health and
safety duties in the WHS Act, and the Victorian and Western Australian Acts. Safe Work
Australia has developed an extensive number of codes of practice on topics ranging
from ‘Confined spaces’, ‘First aid in the workplace’ through to ‘Managing noise and
preventing hearing loss at work’. Under a state WHS Act, approved codes of practice
are admissible in court proceedings. Courts may regard an approved code of practice
as evidence of what is known about a hazard, risk or control and may rely on the code
in determining what is reasonably practicable in the circumstances to which the code
relates (Safe Work Australia 2014c).

FIGURE Codes of Practice and Compliance Codes: The WHS Act, regulations and
10.1 compliance codes

OHS agencies and inspectorates

As mentioned earlier, the federal agency with the responsibility for health and safety
coordination in Australia is Safe Work Australia. Since its inception in 2009, the role
of Safe Work Australia has been to:
coordinate and develop national policy and strategies
assist with the implementation of model work health and safety legislation and
reform the legislative framework
undertake research
collect, analyse and report data (Safe Work Australia 2015b).

Safe Work Australia

An independent federal body that leads the development of policy to improve work
 health and safety and workers’ compensation arrangements across Australia.

In addition to Safe Work Australia, each state and territory has a dedicated
regulator responsible for workplace safety (see Table 10.1).

Table 10.1 Australian workplace safety regulators

Jurisdiction Authority

Australia Safe Work Australia – national agency

(www.safeworkaustralia.gov.au)
Australian Capital WorkSafe ACT
Territory www.worksafe.act.gov.au/
New South Wales WorkCover New South Wales
(www.workcover.nsw.gov.au)
Northern Territory NT WorkSafe (www.worksafe.nt.gov.au)
Queensland WorkCover Queensland
www.workcoverqld.com.au
South Australia SafeWork South Australia (www.safework.sa.gov.au)
Tasmania Workplace Standards Tasmania (www.wst.tas.gov.au)
Victoria WorkSafe Victoria (www.worksafe.vic.gov.au)
Western Australia WA WorkSafe (www.commerce.wa.gov.au/WorkSafe)

Each state regulator plays a similar role in helping to prevent injuries, as well as
managing workers’ compensation schemes that provide insurance for employers and
entitlements for injured workers (discussed later in this chapter).
Broadly, the role of the state regulators, as described by WorkSafe Victoria, is to:
help avoid workplace injuries occurring
enforce Victoria’s occupational health and safety laws
provide reasonably priced workplace injury insurance for employers
help injured workers back into the workforce
manage the workers’ compensation scheme by ensuring the prompt delivery of
appropriate services and adopting prudent financial practices (WorkSafe Victoria
 2015b).

Occupational Health and Safety

The safety, health and welfare of people engaged in work or employment.

In addition to the state and territory regulators is ComCare, which administers the
Commonwealth Workers’ Compensation Scheme and the Work Health and Safety Act
2011. Traditionally, ComCare provided safety regulation and workers’ compensation
for federal government employees, but in recent years its jurisdiction has widened and
some major employers in industries not traditionally covered by ComCare, such as
construction and transport, were controversially allowed to join the scheme as self-
insurers, a move that was criticised by some state regulators and the trade union
movement.

Prevention
The state regulators employ a range of specialists to develop a range of resources and
information to assist employers, workers and their representatives to address health and
safety issues, and to provide solutions to a common range of workplace hazards, from
working at heights to asbestos removal. These documents and other resources, from
videos to checklists, can be found on the regulators’ websites and are a good starting
point for those involved in health and safety in the workplace, including supervisors,
HSC members, HSRs, union delegates, and WHS professionals.

Regulation
The most well known role of the regulators—due to extensive media campaigns and
through workplace interactions—is that of inspector. Australia, in adapting the British
approach to workplace safety, has had dedicated inspectors of workplaces since the
mid-1800s. Through legislation, inspectors are given a great deal of power in relation
to workplace safety.
Inspectors can enter workplaces for a number of reasons, including a planned visit,
a random visit, as part of a campaign focusing on specific hazards (such as unguarded
machinery), or because of a complaint from an employee or member of the public to the
state regulator call centre. During an inspection of the workplace, the employer must
assist the inspector by providing access to the premises and any documents required. It
is normal for the inspector to request that the HSR accompany them on the inspection.
The WHS Act, adopted by most states in Australia, provides workplace inspectors
with a number of powers, including:
 issuing notices that require employers to remedy unsafe working conditions or
hazards
issuing notices that prohibit work from continuing until a hazard is fixed
issuing notices requiring employers to provide proof of correct workers’
compensation insurance
issuing on-the-spot fines for breaches of OH&S legislation
collecting evidence and recommending a prosecution (Safe Work Australia 2015b).

Unions and health and safety

Trade unions are another major stakeholder in workplace safety. Although Australian
trade union membership has declined considerably in recent years, trade unions
continue to play an important role in health and safety, representing their members’
interests in workplace matters related to risk and injury.
The WHS Act (as well as the Victorian OH&S legislation and Western Australian
IR legislation) provides trade union officials with a Workplace Health and Safety
(WH&S) permit and a Fair Work Act permit, the right to enter workplaces to inquire
into suspected WH&S contraventions that affect or relate to ‘relevant workers’, to
inspect employee records or information, or consult and advise workers who wish to
participate in the discussions about WH&S matters.
The WHS Act considers a ‘relevant worker’ to be a worker who is a member—or
eligible to be a member—of the union the WHS entry permit holder represents, whose
industrial interests that union is entitled to represent and who works at the workplace
entered.
Union officials seeking to enter a workplace using the permit must provide 24-
hours’ notice to the employer of their intention; however, there are provisions within
the legislation that override this if it is suspected that the employer may attempt to
remove, conceal or alter any evidence the official may be seeking, or if the official
considers there may be an immediate risk to health and safety.

The scale of the problem

The changing nature of Australian workplaces, discussed in previous chapters, has seen
a dramatic shift in the types of work done by Australian workers. But every year a large
number of workers still lose their life at work.
The cost of workplace fatalities and injuries—to the victims, to their families,
community, employers and governments—is enormous. The most recent completed
estimate of the cost of workplace injuries to the Australian economy, conducted in
2008–09 by Safe Work Australia, was 4.8 per cent of the total annual Gross Domestic
Product (GDP), or over $60 billion (Safe Work Australia 2013a).
Figures from Safe Work Australia (2015) show that 187 workers were fatally
injured at work in 2014. This is 18 per cent lower than the 229 deaths recorded in
2012, and 39 per cent lower than the highest number of annual worker deaths recorded
in the series—310 workers in 2007 (Safe Work Australia 2015c). Of the 187
workplace fatalities:
94 per cent involved male workers
61 per cent involved vehicles
11 per cent involved falls from a height,
11 per cent involved a moving object
47 per cent of the fatalities occurred within the transport, postal and warehousing, or
agriculture, forestry & fishing industries (Safe Work Australia 2014).
The Safe Work Australia (2013a) Australian Workers’ Compensation Statistics
2012–13 provides an overview of the types and numbers of injuries occurring in
Australian workplaces for 2012–13, including:
117 815 serious workers’ compensation claims in 2012–13
11.1 serious claims per 1000 employees and 6.7 serious claims per million hours
worked
men accounted for almost two-thirds of all serious claims
incidence rates increased with age from 6.4 serious claims per 1000 employees
aged 15–19 years to 14.2 claims per 1000 employees aged 60–64 years
forestry & fishing employees sustained the highest incidence rate of all industries
followed by employees in transport & storage agriculture
employees working as labourers and related workers, followed by machinery
operators and drivers, recorded the highest frequency rates of injury.
The same report found that injuries and musculoskeletal disorders led to 90 per cent
of serious claims over the period; the most common type was traumatic joint or
ligament and muscle or tendon injury (45%). Diseases led to 10 per cent of serious
claims, with the most common type being mental disorders (6%) (Safe Work Australia
2013a).
These figures must be interpreted with caution. Statistics are based on actual
workers’ compensation claims and do not include injuries in which a claim for injury
payments has not been made by an injured worker, for reasons such as fear of reprisal
for reporting the injury or lack of awareness of compensation eligibility.
For a comprehensive list, see the Australian Workers’ Compensation Statistics
2012–13 on the Safe Work Australia website.
Occupational disease
Not all injuries sustained at work are immediately present. Over the last century, the
medical field has progressively better understood the impact of work on the general
health of individual workers and the linkage of certain illnesses to hazards in the
workplace. This medical field is called occupational disease, and it is normally
identified when a disease is more prevalent in certain types of workers than in the
general population, or in other worker populations.
There are many types of occupational disease. Common conditions include skin
diseases from being exposed to chemicals, lung diseases from coal mining and, most
recently, with the increasing white-collar workforce, carpal tunnel syndrome, which
occurs from repetitive strain injury. There are many examples of occupational disease
and its consequences in Australia. Some of the most deadly diseases have a long
latency period, with symptoms emerging many years after a worker has suffered
exposure to poisons in the workplace.
Perhaps the most famous case in the last 50 years is the James Hardie asbestos
case. James Hardie was an asbestos mining and building material manufacturer. A
former James Hardie worker, Bernie Banton, successfully sued the company for his
terminal illness after being exposed to asbestos from James Hardie products when
working in the late 1960s. Just before his death in 2007, Banton, with help from the
Australian trade union movement, was successful in making James Hardie pay
compensation to himself and other sufferers of the terrible diseases sustained from
asbestos (ADRI 2015).

PRIMARY EXAMPLE 10.1

The Bernie Banton story
Bernard (Bernie) Douglas Banton AM (1946–2007) was an Australian crusader for
people suffering from asbestos-related diseases and social justice. He was the widely
recognised face of the legal and political campaign to achieve compensation for the
many sufferers of asbestos related diseases.
In 1968, Bernie got a job, through his brother Ted, at James Hardie’s Camellia
facility in Sydney’s western suburbs. He worked there for six years and was the union
representative. At this site, Bernie was involved with the production of various
asbestos products. This group was known as the ‘Snowmen’, because they were
covered from head to toe with the white asbestos dust. At the time there was talk about
the danger of asbestos, but never were they told that it could kill you.
In 1974 there were 137 workers at the Camellia facility, and by 2006 only ten were
alive. Bernie’s brother Ted died of mesothelioma in 2001. Asbestos continued to be
used until 1987.
Bernie suffered from two different asbestos-related diseases. He had asbestosis,
which required him to carry an oxygen tank wherever he went, and he developed
mesothelioma at a later stage. Bernie’s lobbying of the New South Wales Government
in 2000 resulted in the setting up of the Jackson Commission. The Commission
eventually established that James Hardie had grossly underfunded the Medical
Research and Compensation Foundation established to compensate its victims of
asbestos.
It took another two years of negotiations to get James Hardie to agree to pay 35 per
cent of their profits for the next 40 years, making it the biggest settlement in Australian
history.
In the Queen’s Birthday Honours in 2005, Bernie was made a Member of the Order
of Australia, ‘for service to the community, particularly as an advocate for people
affected by asbestos-related illnesses’.
In his victory speech on 24 November 2007, the Prime Minister-elect Kevin Rudd
paid special tribute to Bernie, saying that Bernie represented the ‘great Australian trade
union movement’ and was a beacon of decency in his fight for compensation.
Bernie Banton died on 27 November 2007, just three days after the election. The
Banton family accepted the NSW Government’s offer of a state funeral, which was held
on the 5 December 2007. Both the Australian flag and the NSW state flag were lowered
to half mast that day on all NSW government buildings.
In his eulogy for Bernie Banton, then Prime Minister Kevin Rudd said Bernie was
‘an ordinary bloke with an extraordinary heart who led an extraordinary life’.
Source: ADRI (2015)
Questions
1. What diseases was Bernie Banton suffering from?
2. What was he campaigning for?
3. Was Bernie’s campaign successful?

Industrial diseases often don’t manifest until years later. This means that many
sufferers of illness caused by their work find it difficult to make a link back to the
workplace and receive workers’ compensation or lump sum payments of compensation
because of the lack of evidence, or reluctance of companies to admit guilt.
 EMERGING AND CURRENT ISSUES IN HEALTH AND
SAFETY
In this section we are going to look at several of the issues that are currently emerging
in health and safety in Australia. The first two of them, bullying and stress are not new
phenomena, however, in recent years the number of cases of workers’ compensation
claims for both has increased significantly. It is not really known why these two health
and safety issues are increasing, though it is likely to be a combination of increased
work intensification as well as greater awareness of people knowing their rights at
work and their right to access compensation for these forms of injuries. The third
emerging issue is general worker health. This area of health and safety is gaining
increasing importance not only in Australia but across Western countries suffering from
the consequences of obesity within the general community and the workforce.

Bullying
Over the last decade, due to a number of high profile cases (see Case study 10.1),
workplace bullying has become a major focus of H&S and human resource
practitioners. Community concern has led to state and federal governments introducing
a range of legislative measures to prevent and prosecute workplace bullying.
The WHS Act addresses bullying as a concern of health and safety by defining
‘health’ as being both physical and psychological health. This definition also exists in
the Victorian and Western Australian legislation.
In Victoria, new legislation known as ‘Brodie’s Law’ has been introduced, as a
result of the tragic case involving the 2006 suicide of café worker Brodie Panlock
(detailed in Case study 10.1). The law, which amended the Victorian Crimes Act 1958
makes serious bullying a crime punishable by up to 10 years in jail.
The Fair Work Act 2009 also provides employees with the opportunity to apply to
the Fair Work Commission for an order to stop incidents of workplace bullying. The
Fair Work Act 2009 defines workplace bullying as when ‘an individual or group of
individuals repeatedly behaves unreasonably towards a worker or a group of workers
at work, and the behaviour creates a risk to health and safety’ (WH Act s. 789FD (1)).
According to the Australian Human Rights Commission (AHRC)—the regulator
overseeing federal laws relating to discrimination and harassment in Australia—
bullying behaviour can range from very obvious verbal or physical assault to very
subtle psychological abuse. This behaviour may include:
physical or verbal abuse
yelling, screaming or offensive language
 excluding or isolating employees
psychological harassment
intimidation
assigning meaningless tasks unrelated to the job
giving employees impossible jobs
deliberately changed work rosters to inconvenience particular employees
undermining work performance by deliberately withholding information vital for
effective work performance (AHRC 2014).
Each state and territory has its own legislation addressing workplace bullying.
The extent of workplace bullying is difficult to measure. International research has
found that that nearly 95 per cent of employees have had some exposure to general
bullying behaviours in the workplace over a five-year period (Fox & Stallworth 2005).
In the US, Lutgen-Sandvik, Tracy and Alberts (2007) found that almost 50 per cent of
employees have experienced some form of bullying, while in Europe researchers have
typically reported rates of bullying of 5–10 per cent (Einarsen et al. 2011).
In 2005, the AHRC estimated that the cost of bullying to Australian organisations
every year was between $6–36 billion.
The Australian Workplace Barometer, published by Safe Work Australia, found
that 6.8 per cent of those workers participating in the research had experienced bullying
at work in the last six months. Half of those workers had reported experiencing bullying
for longer than a six-month period. Females reported significantly higher levels of
overall bullying, and stated that they experienced bullying for significantly longer
periods. The bullying took many forms. Most cases involved swearing and yelling
(33.8%), being humiliated in front of others (22.8%), discomfort due to sexual humour
(19.1%), unfair treatment due to gender (7%), negative comments regarding ethnic or
racial background, being physically assaulted or threatened by a co-worker or
supervisor (6.3%), and unwanted sexual advances (4.6%) (Safe Work Australia 2012).
Each state and territory regulator publishes materials and advice to assist
employers in preventing workplace bullying. WorkSafe Victoria has responded to
community concerns about workplace bullying by creating an inspectorate dedicated to
responding to claims of workplace bullying.

Stress
Stress, and the reduction of stress, is becoming an increasing concern for employees,
employers, HR practitioners and the medical and general community. A recent report
released by Safe Work Australia, The Incidence of Accepted Workers’ Compensation
Claims for Mental Stress in Australia, found that stress claims for workers’
compensation costs more than $10 billion each year. The same report found:
mental stress claims are the most expensive form of workers’ compensation claim,
as they can result in workers being absent from work for extended periods
mental stress claims are predominantly made by women
more professionals make claims for mental stress than any other occupation. A third
of these claims are due to work pressure
the hazards resulting in mental stress claims vary with worker age. Younger workers
are more likely to make claims as a result of exposure to workplace or occupational
violence. Work pressure is the main cause of mental stress claims for older workers
women were around three times more likely than men to make a workers’
compensation claim as a result of work-related harassment or workplace bullying
work pressure was stated as the cause of the majority of claims in industries with the
highest claim rates (Safe Work Australia 2013c).
Previous research has identified a number of factors that can lead to stress in the
workplace. Research conducted by the ILO (2015) found that work-related stress is
primarily determined by psychosocial hazards found in:
work organisation
work design
working conditions
labour relations (ILO 2015).
Employers take a number of actions to help prevent and reduce stress in the
workplace. The ILO has identified a number of best-practice strategies, including:
adopting collective and individual preventive and control measures
increasing the coping ability of workers, by increasing their control over their tasks
improving organisational communication
allowing workers’ participation in decision-making
building up social support systems for workers within the workplace
taking into account the interaction between working and living conditions
enhancing the value placed on safety and health within the organisation (ILO 2015).

Health at work
Australian employers are increasingly focusing on the general health of workers in
response to, and in addressing, their obligations in health and safety. They are also
motivated to be proactive in this area because of the link between employee health and
productivity, absenteeism and workers’ compensation claims.
Obesity is a major problem in most developed countries. ABS data from 2013
found that 62.8 per cent of Australians aged 18 years and over were overweight or
obese in 2011–12, comprising 35.3 per cent overweight and 27.5 per cent obese (ABS
2013). An example of the declining health of Australian workers was shown by
WorkSafe Victoria, which provided half a million Victorian workers with a free 15-
minute ‘WorkHealth’ check, conducted between April 2009 and April 2012 as part of
its WorkHealth program. The program identified 5223 workers (1%) who were
advised to see their doctor urgently within 24 hours, due to either very high blood
pressure or very high blood glucose. Just over half the participants (52%) were
advised to see their doctor within one month to discuss at least one health issue
identified in their WorkHealth check (WorkHealth 2015).
Responding to the growing awareness of the benefits of healthy workplaces, many
employers are implementing strategies aimed at improving the health of their
employees, including programs to improve physical activity, promoting healthy eating,
reducing alcohol consumption, improving mental wellbeing, providing free gym passes,
making fresh fruit available to all employees, running on-site yoga classes and
conducting ‘quit smoking’ programs.

WORKERS’ COMPENSATION
Apart from the focus on safety by state regulators, discussed earlier, each state
regulator also manages a workers’ compensation scheme, paid for by local employers
through premiums based on their current and historical rate of injuries, and the industry
the business is involved in. The money collected by the various agencies is used to
provide a safety regime that helps to assist employers, workers and their
representatives, and to regulate individual workplaces—predominantly through the use
of an inspectorate made up of trained inspectors awarded powers by the state health
and safety legislation.
With such a large number of workplace injuries every year, each Australian state
has developed legislation to help protect the rights of injured workers, and created
obligations for employers to assist in the rehabilitation process to get injured workers
back to normal duties where practically possible. Each state regulator has also created
a workers’ compensation scheme that sets out the rights and responsibilities of both
parties, although differing slightly across jurisdictions. Typically, employers each pay
an annual levy to the various state and territory (and Comcare) workers’ compensation
schemes, which injured workers can access if they suffer a workplace injury.
The levy, or premium, is calculated on a number of factors, which vary according to
jurisdiction. In the Queensland workers’ compensation scheme, the levy is based on the
number of injuries within the industry, previous claims made within the organisation
paying the premium, and the size of the organisation in relation to the industry
(WorkCover Queensland 2015).
As an example of the industry premium rates, in Victoria the current premiums for
employers based on their payroll for the 2014/15 period, are as follows: road freight
employers (4.59%), hospitals (1.18%), meat processing (5.59%), and advertising
services (0.25%) (WorkSafe Victoria 2015b).
Each state/territory regulator manages their workers’ compensation scheme,
ensuring that there are enough funds available for employees currently suffering
workplace injuries, as well as for future injured employees. Part of the money collected
from employers is also used to help fund the safety prevention arm of the regulators,
including inspectors and other operations.
Each state/territory oversees their scheme, but typically utilises external
administrators to manage the premium payments and injury compensations for
employees. The administrators of the scheme are normally insurance companies. Those
used in the NSW scheme include Allianz Australia Workers’ Compensation (NSW)
Limited, Xchanging Integrated Services Australia Pty Ltd, CGU Workers Compensation
(NSW) Limited, Employers Mutual NSW Limited, Gallagher Bassett Services Pty Ltd,
GIO General Limited and QBE Workers Compensation (NSW) Limited.
Each state and territory (and Comcare) workers’ compensation scheme is based on
a ‘no fault’ system in which workers only have to prove that the injury was sustained
during the course of employment, not who was at fault.
Data on workers’ compensation from SafeWork Australia (2014) demonstrate the
enormous burden caused by injured workers. In 2011–12, the total amount paid by
workers’ compensation schemes was $7.8 billion. This included $4.19 billion in direct
payments (incapacity, permanent impairment and common law) (53.5%), $1.82 billion
in medical and other services, including rehabilitation (23.3%), $1.43 billion of
insurance operations costs (18.8%), and $390 million of other administrative costs
(5.0%) (SafeWork Australia 2014b).

The workers’ compensation process

The Safe Work Australia guide, Comparison of workers’ compensation arrangements
in Australia and New Zealand (2015a), provides a detailed analysis of the various
state workers’ compensation schemes.
When an employee suffers a work-related injury, a number of steps take place
before payments are made for compensation while the employee recovers from injury.
First, the employee must notify the employer of the injury. In most states or territories,
this is as soon as practicable, except in Victoria, which allows up to 30 days. All
workplace injuries must be documented by employers for H&S record-keeping
purposes and to provide information to assist in the claim for compensation when it is
made. The stored information of workplace accidents is called the ‘register of injuries’.
If the injury is of a ‘serious’ nature, the relevant safety regulator must be notified,
generally within 24 hours of the incident. Failure to do so can lead to prosecution of the
employer by the regulator. The injured employee should seek medical treatment as soon
as possible, normally from the employee’s own doctor, and inform the doctor of the
incident, in order to help understand any possible work restrictions as well as to
provide a certificate of incapacity if the employee is claiming compensation.
The next part of the process in making a claim for compensation is to provide the
employer with a claim form, which the employer should then submit to the relevant
state or territory workers’ compensation authority for administration. The claim is then
assessed by the authority’s administrator—the insurance agent to whom the employer
has been paying premiums. The insurer will assess the claim and make a decision on
the relevance of work in the injury. The decision is often made in consultation with
independent medical advice about the legitimacy of the claim. Injured employees are
often requested by the insurer to attend medical examinations with independent
practitioners as part of the verification of the injury.
If the administrator of the claim accepts that there is a reasonable link between
work and the injury, then the injured worker will be compensated for a period of the
injury in a number of ways. Although there are differences between each jurisdiction,
injured workers are broadly entitled to a number of benefits, including a replacement
wage during their recovery, medical costs including medicine, treatment, and other
related costs.
Full wage payments for injury are paid to injured employees for the first 13 weeks
in all states and territories except Victoria and Queensland. Compensation is then paid
up to a limit of 104–130 weeks, depending on the jurisdiction. For workers with
permanent injuries, such as loss of a limb, lump sum compensation is provided to
varying limits in each state. With a focus on rehabilitation, the schemes provide
extensive treatment options to assist injured workers in their recovery, including
doctors, physiotherapists, chiropractors, etc.

Return to work plans

The costs involved in workers’ compensation highlight the importance of employers
having strategies to help injured workers return to work in some capacity; to both help
the workers’ recovery and ensure that the organisation doesn’t suffer as a result of the
loss of skilled workers.
Returning to work is a high priority for workers’ compensation schemes, with
penalties provided for both employees and employers who refuse to participate
meaningfully in plans developed to help effective return to work. The return to work
plan is normally formulated by the employee and employer, with consultation from the
employee’s treating doctor. Increasingly, occupational rehabilitation providers are used
by regulators and organisations to help identify suitable alternative work duties for
injured employees, prior to commencing normal duties.
Extensive research has found that the best opportunities for successful return to
work come from engaging injured employees at the workplace, rather have them than
sitting at home recovering (Waddell 2006).

FIGURE Typical workers’ compensation process in Australia

10.2

SUMMARY
Far too many Australian workers are injured in Australia every year. The cost to the
individual employee, family, the company and broader community is enormous. To help
Australian workplaces achieve better safety outcomes, health and safety legislation,
regulations and codes of practice have been introduced to help ensure that risks and
potential risks in the workplace are reduced. This chapter has looked at the complex
laws that exist in Australia, including the role of employers in promoting consultation
over work safety issues; the rights of employees to have representation through HSRs,
and the right to be represented by unions in safety issues. The role of the safety
regulator in each state and territory has been investigated, as has the role of Safe Work
Australia.
This chapter looked at some of the emerging issues in Australian workplaces,
including stress, bullying, and general work health. The chapter concluded with a
discussion of workers’ compensation, its purpose, the rights and entitlements of
workers and the focus on rehabilitation. Of course, the changing laws and types of
injury—including new and emerging threats—mean that it is important for students of
employment relations to keep up to date with changes and developments in this
important area. This chapter should serve as an introduction; further reading on the
topic and participation in health and safety in the workplace is encouraged.

REVIEW QUESTIONS
1. What was the traditional approach to health and safety in Australia and Great
Britain? What was the problem with that approach?
2. How was the model Work Health and Safety Act created?
3. What are some of the duties of employers and employees?
4. What is a health and safety representative, and what are their powers in the
workplace?
5. How do regulations differ from compliance codes?
6. What role does the safety regulator in each state or territory play in making
workplaces safe?
7. What powers do workplace inspectors have?
8. What are the main causes of injury to Australian workers?
9. Define the term ‘occupational disease’.
10. What is the purpose of workers’ compensation?

Visit Oxford Ascend for
further revision material

CASE STUDY BRODIE’S DEATH

10.1 A WARNING TO
SMALL BUSINESS
SADLY, it was an irony lost on the young woman working behind the counter of
the busy cafe on Hawthorn’s cosmopolitan Glenferrie Road. Cafe Vamp was its
name, but Brodie Rae Constance Panlock was no femme fatale. Described by her
family as a determined young woman ‘who set goals to achieve’, which included
earning enough money in order to travel, the 19-year-old was also searching for
‘approval and acceptance’. Sad, too, was that few, if any, of the cafe’s steady
stream of customers noticed a static in the air—the kind left behind in the wake of
a hurtful comment—whenever Brodie shared a shift with Rhys MacAlpine, and
manager and erstwhile lover Nicholas Smallwood, or her brittle emotional state
after an ‘almost daily routine of inappropriate pressure at work’. But saddest of
all was that no one was there on the night in September 2006 when a distraught
Brodie took herself to the top of a nearby multi-storey car park and jumped off.
Three days later, ‘the little ray of sunshine’, as Brodie was described by co-
worker Meghan Chester, was dead.
During the inquest into Brodie’s death held earlier this month, the Age’s Helen
Westerman wrote that workplace bullying was ‘a small-business problem’.
Westerman briefly singled out an industry where ‘intolerable behaviour is (often)
glossed over, or even celebrated’ à la a well-known, if tarnished, UK celebrity
chef. The one and the same industry that, in Australia, employs the largest number
of young and inexperienced workers. And with the numbers of school leavers and
students on summer break currently knocking on the doors of restaurants, cafes and
bars across the nation, there’s one less excuse for complacency with our cafe
lattes.
Here’s another. A WorkSafe survey undertaken in May found nearly one in five
workers reported being bullied, with the incidence of reported bullying rising to
19 per cent from 12 per cent in 2007. And yet a workplace summary, released in
2006, found hospitality employees were less likely than others to know if their
organisation had a bullying policy or to have been informed of one. Few knew
about reporting procedures for bullying, or sought help from internal or external
sources. This was supported by a following survey of 1600 young workers, which
found that they were ‘less likely to be consulted on safety in the workplace, don’t
have the confidence to raise issues, may not understand or know their rights and
alarmingly don’t consider workplace safety as important as road or public safety’.
Alarming is right. The hospitality industry remains frighteningly accident
prone, especially for the young. In Victoria alone, those aged 15 to 24 experience
the highest proportion of work-related injury, occurring mainly in food retail, such
as fish shops and takeaway-food shops, cafes and restaurants. While many
hospitality employers have good, sound systems in place to ensure their young
charges’ first experience in the workforce is a positive one, many more don’t. Of
all industries, the hospitality sector consistently generates the most complaints,
including underpayment of minimum hourly rates, penalty rates, weekend and
public holiday loadings and failure to expediently issue play slips, as Craig
Bildstien, a spokesman for the Fair Work Ombudsman, tells me.
Attempting to address this disparity, in February this year WorkSafe launched
a national education campaign aimed at young hospitality workers and their
employers. Fair Work, too, regularly runs campaigns in schools and universities,
as well as dropping leaflets at popular venues. The message, says Bildstien, is that
‘the best defence for a young worker against being taken advantage of is to know
their workplace rights.’ That’s certainly true enough, but is it good enough?
In May last year, coroner Peter White found that Panlock’s ‘low self-esteem,
age and inexperience’ rendered her ‘emotionally vulnerable’. With such a trifecta
acting against her, being aware of her rights would have been little ammunition
against the barrage of an ‘unbearable level of humiliation’. The fallout from this
case will be felt not only by a family but by all involved, with the lawyer of Cafe
Vamp’s owner, Marc Luis da Cruz (who admitted he felt terrible about what
happened) indicating his client would leave the hospitality industry after 20 years.
And yet much of what happened to Brodie over the course of her employment at
Cafe Vamp from early 2005 to late 2006 must have occurred within earshot of
others, too, if not within sight.
We come across it often enough. The ribbing, jibes and mucking around that
sometimes masquerade as camaraderie. There can be a very fine line between
having a joke and being the butt of one. Brodie Panlock may have been easy prey,
but this young, insecure woman’s experience has exposed the erroneous idea
embodied in hospitality’s unspoken rule that what happens inside the kitchen or
behind the counter can stay there. The tragedy is that she never lived to see what
she had achieved.
Source: Vuk (2009)

Questions
1. What steps can an organisation take to eliminate bullying form their
workplace?
2. What part of the WHS legislation relates to bullying?
3. What role does the state workplace safety regulator play?

CASE STUDY FOLSTAFF

10.2 STORAGE
FACILITY
Sandra had only been a Health and Safety Representative at Folstaff Storage for
two months, but the list of problems kept growing.
After the five-day training course provided by her local union soon after being
elected by workmates in her designated work group, Sandra decided that
something must be done about the issues that had already caused a number of ‘near
misses’ and at least three unconfirmed injuries.
This morning, Sandra approached her supervisor, Con, and asked to have a
meeting about the issues, which she had written on a piece of paper.
Con, always too busy and stressed, screamed, ‘Not now Sandra. Talk to me
when I am not busy’.
Four days later and Sandra still had not managed to convince Con to sit down
and discuss the issues that were concerning her and her fellow workmates,
particularly urgent matters such as the noise levels and the lighting in the car park
that never worked, which was a real problem for the night shift employees
arriving for work at midnight.
Sandra has approached her union and asked them what the next steps are and
what rights she and her workmates have.

Questions
1. What rights do Sandra and her workmates have to raise issues on safety
matters?
2. What are the employer duties in relation to Sandra and her workmates?
3. What next steps should Sandra take?

FURTHER READING
Guthrie, R., Ciccarelli, M., & Babic, A. (2010). Work-related stress in Australia:
The effects of legislative interventions and the cost of treatment. International
Journal of Law and Psychiatry, 33(2): 101–15.
Productivity Commission. (2010). Performance benchmarking of Australian
business regulation: Occupational health & safety. Canberra: Productivity
Commission.
Quinlan, M., & Johnstone, R. (2009). The implications of de-collectivist industrial
relations laws and associated developments for worker health and safety in
Australia, 1996–2007. Industrial Relations Journal, 40(5): 426–43.
Schofield, T., Reeve, B., & McCallum, R. (2014). Australian workplace health and
safety regulatory approaches to prosecution: Hegemonising compliance.
Journal of Industrial Relations, 56(5): 709–29.
Underhill, E., & Quinlan, M. (2011). How precarious employment affects health and
safety at work: The case of temporary agency workers. Relations
industrielles/Industrial Relations, 66(3): 397–421.

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rate>.Case study 10.1
 Chapter
Eleven
INDUSTRIAL RELATIONS AND HRM

INTRODUCTION
Over the last 100 years, the Australian IR system has developed into a complex web of
rules that govern workplace wages, conditions and the role of the parties involved in
the system, including the state and its various representative individuals and
institutions, employees, employers, trade unions and employer associations. As
detailed in previous chapters, the laws relating to the regulation of the employment
relationship were borne from the bitter disputes of the 1890s. The deep divisions in
Australian society caused by resistance to the aspirations of the emerging union
movement, combined with detrimental economic conditions, resulted in what some
termed as ‘open class warfare’. From the outback of northern Queensland to the docks
of Sydney. the hostilities between workers and employers hadn’t been as acute since
colonisation.
After Federation in 1901, the resulting legislation derived from a newly created
Constitution that sought to remove—or at least alleviate—those hostilities, and address
issues of work conditions in a more systematic and ‘civilised’ way. The legislation
helped the re-emergence of organised labour, which had been badly defeated in the
great strikes of the 1890s. As a consequence, Australian trade unions grew larger and
stronger, and were given a legitimacy and legal status in the workplace relationship that
had no precedent anywhere in the world at that time. For the cost of registration with
the (then) Arbitration Court and a promise to comply with rules relating to democracy,
activities and organisation, unions were given the opportunity to sit ‘at the table’ with
employers and their representatives on an equal footing. Unsurprisingly, the response
from unions was immediate. Trade union organisations and trade union membership
rose rapidly. As their counterparts in other countries faced physical threats,
imprisonment or worse, Australian trade unions were able to take their disputes to
court and have them decided by a judge.
Within a short period of time, the creation of awards by judges and the gradual
acceptance and participation in the new system from employer associations resulted in
the institutionalisation of what we commonly refer to as the ‘Australian IR system’. For
almost 80 years the system worked, and worked remarkably well. Whether it was the
system itself or the fortunate economic climate is debateable. It was nevertheless
remarkably stable and predictable. All Australian workers doing the same job were
paid roughly the same wages, disputes for the most part never quite reached the bitter
heights of the 1890s or what other countries experience, such as the United States,
where strikes could continue for months or even years. Employers grumbled, but some
were content with wages being taken out of the competitive equation—i.e. a ‘level
playing field’ meant that all employers paid roughly the same, so they could not use
wages as an excuse for poor profit margins.
However, by the 1980s, the system was looking outdated. High unemployment and
high inflation led to questions about centralised industrial relations. Ironically, it was
the union movement (the ACTU) and the newly elected Labor Government, led by the
former ACTU President Bob Hawke, that opened the door to questioning, and then
challenging, the approach taken since 1904. The creation of the Prices and Incomes
Accord in 1984 preceded the introduction of workplace bargaining and workplace-
focused dispute resolution, leading to a dramatic new approach to the management of
the workplace relationship within Australia, the likes of which had not been since
Federation.
At the same time as the new approach was starting to emerge in the political and
industrial arenas in Australia, the approach taken to managing people within
organisations was significantly changing, too. Traditional management theory and
practice—with its focus on authority and leadership as the method of managing people
in organisations—increasingly came to be questioned by academics and practitioners in
the area of personnel management.

Personnel management
A term used until the early 1980s for those people in organisations commonly
responsible for recruiting, hiring, compensation and benefits, new employee
orientation, training, and performance appraisal systems.

Personnel management received little attention from Australian academics in the

twentieth century, perhaps reflecting the importance of the state’s influence on the
outcomes of employment relations through tribunals, as well as unions and employer
associations, but some commentary on this area is worth considering.
World War I saw the introduction of the term personnel management, as a large
number of women suddenly joined the workforce and needed to be trained to replace
the men who were fighting wars overseas (Drucker 1954). This role continued during
World War II, with the government training specialist ‘industrial welfare officers’ who
—prior to their placement in the large factories needed to sustain Australia’s war effort
—were trained in industrial psychology, human relations, industrial health, amenities
and work fatigue (Kaufman 2014). The post-war boom in Australia led to the
continuation of the role, as Australian companies vied with each other to attract and
retain talent by instituting a number of policies used with success during the war
(Kangan & Cook 1949). Reflective of the trend of organisations to employ ‘welfare
officers’ or personnel officers was the emergence of professional associations such as
the Personnel Officers Association of Australia (1949–1954), and its later incarnation
the Federal Institute of Personnel Management of Australia (IPMA) (1954–1992). The
role of personnel management continued to expand during the 1960s, with common
responsibility for activities such as recruiting, hiring, compensation and benefits, new
employee orientation, training, and performance appraisal systems, although as Wright
(1995: 50–65) notes, many organisations viewed the role suspiciously as it was
considered by some to be challenging the notion of managerial prerogative.

Managerial prerogative
The ‘right’ of employers to manage employees without interference.

By the late 1980s, the role of personnel had become quite broad. Tyson (1989)
identified three ‘types’ of personnel management jobs, including ‘Clerk of works’,
which involved administration, recordkeeping, recruitment and payroll duties
commonly associated with personnel; the ‘Contracts manager’, who was commonly
found in larger organisations, involving industrial relations, and dealing with unions
and negotiations; and the ‘Architect’, a role that included being both a business manager
and a personnel manager.
Although the theories of human resource management emerged in the 1980s, it was
management theorist Drucker (1954) who first used the term ‘human resources’ in the
1950s, introducing the idea of the worker as ‘the human resource’ that was ‘comparable
to all other resources but for the fact that it is human’. This new term emerged at the
same time as management theorists such as McGregor (1960) developed new ideas
about human motivation, and within the work context, the needs of individual workers
separate from financial rewards. These ideas were developed by Miles (1965). Using
the term ‘human resources’, Miles argued that worker participation in decision-making
was a key ingredient for enhancing both worker productivity and job satisfaction. There
are several competing explanations for the emergence or popularity of the term human
resource management (HRM) during the 1980s. Some, such as Storey (1992), argue
that HRM developed as a response to the need for a new way to manage employees.
Price (2007) believes that the creation of an HRM model by the influential Harvard
Business School helped. Later, a number of other different models were developed to
help understand the role of HRM, including the Harvard model (Fombrun et al. 1984),
the Guest (1995) model, the Warwick model (Hendry & Pettigrew 1990) and the Storey
(1992) model. Figure 11.1 shows the Harvard model, which is commonly used to
illustrate the stakeholder interests and contextual factors that both influence and are a
priority of HRM.

Human resources
A term that embraces the idea of the worker as a ‘human resource comparable to all
other resources but for the fact that it is human’. Coined by management theorist
Peter Drucker (1954) in the 1950s.

Human resource management

Systematic program of labour management that is linked to strategic business plans
in a manner that benefits both employees and the organisation.

FIGURE The Harvard model of human resource management

11.1

Source: Beer et al. (1984)

 THE EMERGENCE OF HRM
The origins of HRM can be found in what was previously called personnel
management. Personnel management has a long history; some argue it began with the
Industrial Revolution (Watson 1986), while others believe it can be traced back to the
end of the nineteenth century, predominantly in England, with the creation of welfare
officers within larger organisations, with the specific role of protecting women and
girls (Fitzgerald 1988).
In Australia, the emergence of HRM in the early 1980s occurred just as the
Australian economy faced its greatest challenge since the OPEC oil crisis of the 1970s.
The concept of better utilisation of human resources to help productivity was attractive
to Australian employers as high inflation, lower tariffs and exposure to international
markets meant greater efficiencies were needed for organisations to survive. On the
industrial relations (IR) front, this also meant an increased focus in productivity through
the development of the Accord, which promoted multiskilling and, eventually, the shift
from centralised bargaining to workplace bargaining.
Since the growing popularity of HRM in the 1980s, there has been a great deal of
debate about the similarities and differences between personnel management and HRM.
Some (Hallier & Leopold 1996) argued that HRM was little more than a new name for
personnel management, an idea supported by Hendry and Pettigrew (1990), who argued
that HRM should be perceived as a perspective of personnel management and not a
new theory. Others, however, argued differently. Guest (1995) argued that the emphasis
on developing employee commitment, flexibility and the strategic integration of the
field, makes HRM different from its predecessor. This is supported by Legge (1995),
who argued that HRM has developed to such an extent that it is now crucial to
organisations in a way that personnel management never was.
However, it would be simplistic to describe HRM as only taking the one approach
to managing employees in organisations. Research indicates that the HRM approach has
evolved into two forms when utilised in the workplace environment. These can be
characterised as ‘hard’ and ‘soft’ approaches (Guest 1995). The hard approach to HRM
is characterised by human resources being used to achieve organisational goals and
objectives similar to other resources, such as equipment, transportation, etc.
(Beardwell & Claydon 2007). Whereas the soft approach, which dominates HRM
textbooks, utilises strategies to gain commitment, quality and flexibility of employees
(Beardwell & Claydon, 2007).
More recently, the term strategic human resource management (SHRM) has
evolved to describe HRM. SHRM referes to the planned actions and activities of HR
practitioners that are used to help organisations achieve their strategic goals (Boxall
2014).
 Strategic human resource management (SHRM)
The planned actions and activities of HR practitioners that are used to help
organisations achieve their strategic goals.

THE ROLE OF HRM

Although the tasks previously performed by personnel have been incorporated into the
HRM function, the scope of activities of HR has grown dramatically over the last 20
years, and again more recently through the concept of SHRM. It is generally agreed that
HRM involves five basic activities: planning, organising, staffing, leading and
controlling (Dessler 2007). Pfeffer (1998), in a review of the literature on HRM,
identified seven strategies engaged by successful HR practitioners. These include
strong recruiting practices, employment security, self-managed teams, decentralised
decision-making, extensive training, reduced status distinctions and comparatively high
compensation linked to organisational performance.
Taking into account the broad labels given to HRM activities in organisations,
research conducted in Australia by Kulik and Bainbridge (2006) provides a good
insight into the role of the HR practitioner in the workplace (see Table 11.1). For each
HR practictioner activity listed, it is worthwhile noting the relationship between that
activity and what has traditionally been termed ‘industrial relations’.

Table 11.1 Typical activities in a large HRM department

Industrial relations Workers’ compensation Human resource

planning
Equal opportunity Diversity management Leadership
development
Induction process Grievance handling Culture
Occupational health and Training Succession planning
safety
Recruitment and selection Career planning and Termination decisions
development
Job design Employee disciplinary action Coaching
Performance management Promotion decisions
 Source: Kulik & Bainbridge (2006)

THE HR PROFESSIONAL
Over the last 30 years, there has been much debate about the competencies required to
be an HR practitioner (Storey 1992; Ulrich et al. 2007) because of the complexity and
broad range of duties required, and the changing role of HR to SHRM. The six
competencies needed by HR practitioners, developed by leading HR academic Ulrich
(2008) and widely accepted, include:
credible activists who build relationships
strategic positioners who understand the business
capacity builders who define, audit and create organisational capabilities
change champions who initiate and sustain change
HR innovators and integrators who look for new ways to do HR practices
technology proponents who use technology for efficiency to connect employees.
A glance at most university courses providing qualifications in HR reflect these broad
competencies, but few offer detailed subjects that were traditionally within the IR
sphere and relate to the legislation surrounding employment relationships, despite this
competency being crucial for compliance with legal requirements.
Taking into account the variety of approaches towards utilising human resources,
the next section explores the difference between IR and HR in order to gain an
understanding of how these approaches can merge and complement each other.

DISTINGUISHING HR AND IR
In Chapter 1 we discussed Fox’s frame of reference, a theory that categorised the
opinions held by people on workplace issues according to three categories: unitarist,
pluralist and radical (or Marxist). If HR and IR are explained in terms of Fox’s frames
of reference, there is certainly a vast divide between them.
As previously explored in Chapters 1 and 3, the IR field is deeply embedded in the
pluralist perspective. IR acknowledges conflict as a reality in the workplace
relationship, and is constructed to address conflict in a detailed manner, providing both
parties—the employee and the employer—the right to utilise representatives to
negotiate and advocate on their behalf. In practice, this feature continues today, although
the role of both representatives has been diluted by the focus on decentralised
workplace bargaining and the eroding of powers of the state apparatus—the Fair Work
Commission (FWC)—to intervene and make decisions on workplace disputes. The
system further reflects the pluralist perspective by acknowledging the right of
employees to collectively bargain. Even in the era of Work Choices, this remained a
constant and continues today; collective bargaining is the primary method for the
majority of Australian employees to obtain wage rises—apart from those on the
minimum wage, who are reliant on the yearly national wage case.
Compare this with HRM, which is characterised by an essentially unitarist
approach to the employer–employee relationship (see Chapter 1 for more on unitarism).
The ideas and values of HRM are essentially organisation-centric and individualistic
(Foulkes 1980). As discussed previously, the basic premise of the unitarist paradigm is
that there is ‘one source of authority and one focus of loyalty … [to] strive jointly
towards a common objective …. There are no oppositionary groups or factions …
[with] members owing allegiance to their own leaders but to no others’ (Fox 1971).
HR theory focuses primarily on the relationship between the employer and the
employee, attempting to gain commitment and loyalty to the organisation through
strategies such as job design, training and rewards. The theory is essentially
behaviourist and embraces the concept of reward and punishment as a strategy for
gaining commitment and productivity from employees. Many HR practitioners accept
that trade unions are a reality in the workplace, while at the same time viewing them,
theoretically, as a competing source that impacts negatively on the commitment
necessary to achieve organisational goals.
To help understand the differences between the approaches of IR and HRM, it is
worth reviewing Storey’s (1992) comparison of the two approaches. Table 11.2
identifies 20 differences spanning the areas of beliefs and assumptions, strategic
management, line management and key workplace activities or key levers. Some of
these are explored in more detail later.

Table 11.2 Comparing IR and HRM

Dimension Industrial relations Human resource

management

Conception of workers Theory X Theory Y (e.g. McGregor)

Conception of work Pluralist Unitarist
relationships
Contractual relationships Collective Individual
Contract Written contracts Aim to go ‘beyond the
contract’
Rules Clear and detailed ‘Can do’ impatience with
 rules rules
Guide to action Procedures Business need
Behavioural referent Custom and practice Values and mission
Management vis-a-vis labour Monitoring Nurturing
Conflict Institutionalised De-emphasised
Key relations Labour Customer
Corporate plan Marginal Central
Line-management role Transactional Transformational
Speed of decision-making Slow Fast
Initiatives Piecemeal Integrated
Communication flows Indirect Direct
Standardisation High (parity an Low (parity not an issue)
issue)
Prized management skill Negotiation Facilitation
Pay Fixed grades Performance related
Conditions Negotiated Harmonised
Labour–management Collective contracts Individual contracts
contracts

Source: Adapted from Storey (1992, p. 35)

The first part of Storey’s analysis, the conception of workers and work, is one that
identifies McGregor’s theory Y with HRM. Theory Y is that workers are ambitious,
motivated and self-controlled; whereas Theory X sees workers as lazy and in need of
supervision. This fundamental belief within HR theory means that workers are
identified on an individual basis with each having potential that can be developed. In
order to develop those human resources, HR takes a nurturing approach and, in the
behaviourist tradition, focuses on individual rewards and conditions over that of the
collective.
In essence, unlike their IR counterparts, who see conflict as normal, the unitartist
perspective adopted by HR places a great deal of emphasis on cooperation and
commonality of goals. This does not deny that conflict can occur, but HR approaches
conflict as unnecessary and being caused by factors such as personality disorders, poor
recruitment practices and performance management, and inadequate communication, or
sees it as the actions of troublemakers who are not aligned with organisational strategy.
To reduce conflict or attempt to eliminate it altogether from the workplace, HR
theory adopts a number of strategies, including effective communication, good
recruiting, and clear performance management—as well as punishing troublemakers to
modify their behaviour, or removing them.
Although trade unions are a fact of life for many organisations—representing
employees and imposing demands on the HR department—they are often seen as a third
party in the employer–employee relationship: an unwelcome party that interferes with
the ability of HR to gain commitment from individual workers and challenges the
legitimacy of management. This belief in the negative role of unions often sees HRM
attempt to thwart the unions’ role, by refusing to negotiate with them or denying their
right to interfere with management decisions.
The final part of Storey’s (1992) analysis of the difference between the two fields
—and in part related to the role of unions—is the HRM belief that collective
bargaining, long a tradition of Australian industrial relations, has a negative impact on
the organisation and the individual. According to HR theory, individuals who are
provided the best opportunity to perform, and who perform well in organisations,
should be rewarded for their contributions. Awards, enterprise agreements and
minimum conditions created by the federal legislation, all conspire to limit the ability
of HR to individually reward performance and—according to HR theory—contribute to
divisions of interest within organisations that lead to possible conflict. This is
especially so in the current decentralised environment, where organisations must
collectively negotiate with employees and their representatives, namely trade unions, if
they are present.

TOGETHER OR APART: A NEW DIRECTION FOR IR

AND HRM?
Not surprisingly, the major differences in approach to the employment relationship by
IR and HRM mean that there has been little discussion about possible integration, either
in academic literature or among practitioners. Most IR textbooks have little or no
discussion about the role of HR or its implications for industrial relations. This is also
true of HR textbooks, where very few provide any detailed analysis of the basic
components of the Australian industrial relations system, including trade unions,
employer associations, or the role of the regulator, and only minimal discussion of the
legislation relating to the employment relationship.
The lack of understanding of the differences and similarities between IR and HRM
needs to be explored because, increasingly, as the Australian business sector faces
challenges on many fronts, from the changing types of work that Australians perform
(moving from a manufacturing economy to a service economy), to competing in the
global marketplace, companies are attempting to utilise their human resource assets as
efficiently as possible, while also needing to consider the legal and representative
frameworks that exist.
As has been discussed in previous chapters, although there is no doubt that
workplace relations are becoming increasingly decentralised—as much of what the
various tribunals previously attempted to regulate, particularly in relation to disputed
boundaries in the employer–employee relationship is now done in the workplace—the
focus on workplace dispute-resolution procedures and mechanisms for dealing with
disputes mean that it is critical for employers and their representatives—in this case the
(HRM practitioners) responsible for addressing workplace issues—to meet their
legislative obligations.
It is not surprising that many academics now see that HR needs to become better
acquainted with skill sets traditionally associated with IR, such as employment law,
union management and the broad area of dispute resolution. The decentralised nature of
industrial relations relates not only to the legislation dealing specifically with the
conditions of employment. Much of the Equal Employment Opportunity (EEO) and
health and safety (H&S) legislation now imposes greater legal duties on employers in
relation to engaging their workforce in a proactive manner to ensure a safe and
discrimination-free workplace. For larger organisations, this is likely to involve a great
deal of union representation on how best to address those issues.
This raises questions about whether the IR and HRM approaches to managing the
employment relationship are incompatible because of their fundamental differences,
their frames of reference, and the theories that have been developed to support them.
That is, the process of IR, rules and regulations, tribunals and, particularly, trade unions
are all obstacles to the principles of HR engaging and developing their human
resources for maximum benefit for the organisation. These are, of course, weaknesses
in the HR theory because they cannot be avoided in an Australian context and must be a
starting point in any discussion by those in the HR field when looking at the utilisation
of employees for the organisation. The weakness of the IR approach is that the creation
of the nation’s unique system, with all of its rules and regulations, has still provided
Australian employers with a great deal of latitude on how to manage their employees,
that being managerial prerogative.
This lack of interest in ‘management’ activities has meant that outside of tribunal
decisions and the core elements of wages and legal conditions of employment, other
areas that should have been addressed by IR have not been addressed. For example,
areas such as employee engagement, job design and organisational structure have been
dealt with on the periphery, with little interest from academic researchers in the field of
IR. Even worse—particularly during the Accord era when multiskilling was first
discussed in a serious manner—much of the focus was on wage outcomes, not the
nature of work itself and the potential for individual employee growth through the
development of more interesting and challenging jobs. This, with an increasingly
decentralised system, means that IR is going to become more and more individualised
for both the organisation and employee, with few signs that future federal governments
want or aspire to a return to the ‘old days’ of high government intervention in the
employment relationship.
So is integration of the two approaches possible? Gardner and Palmer (1997)
argued that HRM and IR can and often do complement each other, since they are
essentially two separate areas of the field of employment relations. The term
employment relations has become increasingly common in recent years in both
Australia and the UK, and is used to describe many of the areas encompassing HR and
IR. These include the management of the employment relationship between an
individual employer and employee, as well as the wider macro-level activities and
relations that take place between the state and representatives of both employers and
employees—namely employer associations and trade unions—that can have an impact
at the micro level: the individual workplace.
At a practical workplace level, both HRM and IR strategies are commonly used to
address work employment issues. For example, an organisation may be having
problems with high levels of absenteeism because of conflict between employees and
management, thus resulting in a need for negotiation. The other side of the same issue is
that many IR issues, such as H&S and discrimination, can be a result of HR practices
that involve poor job design, lack of training or poor communication. Adding to this
concept of an almost symbiotic relationship between the HRM and IR is that in their
daily lives, regardless of their beliefs or adherence to HR theory and a unitarist
perspective, HR practitioners must operate within the classic Australian pluralist
framework, which actually exists and cannot be ignored. Any strategies developed to
gain commitment from employees, to reward and punish, even to hire, must be
considered in the context of the rules and procedures of our system, often requiring
consultation with the parties involved, which is a subject addressed in Chapter 12.
Adding to this legislative and regulatory burden is the increasing encroachment of
both federal and state legislation on the areas traditionally called managerial
prerogative, which we have written a great deal about in this book. Ironically, as the
old system of highly centralised industrial relations in which workplace conditions
were regulated by third parties, especially the tribunals, has retreated, with an
increased focus on workplace bargaining and a restriction of union rights, legislation is
increasingly imposing on employers’ processes for managing their employees’ duties.
This can be clearly seen in H&S legislation, which mandates consultation by employers
as a prerequisite in avoiding penalties, including prescribed representation of
employees and, through the HSR process, providing them with a great deal of power
unseen in many Western countries. This imposition has also been seen over the last
decade in the major legislation governing workplaces from the Industrial Relations Act
1988 onwards, with clear dispute–resolution procedures enshrined in both awards and
compulsory in all registered workplace agreements. In this sense, it can be said that the
radical decentralisation of our IR system should be characterised as one of
reregulation not deregulation.
But it isn’t only HRM that must accommodate its adversary. IR has also made great
changes over the last 30 years. Beginning with the Accord (see Chapters 1, 2 and 5),
trade unions were forced to confront areas that sat within the HRM sphere, such as
multiskilling, career paths and job classifications, as government strategies aimed at
addressing high unemployment and high inflation saw a pact with the leadership of the
union movement, resulting in pay rises if changes were achieved at the workplace level
that resulted in increased productivity. For trade unions—and HR practitioners, too—
these policies are not only challenging, but were not always popular when being
implemented. For many Australian workers at the time of the Accord, the role of the
ACTU in helping management remove hard-won employment conditions in the name of
flexibility was a bitter pill to swallow. This concern was echoed within many unions
and among union officials themselves.
Since the introduction of workplace bargaining, the areas associated with HR—
such as rewards, performance management (particularly when associated with
bonuses), job classifications and worker participation processes—are now important
facets addressed when discussions of pay rises occur. For the modern trade union
official dealing with members in some of the more traditional blue-collar industries—
who often have limited education, particularly in HR—this can be challenging, but it is
the new reality. Reliance on old structures for pay and conditions of employment are
now only indicative of low–paying casualised jobs, where scope for improvements is
limited.

HRM and IR: A new alliance?

We have seen that, regardless of the divide that exists between the fields of IR and
HRM—particularly in the theory—there is a clear relationship between them. The
decline in the old centralised system has not meant a withering away of the state, nor
have its rules and parties provided unfettered workplace powers for HR. Rather, as has
been explained, in many ways the old system just changed direction and there are now
even more prescriptive processes and procedures for people working in the HR field to
comply with. And while employer associations will always attempt to influence
governments to remove as much legislative red tape when it comes to the employment
relationship (e.g. deny union rights, remove unfair dismissal laws), the reality is that the
Australian people have demonstrated—most recently at the 2007 federal election when
the Howard Coalition Government was removed because of its unpopular Work
Choices legislation—that they have little appetite for unrestricted managerial
prerogative.
This means that the HR departments of Australian organisations, despite their desire
for total freedom in managing the terms and conditions of employment of their
employees, need to accommodate the pluralist framework of IR. It is a fact of life. This
is particularly so in those organisations where trade unions have a presence, where
organised structures such as delegates and HSRs operate, and in which working
conditions are subject to collectively bargained agreements. It must also be noted that
although trade union membership in Australia has dwindled over the last 40 years,
density in some particularly crucial industries—such as transportation, construction,
manufacturing and mining—remains significant. This is even more so in the public
sector, where rates of union membership easily outstrip the private sector. In
accommodating industrial relations in those organisations, HR needs to adapt an HRM
industrial relations policy that addresses a number of areas within the IR sphere, the
chief one being the approach to trade unions.

PRIMARY EXAMPLE 11.1

HR/ER Manager—East Melbourne
This leading Manufacturing Organisation is seeking an experienced and successful
Human Resources/Employee Relations Officer. This challenging role has a significant
Employee Relations focus overseeing the policies and procedures of more than 1400
employees spread across three Victorian locations.
Key Responsibilities:
Provide ER/IR support to supervisors and managers
Management of workplace investigations
Advise, train and assist Managers and Supervisors in disciplinary and performance
management processes
Lead negotiations, development and implementation of Enterprise Bargaining
Agreements
Provide advice and support for managers in the prevention and resolution of
workplace disputes and grievances
 Develop and drive internal education processes on ER/IR matters
Develop and maintain strong relationships with internal and external stakeholders
Key Achievements:
Relevant tertiary qualifications in HR or similar field
Experience interpreting or advising on the Fair Work Act or modern awards will be
highly regarded
Proven capability in providing timely commercial advice to clients, together with
excellent verbal and written communication skills, is essential
Exceptional administrative skills including strong attention to detail
High level interpersonal and communication skills
Effective time management skills
Ability to maintain confidentiality at all times

Interested in applying?
To be considered for this position, please submit your application below which must
include a cover letter and resume quoting job reference number #470.
Source: Based on a job advertisement from www.seek.com.au
Questions
1. What activities could HR do to help the organisation achieve its key strategic
business goals?
2. Which part of the position do you think is more important: the ER aspect or the
HRM aspect?

Trade unions
The degree to which trade unions within the organisation are embraced as legitimate
representatives of the workforce is dependent on a number of variables. For smaller
organisations in Australia without a union presence this does not apply. However, for
most of the larger organisations, with 500 employees or more, and those in crucial
sectors such as construction, transport, mining and manufacturing, it must be
considered. HR and senior management need to ask themselves whether trade unions
will be provided a right to be part of all facets of the employment relationship, or are
they to be resisted and where possible removed from decisions relating to their
members’ conditions of employment? This includes a decision on whether the
organisation will acknowledge multi-union or single union representation of its
employees, although under current legislation in Australia this remains an issue of
demarcation, as employees are not given a choice to join alternative unions other than
the one designated by the Fair Work Commission (FWC).
Fells (2003: 104–16) provides a framework that helps to understand how
management can approach its relationship with trade unions. The approach has four
distinct possibilities. In the first approach, Fells identifies organisations managing trade
union relations externally by referring industrial-relations issues to employer
associations or labour lawyers; this is to provide the firm with representation in
negotiations with trade unions, and in matters brought before industrial tribunals. The
second approach involves managing trade union relations internally through a specialist
department (e.g. HRM). In this case, the organisation, utilising its specialist department,
negotiates directly with trade unions, resulting in the bargaining agendas likely to be
more clearly defined in terms of the firm’s particular circumstances and needs. The
third approach involves managing trade-union relations internally through line
managers. In this instance, line managers are responsible for industrial-relations issues,
negotiating directly with trade unions and providing representation in the proceedings
of industrial tribunals. The fourth approach involves managing trade-union relations,
either externally through employer associations and labour lawyers or internally
through line managers or specialist departments; in this instance, the aim is not to
accommodate trade unions and industrial relations issues, but to seek their elimination
from the workplace altogether (Fells 2013).
The approach adopted will, in turn, help to educate the organisation about how it
will manage other areas of the relationship with unions, including the following (Fells
2013):
Negotiation: Clarifying what the issues are, and when the organisation will negotiate
with trade unions in the planning process—recognising that there are legislative
impositions on employers in relation to change in the workplace and a duty to consult.
Consultation: How the organisation will consult with employees and allow for union
involvement in the consultation process.
Dispute settlement: How the organisation expects industrial disputes to be resolved,
either in conjunction with trade unions or with no union input.
Responsibility: Clarifying who in the organisation will be responsible for industrial
relations issues. Is it the responsibility of the HR department, line managers (as many
organisations are increasingly aspiring towards), employer associations or other
specialists? The approach taken by management in organisations has enormous
implications for union/management relations (Fells 2003).
Once the policy has been established and the people responsible for HR and IR are
clear about the organisation’s position, there is an opportunity for HRM to be strategic
in its activities, aligning the people with the goals of the organisation. Of course, when
HR makes decisions about the utilisation of employees within organisations—such as
organisational structure, job design, recruitment, training or performance management
—a number of IR issues need to be constantly monitored to ensure that HR is not in
breach of existing laws relating to employment relations. They include the following
areas (Fells 2013).

Recruitment
Employment contract provisions (e.g. internally or externally).
Anti-discrimination legal obligations.
Equal employment opportunity legal obligations.

Selection
Anti-discrimination legal obligations
Equal employment opportunity legal obligations
Union involvement in the selection process (via shop steward, employee
representative or outside trade union official), or otherwise.
Organisation’s attitude to trade union involvement (supported or discouraged—
although it is illegal to ask candidates during the selection process).

Training
Employment contract provisions (e.g. study leave, skill development programs).
Equal employment opportunity and anti-discrimination legal obligations to be
observed in the selection of those to be trained.
Union consultation or involvement in the selection of training programs and who is
to be trained, or otherwise.

Performance appraisal
Employment contract provisions (e.g. grievance procedures when differences exist,
and by which criteria is performance judged).
Union involvement in the appraisal process, or otherwise.

Remuneration
Employment contract provisions (e.g. minimum pay rates, overtime rates, penalty
 rates, rates for skill, etc.)
Union involvement in job evaluation and skills auditing, or otherwise.
Individual common law agreements, union or non–union collective agreements—
which to apply?

OHS
OH&S legal obligations.
Union involvement in the formulation, evaluation and monitoring of OH&S policies
and practices.

Equal opportunity
Anti-discrimination legal obligations.
Legal obligations regarding equal employment for women.
Union involvement in formulating, evaluating and monitoring anti-discrimination and
equal opportunity policies and practices.
Union involvement in preparing equal employment for women in the workplace
reports.
Having a policy in the workplace identifying IR strategies and taking into
consideration the vast array of legislation that impacts on the employment relationship
provides a good basis for HR to operate. But those attempting change in organisations
—and in the contemporary business world change is constant—must approach
introducing new ideas and strategies with a great deal of care and thought. However,
this should not deter HR practitioners. Remember that much of HR theory—and modern
management theory—recognises that employee input in decision-making processes is
crucial if organisations are to have the flexibilty to meet the market conditions in an
increasingly unstable environment.
As discussed earlier, much of the legislation requires consultation from employers
on change, H&S and EEO strategies, so many workplaces already have existing
structures for communication and participation in the development of various strategies.
It is worthwhile at this point considering the impact of trade unions on HR activities, as
this is often a primary concern of HR practitioners when developing new strategies.
The evidence of trade union influence on organisations for better or worse is clear
(Blanchflower & Bryson 2002). Union presence can cause wage growth and decrease
productivity, both of which can be detrimental to overall organisation survival.
However, a great deal of research has also found that trade unions can be beneficial to
the productivity of organisations. Evidence suggests that practices approximating ideal
HRM techniques are more likely to be found in unionised workplaces rather than non-
union workplaces, because without the stimulus of a trade union presence, employers
are prone to manage labour poorly or in ways that go against the principles of HRM
(Brown 1994).
Of course, in discussing trade unions, it is all too common to be abstract and paint
them all as the same. The Australian trade union movement is what many within it term
a ‘broad church’. The union movement is made up of political factions with little in
common; some are well resourced and organised, others have few resources or
financial capacity to represent their members. This, at a time when unions are trying to
stay relevant to members and potential members, means that the traditional ‘us versus
them’ approach is slowly eroding, with many unions seeing that constructive
participation in workplaces ensures the ongoing viability of their members’ jobs—and
this is potentially beneficial to those employers and HR departments who embrace
them.

MEASURING HR POLICIES
As with any policy that has been developed in the workplace, a HR/IR policy needs to
be measured to gauge its effectiveness or otherwise. Many organisations with well
developed HR/IR policies create indicators to help them understand how their current
policy, and the processes associated with it, is working. Many of these indicators are
increasingly being used in HR, and new accounting measures related to sustainability
and corporate social responsibility include:
absenteeism rates
labour turnover rates
strike rates
number of stop work and grievance meetings
time lost to industrial activity (and associated costs)
employee satisfaction levels (Stone 2014).
The level of complexity of measurements—and the complexity of the strategies and
policies themselves—will be dependent at least in part on the organisational size and
structure. The methods of measurement of HR activities are becoming increasingly
sophisticated as senior leaders of organisations attempt to understand every area of the
organisation and the potential for improvement to give them a strategic edge in the
marketplace. Many Australian organisations already use complex reporting systems to
demonstrate current human resource performance to their shareholders. A look at any
annual report of Australian companies in the Australian Stock Exchange top 100
(ASX100) will have information such as workplace injuries, diversity strategies and
EEO details. All of this is not only to support perceptions of organisations being good
corporate citizens, but to help investors in deciding to buy or not buy particular stocks.
A common measurement employed by leaders in organisations is the balanced
scorecard. The Balanced Scorecard was developed by Kaplan and Norton (1996) as a
framework for measuring organisational performance. The scorecard measures key
performance indicators (KPIs) in four distinct areas:
financial KPIs—financial results and productivity
customer KPIs—customer satisfaction
process KPIs—the efficiency of existing business processes
people-related KPIs—the important component for employment relations, e.g. safety,
job satisfaction.

Balanced scorecard
An HR measurement tool. The scorecard measures financial, customer, process and
people-related key performance indicators to evaluate performance.

Key performance indicators

A metric or type of measure used by organisations to help them understand whether
or not they are reaching their objectives.

FIGURE Balanced Scorecard Strategic Management System

11.2
 Source: Adapted from Kaplan & Norton (1996)

People-related KPIs developed by organisations and HR practitioners can include

many different facets of employee relations, from learning and development through to
labour turnover and employee satisfaction. They are an essential component of HR
strategy to increase commitment and reduce staff turnover.
The Society for Human Resource Management in the United States provides an
example of the use of the balanced scorecard for reducing employee turnover in HR/ER
practice. These are outlined in Box 11.1.

Box 11.1 Balanced scorecard

Objective: Reduce turnover costs
Description: Develop effective recruiting methods and new-hire orientation methods
to optimise the retention of new hires
Actions
 Identify key attributes of successful employees who stay at the company for two or
more years.
Utilise technology more effectively for recruiting and screening applications.
Identify selection methods that will contribute to successful hires.
Integrate branding efforts into recruiting.
Revise the orientation program to ensure new-hire retention.

Measures
Cost-per-hire (financial).
Turnover rates and costs (financial).
Time-to-fill (business process).
Customer satisfaction with new-hire performance (customer).
New-hire satisfaction with orientation (learning and growth).
Supervisor satisfaction with orientation (learning and growth)
Source: Society for Human Resource Management (2015)

For HR practitioners who are given the responsibility of industrial relations within
an organisation, a number of duties need to be performed if the policy is to be
successful. These include:
coordinating industrial relations issues with HRM
acting as an internal adviser and educator to others in the organisation on IR laws,
such as line managers, supervisors, etc.
making representations before IR tribunals
negotiating with trade unions and their representatives within the organisation
(delegates)
assisting in the interpretation and application of anti-discrimination, EEO and
OH&S law within the firm
interpreting the terms and conditions of employment contracts and ensuring
compliance with their provisions
developing and managing grievance procedures and dispute settlement processes
identifying potential workplace conflict, and using organisation processes and
people to help reduce or avoid conflict.
These all provide challenges on a number of levels. Many HR practitioners
discover that their studies provided very limited focus on legislation, tribunals, and the
roles of employee and employer representatives. Furthermore, what little of such
matters was taught tended to be taught at an introductory level, with limited practical
knowledge gained. To be adequately skilled in the complexities of employment law,
many HR practitioners undertake further training through associations such as the
Australian Human Resources Institute, which offers numerous courses for HR
practitioners who have been given the responsibility of undertaking duties traditionally
associated with industrial relations.

Australian Human Resources Institute (AHRI)

The national association representing human resource and people management
professionals.

Box 11.2 Managing legal issues across the employment

lifecycle
The ‘Managing the legal issues’ workshop is designed for new and emerging HR
managers to keep you up to date on the legislative and regulatory changes that
influence the organisation’s risks, rights and responsibilities.
Course overview
Recent decisions by courts and tribunals about accessorial liability have meant that
HR managers and other senior officers within employing organisations are finding an
increasing obligation to manage the legal risk of their businesses as well as their
personal legal risk.
It’s been over five years since the Fair Work Act 2009 commenced, bringing with
it a new breed of litigation for individuals and employee organisations.
Understanding the areas of risk arising under laws that govern Australian workplaces
is critical to issues such as recruitment, business reorganisations, dismissals and
general employee engagement.
This course is designed for new and emerging HR managers to keep you up to
date on the legislative and regulatory changes that influence the organisation’s risks,
rights and responsibilities.
Source: AHRI (2015)

Box 11.2 provides an example of an AHRI professional development course for HR

practitioners.
 Within the smaller organisations that dominate the Australian economy, the policies
discussed in this section are normally carried out by a ‘juggler’—a person or group of
people who have many different roles and responsibilities. This should not preclude
those in small organisations from adopting some form of HR/IR policy, particularly in
those industries where union presence is common, such as construction and transport.
However, those who do attempt this type of policy in a small organisation will need to
be less ambitious—in the initial stages at least—in achieving major progress on the
measures listed earlier, as many other factors and variables can have a greater impact.
Those undertaking the role should seek assistance from their relevant employer
association, legal firm or association (such as AHRI) to help them understand how they
can combine HR and IR, and to ensure their actions lead to successful implementation.

SUMMARY
The Australian IR system has changed dramatically over the last 30 years from a
centralised to a more decentralised system, with a focus on the workplace in resolving
conflict and, to a degree, determining conditions of employment. The emergence of a
new form of management focusing on the human resources in organisations has changed
the approach to managing employees.
This chapter explored the theory and practice of HRM and attempted to address the
implications of the theory for IR. For some time now, IR has been perceived as an
outdated concept of ‘us and them’ employment relations. Certainly, little attention is
given to the rules, procedures and parties involved in IR in HR textbooks. Rather, the
focus is on the individual and strategies to motivate them via training and rewards.
Much of this HR approach is taken from fields such as psychology and management,
and provides little consideration for the main component of industrial relations—
unions, employer associations, tribunals and myriad regulations and laws—that impact
on the very strategies designed to achieve organisational success through efficient
utilisation of human resources. On the other hand, the IR field has until recent years
been mostly silent on many key aspects of the employment relationship that HR focuses
on, such as job design, performance management and job satisfaction. These were
considered areas of managerial prerogative that the tribunals, for the most part, were
historically reluctant to involve themselves in. The result has been a large divide
between the two fields.
Recently some theorists have begun to question this divide, and its relevance to the
contemporary workplace. Increasingly, HR is acknowledging—at least in Australia,
with its unique system of regulating employment—that to develop any strategies that
will lead to an enhanced use of human resources, HR practitioners must consider the
industrial relations implications before implementing such strategies.
Likewise, the IR field is starting to bridge the divide and turn its attention to those
areas previously ignored, such as job design, job satisfaction, motivation and
performance management. Some of that attention has been forced on many participants
in the field—particularly trade unions—as they have become increasingly workplace-
focused in a bid to achieve real gains in employment conditions and wages for their
members and potential members. For employer associations, the same challenges faced
by their union counterparts mean that if they are to remain viable they need to better
understand how they can assist organisations, particularly their smaller member
organisations, in dealing with HR issues. The final part of this chapter provided some
ideas about how the IR and HR approaches can be integrated. The ideas are by no
means prescriptive, as organisations differ in many ways including size, industry, skills
and technology.
What is hoped is that by combining the twin approaches of HR and IR, Australian
organisations will be able to make better sense of their employees and their conditions
of employment, and hopefully use that understanding to contribute to more successful
organisations in which wage growth, job satisfaction, and improved employment
conditions are seen as invaluable for employers as they strive for success, and for
employees as they develop their careers.

REVIEW QUESTIONS
1. Who first used the term human resources?
2. What are the typical duties of an HR practitioner?
3. What is hard and soft HRM?
4. What is the balanced scorecard?
5. What is strategic human resource management (SHRM)?
6. What are the competencies needed by HR practitioners?
7. What strategies does HR use to reduce conflict in the workplace?
8. Using Fox’s frames of reference, what perspectives are IR and HRM?
9. How can HR policies be measured?
10. What are some of the duties of HR practitioners who are given the IR
responsibility within an organisation?

Visit Oxford Ascend for
further revision material
 CASE STUDY WHEN PUSH
11.1 COMES TO SHOVE
Business is not good for Fortitude Transport Company (FTC), based in Western
Sydney. For the third year in a row, the CEO has announced a financial loss. The
280 employees are worried about what the future holds.
At an emergency meeting held yesterday, the CEO demanded changes to the
way that ‘things are done around here’. Suggestions included redundancies, more
casual workers, 12-hour shifts and performance-based pay. The main trade union
with membership in the company, the General Workers Union of Australia
(GWUA), wants to meet with the CEO next week.
The CEO has requested that Jan Fenelly, the HR Director, advise on the
possibility of making the changes and report back to him by Friday.
Jan has asked you to answer the following three questions to provide the
information she needs to write a report to the CEO.

Questions
1. What workplace laws, if any, will impact on the proposed changes?
2. What rights does the GWUA have in representing their members at the
workplace?
3. What implications could the changes have on HR strategies?

CASE STUDY TROUBLE AT

11.2 FRESHLY BREWED
COFFEE GROUP
Jane Withers shook her head. ‘Under no circumstances will this organisation,
which I have built from the ground up, be stood over by union thugs!’
An hour earlier, Beth Anderson, an organiser from the Retail Workers Union
(RWU) had called and demanded a meeting to discuss some issues that her
‘members’ had raised with her. This was the first time that Jane had heard of the
RWU, or that there were RWU members in her company.
‘I treat these workers like family!’ scowled Jane Withers. She was sitting
opposite Kate McMahon, the director of the small HR department responsible for
training, recruitment, wages and performance management.
‘How are we going to handle this?’ asked Jane. ‘I do not want this company to
go the way of other companies in this industry. Before you know it, there will be
picket lines at the front door scaring away the customers!
‘Kate,’ Jane went on. ‘Do something! I want an answer by the end of the day
about how we stop this insanity—even if it means we fire the ringleaders.’

Questions
1. Does the management of Freshly Brewed have to meet with the RWU?
2. What potential approaches can HR take in dealing with the RWU?
3. What possible implications could there be for the employee–employer
relationship if management refuse to meet with the union?

FURTHER READING
Black, B. (2011). Partisan politics and varieties of employment relations and HRM.
International Journal of Human Resource Management, 22(18): 672–691.
Boxall, P. (2014). The future of employment relations from the perspective of human
resource management. Journal of Industrial Relations, 56(4): 578–593.
Burgess, J., Connell, J., & Winterton, J. (2013). Vulnerable workers, precarious
work and the role of trade unions and HRM. International Journal of Human
Resource Management, 24(22): 4083–4093.
Carol, G., & Meyer, D. (2013). Union presence, employee relations and high
performance work practices. Personnel Review, 42(5): 508–528.
Godard, J. (2014). The psychologisation of employment relations. Human Resource
Management Journal, 24(1): 1–18.

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WEBSITE
www.ahri.com.au
Australian Human Resources Institute
 Chapter
Twelve
ENGAGING LABOUR IN THE
WORKPLACE

INTRODUCTION
Managerial policies and employment conditions associated with workplace change
have long been a major source of grievance in relations between employers and
employees. The constant pressure to have a flexible workforce that is capable of
adapting quickly and readily to accommodate dynamic market conditions is a key issue
for organisations, not only to prosper but just to simply survive. It has consequently
grown in importance for organisations to ‘carry’ employees with them, not only in their
doing the allocated work expected, but also in a manner that ‘goes beyond the contract’;
to embrace change willingly and readily (Herriot 2013). One of the key organisational
mechanisms used to encourage the emergence and development of this type of
workforce is human resource management (HRM). HRM practices are associated with
workplace participation and involvement (Cummings & Worley 2015). Some special
reckoning of the developing trend in this area is worthwhile for two reasons. The first
reason relates to employee participation and employee involvement as they are both
associated with the operation of HRM and industrial relations (IR) practices: the twin
elements that make up the contemporary employment relationship. The coexistence or
otherwise of these practices thus requires certain managerial decisions be made about
the manner and scope of workers’ inclusion in or exclusion from the decisional
processes of firms (Wilkinson et al. 2014). The second reason flows from changes in
the rules and institutions of IR, represented in the consultation provisions required in
the content of enterprise agreements. Coupled with the growing HRM interest in this
area (e.g. Kaufman 2014), there has been a concerted effort within organisations to
identify and apply various forms of labour inclusion as a way of shaping workplace
behaviours and attitudes to accord with desired outcomes. Yet for all this renewed
interest, it is also an area of management that is still often confused (Huq 2010: 5), even
if the general idea is accepted that encouraging employee participation in managerial
decision-making processes fosters better workplace relations and contributes to
organisational effectiveness.

Employee participation
Power-sharing arrangement in which employees (or their representatives) have legal
rights of representation for exerting some influence or control over managerial
decisions.

Employee involvement
Application of various mediums and forums that provide communication links
between management and employees for gathering and disseminating information.

Enterprise agreements
Agreements at individual enterprises that typically set employment conditions for
groups of workers.

Labour inclusion
Generic term encompassing both employee participation and employee involvement.

This chapter aims to clarify some of the main issues relating to this area of labour
management. It outlines the most significant definitional and theoretical issues relevant
to employee participation and involvement. Furthermore, it looks at the different
perspectives held towards these forms of labour inclusion and provides some account
of how and why they are engaged and applied by firms.

DISTINGUISHING EMPLOYEE PARTICIPATION AND

EMPLOYEE INVOLVEMENT
Determining the criteria that lends precise meaning to the terms employee participation
and employee involvement is not a straightforward task. One primary reason for this is
that the methods and outcomes involved in one form of labour inclusion often overlap
those of the other. As a consequence, it is common to find employee participation being
equated with feelings of involvement on the part of workers, just as employee
involvement is often equated with feelings of participation by the same (Lewis et al.
2003: 248). This has often seen the terms being thought of synonymously—an
oversimplification that sees them being applied in a confused manner. Another reason
for the confusion is that there are a range of alternative terms that encompass practices
that are similar to participation and involvement arrangements. Terms such as
codetermination, social partnership, industrial democracy, worker empowerment,
joint partnership, high involvement work systems, to name a few, have all been used
to describe practices that are similar to employee participation and involvement
(Abbott 2015). In fact, they are subcategories that fall within the criteria distinguishing
these two forms of labour inclusion. Even here, we use the added term labour
inclusion for describing both employee participation and involvement generically. In
the wider literature, the two forms of inclusion often draw on the exit-voice dichotomy
that weighs into the choice confronting employees when in conflict with the
organisations they work for, the term voice being used in the same generic sense (e.g.
Benson & Brown 2010; Wilkinson et al. 2014).
Although there is some overlap between the two concepts and the existence of
alternatives, at least in the terminology, there are nonetheless distinguishing features
that allow for a contrast to be made between employee participation and employee
involvement. Such a distinction can be made by making reference to the type, scope,
purpose and level of employee participation and involvement, as well to the personnel
participating or involved (Lewis et al. 2003). It is to these distinctions we now turn,
starting first with employee participation.

Employee participation
The ‘intended purpose’ of employee participation is to establish power-sharing
arrangements between employees and management. This is to implement practices
within organisational processes that enable employees (or unions acting on their behalf)
to exert some measure of control or influence over managerial decision-making. As a
possible range, it can result in employees exerting less power in decisional processes
than management, sharing power equally with management, or having more power than
management. The ‘type’ of participation can involve the right to be consulted with the
power to reject an organisational decision, or the right to make a decision jointly with
management, or the right to exercise sole control over a decision. The ‘scope’ of
participation can range from rights of participation over peripheral matters (e.g.
choosing what colour to paint the tea room), to rights of participation over core matters
(e.g. what strategic objectives should be pursued). It can also cover a wide array of
matters (e.g. all functional areas of a HRM program) or be limited to a small number of
matters (e.g. occupational health and safety). The ‘level’ of participation can range
from representation provided at board level, to representation provided in works
councils, OH&S bodies or organisational committees assigned to negotiate collective
bargaining agreements. And, finally, the ‘personnel’ participating can be appointed or
elected representatives drawn from the workforce, or professional trade union officials
acting on behalf of the workforce (Poole 1975; Hayter 2011).
Thus, employee participation provides employees with the right to veto certain or
all decisions reached by management, whether in the formulation of decisions or once
decisions have been made. It assumes different power centres exist within an
organisation and power-sharing arrangements are necessary to ameliorate the potential
for conflict between them. It requires engagement with employee representatives or
trade union officials, and that engagement can take place at one or a number of levels
within an organisation (Kochan et al. 1986). The provision of managerial information
to employee representatives or trade union officials is a usual prerequisite of this type
of power-sharing arrangement, with such disclosures being necessary to facilitate the
processes of participatory bargaining (Clegg 1976; Creigton et al. 2012).
There are a number of different manifestations of employee participation. The most
common form in mature industrial economies is ‘collective bargaining’, although ‘joint
industrial councils’ and ‘joint consultative committees’ involving employee
representatives are not uncommon (Dundon et al. 2004). In Europe, ‘works councils’,
‘worker directors’ and ‘codetermination practices’ that involve power-sharing
arrangements between management and employees and the joint regulation of industry
are also forms of employee participation. ‘Social partnership’ arrangements that confer
legal rights to worker collectives (e.g. by way of European Union directives) in
decisions relating to termination, investment and redundancy (among other things) are
also a form of employee participation (Marginson et al. 2013). ‘Industrial democracy’
is another form of employee participation, and is best typified in cooperatives where
employees own the firms they work for and elect their own management teams (Foley
2012). ‘Guild socialist’ practices are a further form of employee participation, in this
instance involving key industries being owned by the state and managed in concert with
trade unions, a practice prevalent in post-war Britain up until the late 1970s (Cole
1921; Bolweg 2012). ‘Syndicalism’ is perhaps the most extreme form of employee
participation, one that rejects the role of management and the state altogether by
conferring all decisional rights to trade unions and worker collectives (Foster & Ford
1990); a practice long advocated by adherents in the Basque counties of Spain.

Joint consultative committee

A decision-making process where employee representatives are consulted before
important managerial decisions are taken, with the expectation that management
respond to any concerns raised by employees by way of argument or action.

Codetermination
Decision-making processes that confer legal or agreed voting rights on employee
representatives on the supervisory boards of organisations.
 Figure 12.1 depicts the extent of employee participation in relation to different
processes of engagement in this area. Participation is deemed to be low when
managerial decisions are taken autonomously, or when it simply involves the
dissemination of information to employees or consulting them about a proposed
decision. On the criteria listed above, these particular processes are not what might be
called genuine forms of employee participation. One commentator refers to them as
being little more than pseudo forms of participation (Day 2014). Such practices are
better seen as falling within the definitional province of employee involvement, which
we turn to next. They are listed here in deference to an earlier comment that suggested
employee involvement must, by reasoned necessity, consist of some degree of
participation on the part of workers, even if that participation only involves listening to
a proposed decision. Employee participation is deemed to be high—and therefore
genuine—when there are formalised power-sharing arrangements in place; proposed
decisions are subject to consultation processes and the power of veto on the part of
employees, and when employees are able to exert some measure of influence or control
over the regulation of decisional outcomes.

Employee involvement
The purpose of employee involvement is to establish mechanisms of communication
between management and employees, and is reflected in the managerial ability to
promote organisation-wide awareness of strategic objectives and gather operational
knowledge about the performance of work tasks. The ‘type’ of involvement can range
from the dissemination of information, the gathering of suggestions and the operation of
non-veto forms of employee consultation to two-way communication via joint
committees, the undertaking of work by empowered teams, and the integration of
individual work effort and financial rewards (Gollan 2007). The ‘scope’ of
involvement can cover task-level subjects, or strategic matters, but in each case is
limited to generating awareness of an organisation’s strategic and operational goals
among employees, soliciting information and know-how from employees about how
work might be carried out more effectively, and providing employees with explanations
and justifications for decisions reached by management. The ‘level’ of involvement can
be at the board level or the task level, and the ‘personnel’ involved are individual
employees themselves as opposed to appointed or elected representatives or trade
union officials (Biasi 2014).

FIGURE Degree of employee participation

12.1
 (Lewis et al. 2003: 253)

Thus, employee involvement may allow some measure of influence to be exercised

by workers, but they have no formal rights to veto decisions reached by management. It
assumes little or no conflict of interest exists within an organisation, and that the
establishment of appropriate communication networks is all that is required to ensure
employees are made aware of where their true workplace interests lie. The provision
of information is thus a prerequisite to achieve this end, encouraging employee attitudes
that are congruent with those espoused by managers and the organisational goals they
wish to achieve. It is also a prerequisite to providing employees with data necessary to
achieve work tasks more effectively and in accordance with the strategic goals of the
organisation. Soliciting information from employees about how work might be
performed more efficiently is a further prerequisite, one that is capable of including
employees without threatening the decision-making prerogatives of management
(Abbott 2015).
A range of practices fall within the realm of employee involvement. Some practices
take the form of communicative involvement, which include ‘team briefings’, ‘company
journals’, ‘financial reports’, ‘videos’ and ‘audiotapes’, the aim being to use these
media to disseminate organisational information to employees. They also include such
things as ‘quality circles’, ‘managerial response loops’, ‘suggestion schemes’, and
‘employee surveys’, which, in addition, are designed to access employee knowledge
and know-how as a means of resolving operational problems and generating employee
cooperation. They further include ‘joint consultation committees’, ‘working groups’ and
‘staff forums’, which, in addition, are designed to provide information and test
employee reactions to management proposals (Gollan 2007). Other practices take the
form of task-level involvement, which include ‘job redesign’, ‘teamworking’ and ‘total
quality management’, with the aim being to educate and empower employees to solve
workplace problems without challenging the overall discretion of management. Other
practices take the form of financial involvement, which includes ‘profit-sharing
programs’, ‘share-owning schemes’ and ‘bonus systems’, which are methods used to
link employee work effort to operational performance or organisational success
(Gollan et al. 2014) (see Table 12.1).

Table 12.1 Categories and forms of employee involvement

Types of employee Examples of related forms Management

involvement rationale

Communicative Team briefings; other briefing groups; To provide

involvement: corporate newspapers and reports information;
Information aimed at employees; videos; uniform messages;
provision audiotapes; email; recorded telephone to be educative or
(downward briefings. re-educative.
communication)
Communicative Briefing groups with feedback and To access
involvement: managerial response loops; quality employees’
Problem-solving circles, quality action teams, experience and
(two-way suggestion schemes employee surveys. skills; gain
communications) cooperation and
opinions.
Communicative Joint consultation committees, working To provide
involvement: parties or groups; staff forums. information and
Consultation (two- test reactions.
way
communications)
Task-level Job redesign; job enlargement and job To be re-
involvement enrichment; work reorganisation; educative,
teamworking; (semi-) autonomous providing greater
working groups; total quality levels of
management motivation.
Financial Employee share ownership plans; To be re-
involvement profit- related pay; performance- educative,
related pay; bonus systems providing
incentives and
promoting effort

Source: Derived from Lewis et al. (2003: 262)

To conclude this section, Table 12.2 summarises the key differences between
employee participation and involvement across several dimensions. One observation to
consider when reading the table is that over the past decades there has been a shift from
the collectivist arrangements represented in the practice of employee participation to
more individualist arrangements represented in the practice of employee involvement.
This has been the product of changes in industrial relations that have taken place at a
time when employers are introducing new schemes aimed at securing the loyalty and
commitment of workers. This is not to say that employee involvement has overtaken or
is displacing employee participation. Both forms of labour inclusion are found in many
Australian workplaces. Instead it is a by-product of the growing proliferation of HRM
practices operating within the regulatory framework of the prevailing IR system
(Wilkinson et al. 2014). As such, employee involvement practices—which play a
significant role in the operation of HRM programs—are often found to ‘coexist’ with
employee participation practices that play a significant role in the way the IR matters
are negotiated and settled.

Table 12.2 Dimensions of employee participation and involvement

Employee participation Employee involvement

Fostered by trade unions through government Fostered by managerial interests

regulation on voluntary basis
Pluralist and rights-centred Unitarist and business-centred
Collectivist in nature Individualist in nature
Intended to gain inclusion via employee Intended to gain employee
representations to their employing firms commitment and contribution
Indirect means of inclusion Direct means of inclusion
Power-centred Task-centred
 Source: Derived from Lewis, Thornhill & Saunders (2003: 259)

PERSPECTIVES HELD TOWARDS EMPLOYEE

PARTICIPATION AND INVOLVEMENT
The closing comment of the last paragraph—that employee involvement practices
‘coexist’ with employee participation practices—brings us once again to the twin
paradigms that make up the concept of employment relations. The coexistence of
employee participation and involvement practices within individual firms harks back to
the problems and possibilities of coexistent HRM and IR practices referred to in
Chapter 11. It is therefore useful to pay some attention to how participants may
perceive the merits or otherwise of these two forms of labour inclusion. This is
because the problems and possibilities of coexistence within an employment relations
context are linked to how and why they may or may not be accepted and adopted by
employees and managers alike. One way to look at this question is to view employee
participation and involvement through the lens of the three ‘frames of reference’
referred to in Chapter 1, which were identified in terms of their unitarist, pluralist and
radical reasoning. It is to these frames of reference and how they shape people’s
perceptions and beliefs towards this area of management that we now turn.

Unitarist perspective
Unitarism is predominantly individualistic, holds workers and managers to have a
common interest in the success of the firms they work for, and views workplace conflict
as not being an inherent part of workplace relations. Indeed, the unitarist view is that
trade unions and collective bargaining are the primary cause of workplace conflict
because they offer alternative agendas and compete for the loyalty of employees. These
understandings have been a consistent feature underpinning the assumptions of HRM
and most managerial thinking towards labour inclusion. The ‘common interest’
assumption acknowledges the need to provide workers with information and consult
with them on the operation of work tasks. Effective communication systems are
important for the achievement of these ends, not only because they help employees to
identify their interest with the success of the firms they work for, but also because they
provide firms with feedback on how well their work tasks are functioning (Fox 1966;
Ress & Smith 2014). Thus, engaging individual employees along both of these
dimensions—by making them feel worthy as recipients of organisational information,
and making them feel valuable as contributors to the functioning of work—can only
enhance their productive efforts and sustain their motivation and commitment towards
the achievement of organisational goals and practices. Such views are consistent with
the aims of employee involvement, which are geared towards providing employees
with a limited level of influence over how work is scheduled and performed, as well as
allowing for the dissemination of information for the purpose of educating workers
about where their ‘true’ interests lie (Gollan et al. 2014). Trade unions and collective
bargaining are consequently seen as counterproductive to these efforts; the former
providing alternative sources of authority that undermine the commitment and loyalty of
employees towards the firms they work for, the latter serving to frustrate the lines of
communication by providing alternative visions and expectations of work. Hence,
employee participation—with its collectivist outlook and power-sharing arrangements
involving employee representatives and negotiating frameworks—is not viewed
favourably (Hollenshead et al. 2003).

Pluralist perspective
Pluralism is predominantly collectivist, holds workers and managers to have different
expectations and aspirations towards work and views workplace conflict as a
perennial part of workplace relations. Because of this ever-present potential, such
conflict is thought best managed through the agencies of trade unions and collective
bargaining. These understandings inform the establishment and operation of IR rules
and institutions. The ‘oppositional interests’ assumption acknowledges the need for
agencies and processes to limit the potential for conflict between the two sides of
industry, such that effective regulatory systems and legitimate representatives capable
of articulating and mediating diverse workplace interests are necessary for this purpose
(Fox 1966). Thus, engaging employees along both dimensions—by including them in
institutionalised power-sharing arrangements and recognising the legitimacy of their
representatives—can only serve to ensure workplace conflict is kept in check to the
benefit of organisations and those in their employ (Hollinshead et al. 2003). Such
views are consistent with the aims of employee participation, which are geared
towards providing employees with genuine influence and control over their working
lives through the establishment of collective forms of representation and negotiation.
Engaging individual employees in information-sharing arrangements is consequently
seen as counterproductive to these efforts, serving only to supplant the inherent causes
of conflict and thereby channelling it into other more covert forms that are harder to
assess and manage (Roche et al. 2014). Hence, employee involvement, with its
individualist assumptions and communicative arrangements that leave managerial
prerogatives unchecked, is viewed unfavourably (Wilkinson et al. 2014).

Radical perspective
Radicalism provides an overall critique of unitarist and pluralist views of employee
participation and involvement. Like pluralism, it is collectivist in its values and
orientations, and holds oppositional interests and conflict between employer and
employee to be an inherent part of workplace relations. However, conflict is not
considered to be the product of different workplace expectations and aspirations, but is
seen as the consequence of wider social conflict between competing class interests—
between the owners of the means of production (the bourgeoisie) and those who only
have their labour to sell (the proletariat). Employment relations is thus seen as only
one part of the organisation of society, that part being its principal mode of production,
which confers inordinate power on the bourgeoisie to shape society’s institutions and
ideologies in ways that best reflect and serve their particular interests (Fox 1974). The
interpretation of labour inclusion practices under this analysis takes two forms; one
supportive of such practices, the other hostile. Those supporting employee participation
and involvement argue that they collectively represent a form of ‘encroaching control’,
and should therefore be welcomed as providing employees with the opportunity to
impose their will over managerial decision-making. As this control becomes more
intrusive it can only become more incompatible with the interests of the bourgeoisie,
which, given certain conditions, can only facilitate the development of a revolutionary
consciousness among the proletariat (Kelly 2002). Those opposing such practices argue
that they obfuscate the antagonistic class relations that would normally flow from the
capitalist organisation of society. They do this by legitimising and institutionalising
relations between labour and capital, thereby integrating the proletariat into the existing
economic and social order that serve the interests of the bourgeoisie. Thus, rather than
encroaching control leading to the development of a revolutionary class-consciousness
capable of challenging the existing capitalist order, employee participation and
involvement are seen as merely another mechanism for perpetuating the ongoing
domination and exploitation of labour. The advocacy is therefore to stay aloof from
such schemes and for workers to adopt an independent defence of their interests so that
they might come to appreciate the link between workplace conflict and the exploitative
nature of the capitalist system as whole, and in so doing shift the struggle for
emancipation from the economic arena to the political arena (Martinez-Lucio 2010).

Bourgeoisie
Marxist term for an owner of the means of production, in which the employers buy
the labour power of employees in capitalist labour markets.

Proletariat
Marxist term for waged labour, in which employees sell their labour power to
employers in capitalist labour markets.
Frames of reference: Summing up
Some brief observations and summary points can be made on the back of these
interpretations. Unitarist assumptions are strongly associated with HRM programs,
which in turn are favourably disposed to the practice of employee involvement.
Pluralist assumptions are strongly associated with the rules and institutions of industrial
relations, which in turn are favourably disposed towards the practice of employee
participation. Radical assumptions are not associated with either HRM or industrial
relations and, apart from the exception of ‘encroaching control’, are not favourably
disposed to either form of labour inclusion. Employment relations, as argued in Chapter
11, combine both HRM and IR practices and, when coexisting within the confines of a
single organisation, by necessity they must include both employee participation and
involvement practices. What level of importance is placed on one practice in relation
to the other, however, will largely depend on what role trade unions are expected to
play in the labour management process and what regulatory requirements need to be
observed when formulating and settling the rules of work.
A study by Fells (2003) provides useful distinctions between different
organisational strategies that can be used for thinking about the coexistence or
otherwise of the two forms of employee inclusion. The first are management-driven
strategies framed by unitarist assumptions, which apply HRM and consequently can be
expected to place a higher level of importance on employee involvement than employee
participation. Conversely, gatekeeper strategies framed by pluralist assumptions will
recognise or accept the legitimacy of trade union involvement, and so could be
expected to place a higher level of importance on employee participation than
employee involvement. Alliance strategies are the ‘middle ground’, as they combine
both sets of assumptions and could be expected to place equal importance on both
forms of labour inclusion. This is not to say that employee participation will not figure
in management-driven strategies if such strategies are expected to operate within IR
regulatory frameworks. Nor is it to say that employee involvement will not figure in
gatekeeper strategies if such strategies are seen as beneficial for the effective operation
of HRM programs. Only that the locus of importance placed on one in relation to the
other will be largely determined by the dominant managerial perspective held towards
the role of trade unions and the imposition of regulatory frameworks that provide for
their inclusion in the decisional processes of management.

Management-driven strategy
Organisational model in which a business strategy is formulated, directed and
controlled by management.
 Gatekeeper strategy
Organisational model in which a business strategy is formulated, directed and
controlled with input from the representation and involvement of trade unions.

Alliance strategy
Organisational model in which a business strategy is formulated, directed and
controlled through a combination of input from employees and trade unions.

To the extent that radical assumptions are assimilated and applied by workers (or
representatives acting on their behalf), the managerial strategies outlined in the
previous paragraph would seem to lie outside the realms of possibility. HRM programs
would be seriously challenged if the associated dissemination of information and
consultation processes involved (i.e. employee involvement) were held by employees
to be merely a ploy aimed at falsely acculturating them towards accepting managerial
determinations of their ‘best interests’. Likewise, the rules and institutions of industrial
relations would be seriously compromised if the associated power-sharing
arrangements (i.e. employee participation) were held by employees to offer little more
than a short-term palliative to their ongoing sense of exploitation and domination.
Needless to say, such sentiments, wherever they occur, would be at great odds with the
conduct of workplace relations as we have set out in previous chapters. This is not to
say that a Marxist interpretation is unimportant for understanding the political forces
and social influences that shape the perceptions employees hold towards the processes
of employee participation and involvement. For there is a good amount of scepticism
and cynicism held by employees towards the ‘true’ intentions of employee-involvement
practices, just as there is a good amount of reticence from employees towards outcomes
negotiated on their behalf in power-sharing arrangements. These inclinations, however,
have rarely been of an order that have seen employees reject the offer of inclusion
when the opportunity has arisen.

EMPLOYEE PARTICIPATION AND INVOLVEMENT IN

PRACTICE
In this section we look at the some of the many versions of employee participation and
involvement. Before that, a couple of things are worth mentioning. First, it is not
possible to canvass all the practices that encompass these forms of labour inclusion; the
following are representative examples only, beginning with the most inclusive forms of
labour management in this area, and concluding with the least. We could think of the
various examples laying at different points along a continuum of inclusion. Second, the
explanations offered in each listing provide only the briefest of outlines, and so be
aware that there are wide variations in the practices being noted. That said, what is
offered should lend a general understanding of the different forms of employee
participation and involvement practices engaged by organisations.

Employee participation practices

Industrial democracy involves organisational designs that are capable of incorporating
employee representation within normal managerial structures. It is a form of employee
participation similar to the types of civic representation found in the processes and
structures of political democracies. Industrial democracy involves the formal election
of representatives from pluralist segments of the working population engaged within an
organisation, who then have voting rights over the decision-making processes that
govern that population. It further involves structures and processes by which leaders
might be elected to positions of power, how they might be removed from those
positions and under what circumstances (Poole 1986). And it also involves the
performance of those holding representative position being subject to appraisal by the
working population through periodic voting in elections. Extreme forms of industrial
democracy of this type are found in firms operating as worker cooperatives, some of
which are found in parts of Spain and South America. Milder variations are sometimes
equated with forms of employee participation on organisational boards conferred by the
industrial laws of some countries (Coates & Topham 1975; Foley 2012).

Industrial democracy
Organisational model in which managerial positions and decisions are subject to the
electoral will of organisational members.

Collective bargaining is the most common form of employee participation, and

typically establishes the terms and conditions under which employees work for
employers. Agreements concluded via collective bargaining normally include a range
of ‘substantive rules’ that deal with pay rates, overtime rates, travel allowances, sick
pay, shift rates, maternity leave, holiday leave, bereavement leave, hours of work, shift
rosters, etc. They also include ‘procedural rules’ that deal with methods for negotiating
the settlement of substantive rules, processes by which grievances and disputes are to
be settled, and guidelines by which recruitment, training, dismissal and redundancy are
to take place. Trade unions are typically integral to the establishment and monitoring of
these rules, although bargaining can take place more directly with workplace
representatives. The negotiations involved enable employees to participate in the
formulation and application of management policies, and also oblige employers to
abide by the terms and conditions agreed upon (Poole 1976). However, this will
depend upon a number of factors. First, a common understanding needs to be reached
between both sides over what areas are to be jointly controlled. Second, a common
understanding needs to be reached that acknowledges that each side has the legal right
or the ability to veto certain actions undertaken by the other. Third, management needs
to accept that some of its policies and actions will need to be approved by employees
and their representatives before they can be implemented. Fourth, employees and their
representatives will need to be willing to be involved in processes of managerial
decision-making. And, finally, employees and their representatives will need to have
sufficient power to enforce their desire to be involved in managerial decision-making
(Clegg 1976; Colling & Terry 2010).
Codetermination is a common practice in much of Western Europe. It is a mode of
employee participation that gives employees a legal right to elect a certain proportion
of the supervisory boards of public and certain private sector companies. These elected
board members are commonly known as worker directors, and they are legally obliged
to act in the best interests of the firms over which they preside. They have the right to
vote on the appointment and dismissal of the management board. (Listed European
business and public sector corporations operate under a dual executive administration,
unlike most companies in English-speaking countries which operate under a unified
form of executive administration.) (Sandrock & du Plessis 2012). Employees also have
rights to operational and strategic information and bear co-responsibility for the
supervision and operation of the organisation. Employee representatives typically
constitute one-third of the board membership, although in some German companies —
notably in the coal and steel sectors—employees hold equal membership with
shareholder representatives (Nutzinger & Backhaus 1989; Addison 2009).
Joint consultative committees allow employee representatives to be consulted on
managerial decision-making; their operation broadly spans both participation and
involvement practices under the definitions mentioned earlier. Although the committees
normally have no rights to veto decisions, management is usually expected to justify its
positions and to modify its proposals on the back of reasoned arguments offered by
employee representatives. They can be constituted at a strategic or operational level,
and they typically meet on a regular and formalised basis. Employee representatives
are elected from the workforce in numbers that equate with the various units or
divisions within an organisation. Trade unions are not normally involved, although they
are often kept informed of the actions and outcomes of the committees to allay any
concerns that they are being used to displace trade unionism in the workplace.
Joint consultative committees enable managers and employee representatives to
exchange views about the operation of existing work, as well as to exchange views
about intended changes, whether these are strategic or operational in nature. The
committees also enable managers to access the knowledge and expertise of employees,
as well as to deal with issues not covered by collective bargaining arrangements
(Pyman 2012). Committee agendas can be based on legal rights that require employees
to be consulted by management on certain issues associated with work, as is the case in
some Western European countries (e.g. Sweden and the Netherlands), or they can be
based on non-legal rights agreed upon independently by management and employees
within a given organisation, as occurs in some companies operating in English-speaking
companies. A number of factors need to be in place for them to be successful. First,
they need to be consulted by executive management in advance of any major strategic
change. Second, they need to have a range of substantive issues to discuss, lest they fall
into disuse for reasons of triviality. Third, they need to be adequately resourced with
proper administrative support and access to relevant information. Fourth, they need to
have an effective mechanism to feedback information to employees to ensure their
workplace integrity and legitimacy is sustained. And finally, management
representatives need to be of sufficient seniority so that any actions on agreed
proposals can be carried out efficiently and effectively (Ramsay 1991; Forsyth et al.
2008).

PRIMARY EXAMPLE 12.1

Back to the future on the waterfront
It started badly and ended well. Or at least, as well as could have been expected.
In August, Hutchison Ports sacked 97 workers at Port Botany and in Brisbane with
midnight SMS texts and a confirmation email. Some 40 per cent of Hutchison Port’s
workforce of 224 got the overnight termination notices. They were told by email ‘Your
position will not be retained’, ‘There are no redeployment opportunities’, and that the
contents of their lockers would be delivered to them by courier.
It took pickets, hearings in the Fair Work Commission and the Federal Court and
three months of tense negotiations but the parties have settled their differences. Under a
voluntary redundancy program up to 60 workers are taking an enhanced redundancy
package and transferring to casual employment. The company said the new enterprise
bargaining agreement would help it manage costs in a difficult environment, ‘providing
the company with greatly enhanced flexibility and the workers with the right to return as
full-time employees, if they choose, as volumes increase’.
The national secretary of the Maritime Union said ‘What started out as a shabby and
mean-spirited and heartbreaking attack on an innocent workforce by Hutchison has been
translated through the slow building of respect and proper involvement of those
workers.’
It looks like a win–win. The previously warring parties have salvaged the chance to
work together to give the company, and the jobs it provides, the chance to survive and
grow market share in Australia. We can’t know whether the new-found flexibility and
cooperation will be sufficient to keep the company committed to our shores. What is
certain is that the future of the union movement as well as the nation’s economic
wellbeing depends on a constructive dialogue between employers and unions over
costs and productivity.
Source: Sydney Morning Herald (2015)
Questions
1. What characteristics in the case distinguish this form of labour inclusion as
pluralist?
2. What ‘substantive rules’ of collective bargaining would have been referred to in
hearings brought before the Fair Work Commission in relation to the terminations?
3. What sort of employment relations strategy was deployed or eventually adopted by
Hutchison Ports as a means of resolving the conflict that emerged over the
terminations?

Employee involvement practices

Teamwork is a form of employee involvement that can take a variety of forms
(Rosenhauer 2009), and is a term often used to describe other forms of employee
involvement, such as quality circles and total quality management (which are explained
in more detail later). In its most basic form, it emphasises problem-solving in a
teamworking situation. Teamwork functions most effectively when it is coupled with
policies of task flexibility and job rotation. Teams can vary in size from seven to 10
people, or even more, and large elements of training are necessary to ensure that
workers, team leaders and managers have the required skills to enable them to function
effectively and efficiently. A large part of such training is in interpersonal skills and
communication, as well as in the development of technical skills. It also involves
organisational designs that orientate the technology of work processes to accommodate
small work groups, which are expected to take responsibility for certain operational
and managerial decisions. Teamwork is still popular as a relatively uncomplicated
mode of employee involvement, providing more prerogatives to deal with workplace
problems than those conferred on quality circles. There are varieties of teamwork that
are more and less encompassing in their responsibilities and prerogatives than quality
circles (e.g. Proctor & Mueller 2000; Costa et al. 2014).

Teamwork
 Collection of organisational members with different job roles and responsibilities,
who combine to achieve a set range of specialised tasks in a coordinated manner,
engage in collective problem-solving, or work as an independent group within an
organisation.

Quality circles are a form of employee involvement that consists of six to 10

employees who meet regularly on a weekly or fortnightly basis during working hours.
They are normally constituted on a voluntary basis; their main aim is to improve
workplace relations and allow problem-solving to take place within departments or
organisational units. It is a bottom-up mode of employee involvement designed to
solicit information about any problems occurring in an area of work, and providing the
employees concerned with the analytical knowledge and skills to devise possible
solutions. The solutions are best achieved through the use of objective data and
statistics acquired through methods and techniques taught during quality circle training.
The proposed solutions adopted by the circles are then presented formally to the
manager of the work unit, who then decides whether or not to implement the proposals.
Quality circles still survive in many small firms but have been generally overtaken by
newer total quality management techniques in larger organisations (Brennan 1991;
Blaga & Boer 2014).

Quality circles
Collection of organisational members who meet regularly on a voluntary basis for
the purpose of facilitating the transfer of knowledge so that members are better able
to analyse problems and devise solutions.

Total quality management is a form of employee involvement that centres on the

concept of ‘empowerment’. One side of this empowerment involves the development of
teams to a point where employees take part in managing the continuous improvement of
work performance and product quality. The other side involves the devolution of
responsibility for quality controls from specialist positions to the workforce as a
whole. Its main aim is to generate workforce attitudes that accept the need for
continuous improvement in the production of quality goods and services. Like quality
circles, total quality management involves groups of employees acting in teams that
meet on a regular basis to identify problems and discuss possible resolutions. Unlike
quality circles, it is a compulsory and top-down mode of employee involvement, as its
forms of worker empowerment are greatly circumscribed by limitations imposed by
management. These limitations are represented in the establishment of group norms by
management, against which the performance of individuals is closely monitored and
constantly appraised (Zink 2012). Team meetings provide a forum where work
performance and product quality are debated and information is shared with the
expectation that team members will discipline those who they believe are not
conforming to the team norms—a form of ‘responsible autonomy’ where the
‘empowered’ team acts as the controller of individual performance. As a form of
employee involvement, total quality management has gained significant popularity in
recent years, embracing elements of teamworking and quality circles in its
organisational practices and design (Rogers 2013; Oakland 2014).

Total quality management

Collection of organisational members with specialist job roles and responsibilities,
who combine and are trained to manage the continuous improvement of work
performance and product quality with some measure of autonomy.

Team briefings are used to disseminate managerial information to the workforce

and are a mild form of employee involvement. They typically comprise between four to
15 employees who work in a common production or service unit, and team leaders who
are assigned to manage the units. This form of employee involvement seeks to promote
employee commitment, improve efficiency, gain acceptance of change and give more
weight to the role of line managers. They operate best when the managers are trained in
how to give briefings of this type, when they deal with localised work tasks only, and
when they are held on a monthly or semi-regular basis (Hollinshead et al. 2003; Eppler
2013).

Team briefings
A meeting format applied by management as a means of disseminating organisational
information to employees.

Company journals are also used to disseminate managerial information and are
another mild form of employee involvement. They include in-house newspapers,
organisational videos and audiotapes, briefings relayed through the internal email
systems, and so on. They are typically used to encourage an organisational culture of
inclusiveness, listing such things as ‘employee of the week’, company sporting and
social events, employee and group achievements, community projects in which the
organisation is involved, etc. They are also used to convey a managerial view of
proposed changes in working practices, disseminate vision statements and strategic
objectives and provide a forum for the CEO to address the workforce on matters
pertinent to the operation of the organisation (Marchington et al. 1992). They can be
considered less inclusive when the flow of information through the various mediums is
one-way, and more inclusive when employees are able to have their say without
editorial interference. One of the more recent and growing practices of this type is the
provision of company reports; the assumption is that providing financial information to
employees will encourage a greater sense of trust and partnership, and promote the
view that the interests of all are best served by working together to secure the financial
and commercial success of the organisation (Miller & Gordon 2014).

Company journals
In-house newspapers, video or audiotapes that are delivered via internal emailing
systems as a means of disseminating organisational information to employees.

Attitude surveys are another form of employee involvement making inroads into
organisational decision-making. The surveys involve gathering attitudinal data from
employees and using it as an additional source of information in the managerial
decision-making processes. A sizable minority of firms are using this form of employee
involvement to formulate policies, although their outcomes are invariably the sole
prerogative of management. They contain all the usual problems associated with survey
taking, such as low response rates and only employees who have an ‘axe to grind’
responding. Nonetheless, they have proved successful in revealing equal opportunity
and harassment problems, as well as identifying sources and issues of grievance held
by the workforce. The requirements necessary for a successful attitude survey are three-
fold. First, they require adequate means and personnel for the collection and
interpretation of survey data. Second, they require the survey findings be disseminated
among the survey respondents. Third, they require that those being surveyed have the
confidence that management will act on at least some of the concerns revealed by the
survey (Saari & Scherbaum 2011).

Attitude surveys
Questionnaires designed to gather operational and attitudinal data from employees.

Financial incentives are another form of employee involvement that is growing in

popularity. This form of employee involvement can take a variety of forms, but
typically includes employee share-owning schemes, profit-sharing programs and bonus
systems. Employee share-owning schemes aim to give workers a financial stake in the
organisation (i.e. to create a cash nexus between individual work effort and company
ownership). Some firms have adopted the schemes as a means of securing employee
compliance. Others have introduced them as a philanthropic gesture to reward
employee loyalty. And still others have applied them as part of wider initiatives to
weaken the presence of trade unions or undermine the role of collective bargaining.
Profit-sharing programs seek to impose a form of monetary discipline on employees
(i.e. to create a cash nexus between individual work effort and organisational success).
Most firms applying these types of programs do so as a mean of encouraging employees
to work harder, or as a means of introducing flexibility into their systems of pay (Shaw
& Gupta 2015). Bonus systems are a variation of profit-sharing programs; they aim to
link the pay of employees to the particular tasks they undertake, regardless of the
broader performance of the organisation (i.e. to create a cash nexus between individual
work effort and task success). All these practices are held to involve employees by
giving them a financial reason to take an active interest in how work is best performed
and how well the organisations they work for operate (Pendleton et al. 1995).

Financial incentives
Bonuses, share-owning schemes, etc., offered to employees to encourage their work
performance and give them a stake in the financial success of the organisation.

PRIMARY EXAMPLE 12.2

The staff perks keep workers happy
‘Like eating broken glass without anaesthetic.’ That’s how Michael Kennedy describes
hearing his staff’s frank feedback about working for his timber manufacturing business,
Kennedy’s Timber. But with high absenteeism, high employee turnover, low staff
engagement and low productivity, Kennedy knew something had to change if his
company could remain viable, let alone grow.
Four years ago, Michael Kennedy engaged Brisbane consultant Dr Tony Watt, aka
The Culture Doctor, to help him improve work culture to ensure the 23 staff at his
Narangba plant north of Brisbane enjoyed their jobs and ultimately worked harder. Watt
has worked with small to medium enterprises to fully engage staff and repair ‘toxic
cultures’. He describes the ‘holy grail’ of organisational culture as a business acting
true to its core values (such as trust, respect, safety, human dignity) and thus enticing
staff to go the extra mile, or unleash what Dr Watt refers to as ‘discretionary effort’.
He says there’s a growing recognition by employers that people want their work,
home and spiritual life to be in harmony, and their work life especially to be fulfilling
in a variety of ways. ‘By providing gyms and team breakfasts and so on, these are
behaviours by a company that says I respect you, I value you, I care enough about you to
provide these things.’
Watt also advocates transparency and involving staff in the four-step process: Ask,
Listen, Act, Ask again, recognising staff often know best how to address major
problems in the workplace. ‘Ask staff how the company is currently performing, show
you’re listening by publishing those results internally “warts and all”, involve staff in
addressing major issues, and six months on again ask them to rate the company’s
performance,’ Watt explains. ‘The simple principle is the people on the work floor, they
actually know what’s wrong with the company if you’d only ask. Guess what? If you
ask them how to fix it, they can tell you that as well.’
Source: Edmistone (2015)
Questions
1. What characteristics in the case distinguish this form of labour inclusion as
unitarist?
2. Could the methods deployed by the firm to turn around its ‘toxic culture’ have been
achieved through collective bargaining?
3. What sort of employment relations strategy was deployed by the firm as a means of
enticing staff to ‘go the extra mile’?

THE LEGAL REQUIREMENTS OF EMPLOYEE

PARTICIPATION IN AUSTRALIA
Participation at the board level of private sector organisations in Australia is non-
existent in any legal or practical sense. Participation at this level in public sector
organisations is more apparent, particularly within the university sector, but even then
the level of power sharing is extremely limited, with the number of employee
representatives being very small in relation to the number of people sitting on boards.
In both the public and private sectors, the most prolific form of employee participation
still occurs through processes of collective bargaining. These arrangements provide
employees with some measure of power over the determination of the rules that govern
the employment relationship. However the scope of participation involved in these
arrangements is often limited to the legislative requirements pertaining to consultation
rights during major workplace changes (Creighton & Stewart 2010). Decisions of
strategic importance are still the prerogative of managers—specifically senior
managers (Pyman et al. 2010).
Under the present Fair Work Act 2009 (FW Act), modern awards and enterprise
agreements are expected to contain clauses that require employers to consult with
employees and their unions on certain matters. The first of these matters is when an
employer intends to make significant changes in the workplace. Such changes could
relate to production methods, work programs, organisational structures, or the
introduction of new technology. If changes in these areas are likely to have a significant
impact on the employees, then an employer has a legal obligation to consult with
employees about the nature and likely impact of those changes. Employees also have a
legal right to be consulted when an employer is proposing to change duty rosters and
ordinary hours of work. When changes are intended in any of these areas, the employer
is obliged to discuss with employees and their representatives the nature of the changes,
what effects they will likely to have on employees, and what measures will be put in
place to mitigate any adverse effects. The employer is obliged to receive a response
from the employees or their representatives, but only needs to consider the matters
raised. There is no obligation to act on the matters raised, leaving open the possibility
for the changes to be made regardless of employee concerns (Fair Work Act 2009, s.
205).
Employers are also obliged under the terms of the FW Act to consult with
employees prior to terminating their employment. They must also consult with unions if
the intended dismissals involve 15 or more employees, but only if the terminations are
due to economic, technological or structural reasons (FW Act, s. 530). There are also
other matters that require consultation, for example, when an employee requests
flexible working arrangements (FW Act, s. 65) and in the context of good faith
bargaining for the settlement of an enterprise agreement (FW Act, s. 228). There are
also additional obligations to consult on workplace safety matters that arise out of
various State occupational health and safety legislation. Needless to say, the
combination of these legal requirements placed on employers falls squarely into the
province of employee participation. A summary of the legal obligations placed on
employers under such participation practices is set out in Box 12.1.

Flexible working arrangements

Provision in the Fair Work Act 2009 that enables individual employees to negotiate
with their employer for working arrangements that are different and superior to the
terms and conditions contained in enterprise agreements.

Box 12.1 Employers’ legal obligations regarding employee

consultation
Employees—and in some circumstances, their unions—must be
consulted:
when an employer intends to introduce workplace changes
when an employer intends to change an employee’s regular roster or ordinary
 hours of work
when an employer intends to dismiss more than 15 employees at one time for
economic, technological or structural reasons
when dealing with workplace health and safety matters as required by state
legislation
when negotiating for an enterprise agreement as required under the good-faith
bargaining provisions of the Fair Work Act 2009.
Source: Fair Work Ombudsman (2015)

SUMMARY
Employee involvement practices are prominent in organisations where the employees
concerned are not covered by unions (Dundon et al. 2004). But they are also found in
organisations where unions operate and collective bargaining arrangements exist. Often
these practices are used as an adjunct to collective bargaining, providing for the
dissemination of additional or alternative information to employees about the financial
and business position of the organisation. They are also used to disseminate information
about future investment plans and staffing intentions (Pyman et al. 2006). Some
practices are used as part of wider HRM programs aimed at empowering workers and
encouraging them to ‘go beyond’ the formally agreed conditions set out in union–
negotiated work contracts. Others are used to develop employee commitment and trust
towards the organisation as a means of undermining the workplace role of unions and
collective bargaining (Pyman et al. 2010). The dissemination of information via
company journals is the most widely applied form of employee involvement, although
direct two-way communication involving suggestion schemes, joint consultation
committees, problem-solving teams and quality management practices has also grown
over the past decade.
The increasing use of employee involvement practices is part of managerial
attempts to broaden the task-level involvement of employees, and has been particularly
apparent in firms that employ workers who have high skill levels, where new
technology is being deployed and where sophisticated HRM practices are in operation.
In such cases, employee involvement in the establishment of targets and the setting of
performance-based pay has been a necessary prerequisite for such practices to work,
just as it has for the training needed to operate increasingly complex forms of
technology (Stone 2014). For similar reasons, financial forms of involvement have also
increased, with profit-related and share-ownership schemes becoming more widely
deployed in Australian private sector organisations.
The past few decades have seen employee involvement expand. This has been
partly a product of the expansion of HRM practices, partly a product of the changed
circumstances in which IR outcomes are negotiated and settled, and partly a product of
the increasing complexity of the technical and business environments in which these
practices are expected to operate. Some of this expansion has been at the expense of
employee participation practices normally associated with traditional forms of IR. But,
more often than not, the expansion of employee involvement has grown alongside pre-
existing participation practices, with both frequently being found to operate within the
same workplace contexts. This is particularly so in larger private sector organisations
and public companies. The increasing prevalence of labour inclusion practices, as
represented in both its HRM and IR manifestations, has been facilitated by the
requirements of the FW Act, which places a legal obligation on employers to consult
with employees—and in some cases their trade unions—when major workplace
changes and changes in working hours are intended, as well as when enterprise
bargaining is engaged and when terminating employment. State–based OH&S
legislation also legally requires employees be consulted on workplace safety matters.
Having some understanding of the various nuances and complexities that differentiate
these two forms of labour inclusion, and their aims and manifestation— as well as their
various associations to the contextual legal circumstances in which they operate—will
assist in the selection of the most appropriate form or combination of employee
participation and involvement practices likely to improve organisational effectiveness.

REVIEW QUESTIONS
1. Why is there some confusion between the terms ‘employee participation’ and
‘employee involvement’?
2. What characteristics distinguish employee participation?
3. What characteristics distinguish employee involvement?
4. What is the unitarist perspective of employee participation and involvement?
5. What is the pluralist perspective of employee participation and involvement?
6. What is the radical or Marxist perspective of employee participation and
involvement?
7. What are some of the key practices that are forms of employee participation?
8. What are some of the key practices that are forms of employee involvement?
9. Under which of the two forms of labour inclusion (i.e. employee participation
and employee involvement) does the weight of managerial power weigh
heaviest?
10. What examples can be found in the provisions in the Fair Work Act 2009 that
show forms of labour inclusion?

Visit Oxford Ascend for
further revision material
 CASE STUDY SECTION 205 OF
12.1 THE FAIR WORK
ACT 2009
Under the terms of the FW Act, an enterprise agreement must contain a term that
requires the employer to consult with employees about: (1) a major workplace
change that is likely to have a significant effect on the employees, or (2) a change
to their regular roster or ordinary hours of work.
The consultation term must require the employer to consult with employees
about a major workplace change that is likely to have a significant effect on the
employees. The consultation term must require that for a change to the employees’
regular roster or ordinary hours of work, the employer must: (1) provide
information to the employees about the change; (2) allow the employees to give
their views about the impact of the change (including any impact in relation to
their family or caring responsibilities); and (3) consider any views given by the
employees about the impact of the change.
The consultation term must also allow for employees to be represented during
consultation about a major workplace change or a change to the employees’
regular roster or ordinary hours of work. If an enterprise agreement does not
include a consultation term, or one is included but it does not meet all of the
requirements in the Fair Work Act 2009, the model consultation term set out in the
Fair Work Regulations is taken to be a term of the enterprise agreement.
Source: Fair Work Commission (2015)

Questions
1. What form of labour inclusion does the stated provision of the FW Act fall
under?
2. Do you think this legislative requirement to consult employees over
changes in work rosters and ordinary hours of work is fair? Or do you
think it is an impost on the right of employers to operate their
organisations as they see fit?
3. Should unions have the right to represent employees on these types of
changes, and why?
4. In the stated provision of the FW Act, is there any legal requirement that
the employer must act on the views of the employees subject to the
 change?

CASE STUDY ALL WORKED UP

12.2 ABOUT WORK
The whole concept of staff engagement is one of those fluffy HR subjects that
makes many managers shrug their shoulders with apathy. Its softness as a
workplace theory disguises some hard quantitative results. For example, the
Gallup survey showed that a third of employees with low levels of engagement
had chucked a sickie during the previous month, whereas only 11 per cent of
engaged employees had done the same thing. That means disengaged workers are
three times more likely to call in sick, and chances are they’re not even sick.
The cost of absenteeism is more than just the payment made to employees who
don’t turn up for work. There are other expenses that accumulate too, such as
missed opportunities, reduced productivity, and the impact of stress on colleagues
who are forced to pick up the slack. According to a study by the University of
Western Australia, absenteeism costs the private sector $2 billion in lost
productivity a year. In the public sector, it’s $5 billion.
If you’re still sceptical about the benefits of having an engaged workforce,
here’s one more statistic. Gallup’s figures show that organisations with staff
engagement in the top quartile had growth in earnings per share that was more than
four times higher than their competitors’ median. It’s evident that having happy
staff is good for business, and the data shows it matters a lot.
There were some common elements the researchers found among employees
who declared they were highly engaged. These included the following:
Engaged workers were more likely to say their organisation is hiring and
expanding its workforce.
Engaged workers were more likely to rate their personal life favourably.
Almost all engaged employees said they were treated with respect ‘all day
yesterday’, and were less likely to have experienced anger or stress.
Those with good physical health reported higher engagement than those
with health problems.
In the meantime, most Australian employees are reluctantly dragging
themselves to work, unmotivated and disengaged. But as Sir Walter Raleigh (an
English writer and explorer) wrote several centuries ago: ‘The employer
generally gets the employees he deserves.’ Raleigh was eventually beheaded.
 Source: Adonis (2011)

Questions
1. Of the two forms of labour inclusion referred to in this chapter (i.e.
employee participation and employee involvement), which do you think
Case study 12.2 is referring to?
2. What are the connections being made between employee engagement and
superior business performance?
3. What is implied by the article in relation to employee participation rights?

FURTHER READING
Bashur, M., & Oc, B. (2015). When voice matters: A multilevel review of the impact
of voice in organisations. Journal of Management, 14(5): 1530–54.
Blewett, V., & Dorrian, J. (2012). Partnering for workplace health and safety. Work,
41: 2753–56.
Holland, P., Pyman, A., Cooper, B., & Teicher, J. (2011). Employee voice and job
satisfaction in Australia: The centrality of direct voice. Human Resource
Management, 50(1): 95–111.
Pyman, A., Holland, P., Teicher, J., & Cooper, K. (2010). Industrial relations
climate, employee voice and managerial attitude to unions: An Australian study.
British Journal of Industrial Relations, 48(2): 460–80.
Sablok, G., Bartram, T., Stanton, P., Burgess, J., & McDonnell, A. (2013). The
impact of union presence and strategic human resource management on
employee voice in multinational enterprises in Australia. Journal of Industrial
Relations, 55(4): 621–39.
Townsend, K., Wilkinson, A., & Burgess, J. (2014). Routes to partial success:
Collaborative employment relations and employee engagement. International
Journal of Human Resource Management, 25(6): 915–30.

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GLOSSARY
Accord
The Prices and Incomes Accord was an agreement between the federal Labor
Government and the ACTU that operated in several formulations between 1983 and
1996.

Agreement-making
A process leading to the settlement of the terms and conditions of employment
contained in labour contracts, whether they be legally enforceable or otherwise.

Alliance strategy
Organisational model in which a business strategy is formulated, directed and
controlled through a combination of input from employees and trade unions.

Allowance
A monetary sum that is an extra payment to cover the costs an employee may incur
during the course of their work. It can also be paid as a means of remunerating special
skills, undertaking of certain tasks, having special responsibilities, or working in
arduous or dangerous conditions, as well as for the use of personal tools, equipment,
car or phone.

Alternative dispute resolution

An informal mechanism used in an attempt to resolve a dispute, using an independent
mediator/conciliator who helps the parties explore possible resolutions.

Arbitration
Process where a grievance or dispute between two parties is resolved by a third
imposing a binding settlement. The Fair Work Commission has the power to impose
binding ‘orders’ on parties to settle a bargaining dispute. It also has the power to offer
the parties a voluntary mode of arbitration.

Attitude surveys
Questionnaires designed to gather operational and attitudinal data from employees.

Australian Fair Pay Commission

A federal tribunal responsible for determining national minimum wages under the Work
Choices Act 2005 (now defunct).
Australian Human Resources Institute (AHRI)
The national association representing human resource and people management
professionals.

Australian settlement
A period of stability and predictability in employment relations from1904 until the
1960s. The industrial relations system over this period was built on two mutually
supportive pieces of legislation. The first was a system of compulsory conciliation and
arbitration, premised on the legitimacy of trade unions to represent and bargain on
behalf of workers. The second was a system of trade protection, insulating Australian
businesses from international competition.

Australian Workplace Agreement (AWA)

A registered individual contract introduced by the Howard Government under the
Workplace Relations Act 1996 and further promoted under Work Choices 2005.

Authoritarian unions
Trade unions operating under dictatorial or authoritarian regimes, as an extension of
state power. Their unifying principles are to bring the activities of trade unions under
the control of the state, and to ensure industrial peace and maximum productivity.

Award
A legally enforceable labour contract containing the terms and conditions of
employment that are the result of determinations made by federal or state industrial
tribunals, and applied to employees engaged in a particular industry or occupation. It
can be the sole instrument used to set out their terms and conditions of employment, or
it can used in conjunction with an individual or collective agreement.

Balanced scorecard
An HR measurement tool. The scorecard measures financial, customer, process and
people-related key performance indicators to evaluate performance.

Bargaining order
An order made to the FWC by a bargaining representative negotiating for a proposed
enterprise agreement; designed to ensure good faith bargaining requirements are
adhered to, or to promote fairness and efficiency in the bargaining process.

Bargaining period
A time period designated by the FWC, initiated by parties on the expiry of an existing
enterprise agreement or in pursuit of a new agreement; it allows for negotiations to
begin and for legal industrial action to be taken in pursuing demands in relation to a
proposed agreement.

Bargaining representative
An employer or a person appointed to act as a representative on behalf of an employer
(e.g. industrial officer of an employer association) in negotiations over the terms and
conditions of a proposed labour contract. Also a workplace representative of
employees or a person appointed to act as a representative on their behalf (e.g. trade
union official) in such negotiations. Under the FW Act, a trade union has the legal right
to provide a bargaining agent to represent members who will be covered by a proposed
labour contract. A bargaining representative can also be any other person an employee
chooses to appoint to represent their interests in the bargaining process.

Better off overall test (BOOT)

A test applied by the FWC before approving an award, enterprise agreement or
individual flexibility agreement to determine if workers covered by that award or
agreement would be better off than if they were simply covered by the relevant award.

Bifurcation of the labour market

The growing and increasingly permanent division between the core and peripheral
segments of the labour market.

Bonus payment
A monetary sum paid on the basis of performance.

Bourgeoisie
Marxist term for an owner of the means of production, in which the employers buy the
labour power of employees in capitalist labour markets.

Capacity to pay principle

A principle applied by the federal tribunal in wage determinations that weighed the
capacity of an industry or the economy to pay adjustments in wages.

Casual loading
An incremental percentage of the normal wage rate added to account for the lack of
entitlement to various forms of leave; presently set at 25 per cent.

Centralised wage fixation

A system of wage bargaining and determination that applies to all industries and
occupations, or across an entire economic sector (also known as ‘centralised wage
bargaining’).

Certified agreement
A form of enterprise-based collective agreement.

Codetermination
Decision-making processes that confer legal or agreed voting rights on employee
representatives on the supervisory boards of organisations.

Collective agreement
A labour contract containing the terms and conditions of employment agreed between an
employer, a group of employers, or one or more of their representatives, and a group of
employees, or one or more of their representatives.

Collective agreement-making
A process involving a group of employees (or their representatives) negotiating terms
and conditions of employment with an employer, a group of employers or a
representative of employers (often referred to as ‘collective bargaining’).

Collective bargaining
Negotiations between employers and employees (or their representatives), undertaken
through legal or agreed procedures, to settle the substantive terms and conditions of
employment.

Common law
Judge-made law, case law, or law made by the decisions of courts, which fills in the
gaps left by statute law. Common law is an evolving entity, capable of adapting to new
situations and new ways of thinking.

Company journals
In-house newspapers, video or audiotapes that are delivered via internal emailing
systems as a means of disseminating organisational information to employees.

Company union (or enterprise union)

A union of workers in a particular company or enterprise, regardless of trade,
occupation or job.

Comparative wage justice principle

A principle applied by the federal tribunal in wage determination that required the
relative wage difference between different occupational groups was maintained.

Conciliation
A process whereby a grievance or dispute between two parties is resolved by a third
through its provision of informal advice and assistance. The Fair Work Commission is
empowered to facilitate the resolution bargaining disputes through this type of
provision.

Conflict
Opposition between employers and employees; conflict can take shape in two distinct
ways: either overtly, in the open and easy to both see and understand; or covertly,
hidden and difficult to see.

Consent awards
Awards established at the conciliation stage by the mutual agreement of employers and
unions.

Constitutional law
The Australian Constitution lays down the powers of the federal parliament to intervene
in a range of areas including employment relations. It does this in sections 51 and 122,
which outline the various ‘powers’ of the federal parliament, thus defining the
parameters on which it can make laws.

Consumer price index (CPI)

A measure of periodic changes in the price level of a sample basket of consumer goods
and services purchased by the average household (often referred to as the ‘inflation
rate’).

Contract at will theory

The presumption that the employment contract was terminable at will, and free of the
constraints that accompany a contract of definite duration. This reinforced managerial
authority as workers could be dismissed at any moment.

Core workers
Core workers are typically male, skilled, full-time, and engaged in challenging and
technically complex work that requires specialist expertise. They often have autonomy
over their work and decision-making authority. They also tend to have access to
workplace training and career path development programs.

Corporatism
A three-way or tripartite national agreement on economic policy between peak unions,
big business and government.

Craft employer associations

An association that represents employers with a specific skill; traditionally
concentrated in the building industry.

Craft union
A union whose membership is based on workers’ craft or trade.

Decentralised wage fixation

A system of wage bargaining and determination that applies to an individual enterprise
and its employees (also known as ‘decentralised wage bargaining’). Outcomes can be
directly reached between the employer and employees, or they can be reached through
negotiations held between representatives acting on their behalf. In an Australian
context, the settlement of pay rates in enterprise agreements are the closest
approximation, with their settlement, ratification and policing falling within the
centralised purview and jurisdiction of the Fair Work Commission.

Direct discrimination
Overt or explicit discrimination because of a certain characteristic, such as gender or
ethnicity.

Discrimination
Treating a person unfavourably because of a personal characteristic. Discrimination
can be direct, in which the actions are obvious, or indirect, where an organisation’s
practices, policies or procedures cause the discrimination.

Diversity
The differing characteristics of employees in an organisation, such as gender, ethnicity
and religious beliefs.

Duty of care
The prescribed duties that an employer (and employee) must fulfil in the workplace to
ensure as far as practicably possible that the workplace is safe from injury.

Employee involvement
Application of various mediums and forums that provide communication links between
management and employees for gathering and disseminating information.

Employee participation
Power-sharing arrangement in which employees (or their representatives) have legal
rights of representation for exerting some influence or control over managerial
decisions.

Employee turnover
The number of employees voluntarily terminating their employment in an organisation;
often used as an indicator of employee dissatisfaction.

Employers
Individual organisations that employ workers to perform tasks.

Employer association
An organisation of employers who share common beliefs and interests. They play a
number of roles from general advice (e.g. health and safety, award advice,
superannuation advice, dispute resolution) through to representation in the various
tribunals.

Employment relations
A catch-all phrase covering the areas traditionally known as industrial relations, as
well as the field of HRM. It covers individual, collective and institutional aspects of
management/labour relations.

Enterprise agreements
Agreements at individual enterprises that typically set employment conditions for
groups of workers.

Enterprise flexibility agreement

A non-union instrument for determining wage rates, introduced by the Keating Labor
Government in the 1990s.

Equal pay for work of equal value principle

A principle applied by the federal tribunal in wage determinations that required men
and women engaged in similar occupations within the same award categories be paid
the same wage.

External context
The broader political, economic, legal, social and cultural environment operating
externally to the organisation, but nevertheless impacting on it.

Fair Work Act 2009

The principal Commonwealth law governing Australian workplace relations.

Fair Work Commission (FWC)

An independent federal industrial tribunal established under the Fair Work Act 2009. It
has the role of settling industrial disputes, ratifying awards, enterprise agreements and
individual flexibility agreements. It also has the role of reviewing and adjusting
minimum pay rates, as well as adjudicating on unfair dismissal and certain
discrimination claims.

Fair Work Ombudsman (FWO)

An inspectorate headed by a statutory appointee whose role is to promote an
understanding of federal workplace laws, in particular the FW Act. It also has the role
of educating and providing advice about those laws, and enforcing compliance.

Financial incentives
Bonuses, share-owning schemes, etc., offered to employees to encourage their work
performance and give them a stake in the financial success of the organisation.

Flexible working arrangements

Provision in the Fair Work Act 2009 that enables individual employees to negotiate
with their employer for working arrangements that are different and superior to the
terms and conditions contained in enterprise agreements.

Fordism
The assembly-line type production method, first associated with the US Ford motor
plant in the 1920s, but which came to dominate factory manufacturing methods the
world over.

Frames of reference
The outlook or perspective people apply in framing the way they interpret issues
around employment relations.

Freedom of association
The right of workers to belong to a trade union without fear of negative treatment from
their employer.

Gatekeeper strategy
Organisational model in which a business strategy is formulated, directed and
controlled with input from the representation and involvement of trade unions.

Gender pay gap

The difference in male and female earnings, expressed as a percentage of male earning.

General protections
A set of workplace rights and entitlements in the FW Act that protect employees from
discrimination and sham contracting, allow for their freedom of association and in
contacting workplace regulators, and protect them from employer retribution in the
exercise of these rights.

General union
A union whose membership is drawn from workers across several industries,
regardless of a particular trade or occupation.
Going rate
The standard wage paid to employees engaged in similar occupations or holding
similar skills.

Good faith bargaining

Provisions in the FW Act that legally require employers and trade union negotiators to
engage in enterprise bargaining with the genuine intention to reach a settlement.

Good–faith bargaining orders

An order issued by the Fair Work Commission when one of the bargaining participants
is considered to be not genuinely seeking an outcome.

Gross wage
Monetary sum that represents the total wage before deductions (e.g. taxes,
superannuation).

Groupers
The nickname given to the anti-communist Catholic action activists operating within
Australian trade unions.

Health and safety committees (HSCs)

Committees used to help employers and employees monitor, develop and review health
and safety policies and procedures for the workplace.

Health and safety representatives (HSRs)

Elected representatives of employees; through legislation, HSRs are able to raise
issues with the employer and represent employees on health and safety issues.

Hegemony
Process where the ruling class maintains power and authority by having its ideology—
values, customs and ideas—accepted by the majority of society, without having to
resort to or threaten the use of force.

Human relations theory

The theory that tension and conflict in the workplace is best reduced by the creation of
an appropriate organisational environment, giving employees greater autonomy and
control over how they work, thus making their jobs more fulfilling.

Human Resource Management

Systematic program of labour management that is consciously linked to strategic
business plans in a manner that is held to benefit both employees and the organisation.
Human resources
A term that embraces the idea of the worker as a ‘human resource comparable to all
other resources but for the fact that it is human’. Coined by management theorist Peter
Drucker (1954) in the 1950s.

Indirect discrimination
Work practices that are ostensibly non-discriminatory, but have the effect of
discriminating against people on one of the grounds prohibited under legislation, such
as parental status or pregnancy.

Individual agreement
A labour contract containing the terms and conditions of employment agreed between an
employer and an individual employee; it can be an individual contract registered by a
federal or state industrial tribunal or authority, a common law contract, or an over-
award individual agreement.

Individual agreement-making
A process involving a single employee negotiating the terms and conditions of
employment with the owner or representative of the employing organisation (often
referred to as ‘individual bargaining’).

Individual flexibility arrangement

An agreement between a single employer and an employee that modifies the application
of a modern award or enterprise agreement.

Industrial democracy
Organisational model in which managerial positions and decisions are subject to the
electoral will of organisational members.

Industry associations
Associations that represent members in a specific industry.

Industry union
A union whose membership is based on workers from a particular industry, regardless
of trade or occupation.

Internal context
The combined structure, size, technology, people, purpose, objectives and culture
relating to an organisation.

Interpellation
A process where workers come to accept their subordinate status as subjects. A
concept posited by the French Marxist Louis Althusser (1969).

Joint consultative committee

A decision-making process where employee representatives are consulted before
important managerial decisions are taken, with the expectation that management
respond to any concerns raised by employees by way of argument or action.

Key performance inidicator

A metric or type of measure used by organisations to help them understand whether or
not they are reaching their objectives.

Labour inclusion
Generic term encompassing both employee participation and employee involvement.

Labour power
The combined set of skills, abilities, and physical and mental energy that workers bring
to a job. It is workers’ capacity to work.

Labour process theory

Where employers or managers use a range of processes and technologies to control
employees in order to convert employees’ capacity to work (i.e. labour power) into
actual work effort (i.e. labour).

Labour productivity
A ratio of some unit of measurable goods and services produced per unit of labour
input, typically measured in hours of work effort.

Log of claims
The list of claims or demands placed, usually by unions on employers, as part of their
bargaining or negotiations over wages and working conditions.

Low-paid authorisation
An authorisation made by the FWC upon application by a bargaining representative or
union negotiating for a proposed multi-enterprise agreement. It provides access to
workplace determinations for employees in weak bargaining positions.

Majority support determination

An order issued by the FWC when the majority of employees to be covered by a
proposed agreement want to bargain, but the employer to be covered by the agreement
has not agreed to bargain.

Management-driven strategy
Organisational model in which a business strategy is formulated, directed and
controlled by management.

Managerial prerogative
The ‘right’ to manage. The legitimate authority of management to direct how, where and
when work is to be carried out. It may also extend to management’s ‘right’ to determine
the wages and conditions of employment of their employees.

Managerial prerogative
The ‘right’ of employers to manage employees without interference.

Margin for skill principle

A principle applied by federal and state tribunals in wage determinations that required
an incremental rate be added to the base rate for an unskilled employee to account for
the additional worth of a skilled employee.

Marxist–Leninist unions
Trade unions that aim to both organise and educate their members. Members become
engaged in struggles over wages and conditions, primarily to educate them about the
power of organised labour and capital and to expose the inequity of capitalism.
Through struggles over wages and conditions, radicals hope to spread and develop the
‘class consciousness’ of workers, so they come to identify themselves as part of the
working class, engaged in a long battle with the capitalist class.

Master and servant

The master–servant relationship was based on obligations that were usually inherited.
The master was obliged to care for the servant, and the servant was obliged to obey the
master.

Mediation
An alternative dispute procedure involving a third party (the mediator) who assists the
parties come to an agreement.

Minimum to median wage ratio

The annualised minimum wage relative to the annualised average median wage,
expressed as a percentage.

Minimum Wage Order

An order issued by the FWC that establishes a minimum wage for employees not
covered by an award or agreement.

Minimum Wage Panel

A federal tribunal attached to the Fair Work Commission with responsibility for
determining national minimum wages under the Fair Work Act 2009.

Model dispute resolution process

A dispute resolution process applied in federal awards and other collective agreements
that do not specify a dispute resolution process.

Model Work Health and Safety Act

Federal legislation regulating health and safety in Australian workplaces. Created
following agreement between the various state governments and territories in 2008,
model legislation was created and adopted by most state and territory governments
between 2011 and 2012 (but not Victoria or Western Australia).

Modern award
A legally enforceable labour contract containing minimum terms and conditions of
employment for employees. Recognised in the Fair Work Act 2009, it covers
employees engaged in an occupation or industry.

Multi-factor test
A series of questions about the relationship between the worker and the putative
employer. The test attempts to ascertain the nature and depth of control involved in
placing the worker in a subordinate position within the relationship with their ‘boss’.

National Employment Standards (NES)

Ten minimum employment standards that relate to maximum weekly hours of work,
flexible working arrangements, various leave entitlements, dismissal, redundancy,
public holidays, and information about workplace rights.

National system employee

An employee falling under federal industrial legislation because they are employed by
a constitutional corporation, a federal public authority, a state-referred public authority,
a state-referred private employer, or a territory employer.

National wage case

Method of adjusting wages across the country prior to enterprise bargaining. Unions
would apply to increase the wage rates in several key awards, as a benchmark for a
more generalised movement in wages across all awards.

Needs of the worker principle

A principle applied by the federal tribunal in wage determinations that required the
minimum rate of pay for unskilled employees be capable of providing for a decent
standard of living.
Neo-corporatism
A two-way or bipartite national agreement between one of unions or big business and
government on economic policy, but one in which the missing party (unions or
employers) has some informal input.

Neoliberalism
The ‘free’ market policies adopted by many Western governments since the 1980s,
based on the privatisation of state assets, the imposition of constraints on trade union
activities and a reduced role for the state in economic affairs.

Net wage
Monetary sum that represents the total wage after deduction—often referred to as ‘take-
home-pay’ (e.g. taxes, superannuation).

No-disadvantage test
Test applied to Australian Workplace Agreements; they must at least provide conditions
no less favourable to workers than those contained in the most relevant award.

Nominal wage
A monetary sum that represents the total wage paid over a designated period of time
without consideration of the impact of inflation on its purchasing power.

Occupational Health and Safety

The safety, health and welfare of people engaged in work or employment.

Occupational union
A union whose membership is based on the work they do, regardless of trade or
qualification.

Ordinary hours
Standard or agreed hours of work, paid for at the ‘ordinary’ time rate. Under the Fair
Work Act 2009, the standard ordinary hours of work are presently set at 38 hours per
week.

Organicist unions
Organicist unions operate on an assumed harmony of interests, resting on a moral
obligation of everyone in society to put aside their sectional interests for the greater
good.Trade unions have an important role as educators and enforcers of this moral
obligation among workers through the promotion of social harmony.

Over-award payment
Wage rates in excess of the minimums required in industrial awards.

Over-award rate
A monetary sum paid as an incremental rate above the award rate to account for special
circumstances of an industry or enterprise.

Overtime rate
An incremental rate added to the normal wage rate per hour when work is performed in
addition to normal working hours.

Paper dispute
Deliberate lodging of an exaggerated log of claims (called ambit claims), knowing they
will be rejected, in order to trigger the intervention of an industrial tribunal to resolve
the dispute.

Peak Associations
Associations that represent employers from a wide variety of industries.

Penalty rate
An incremental rate added to the normal wage rate per hour when work is performed on
weekends, holidays, or outside normal working hours.

Peripheral workers
Workers who are generally low paid, precariously employed and have little or no
access to workplace training or career path development programs; they are typically
tasked with routinised and monotonous low-skilled work.

Personnel management
A term used until the early 1980s for those people in organisations commonly
responsible for recruiting, hiring, compensation and benefits, new employee
orientation, training, and performance appraisal systems.

Piece rate
A monetary sum paid for designated units of output (e.g. fruit pickers paid per container
of grapes harvested).

Pluralism
A view of workplace relations that assumes inherent conflict between employees and
managers, which is best managed and mediated through the agencies of trade unions and
collective bargaining.

Pluralist unions
Pluralist unions serve the sectional interests of their members in the workplace, rather
than serving external interests of a firm, political party or a nation.

Postmodernism
A catch-all descriptor for a range of non-structural theories of society. Generally,
postmodernist theories emphasise the role of language and discourse in providing
meaning, as ‘truth’ itself is a subjective phenomenon.

Presenteeism
When workers attend work and perform their role, but at a less than fully productive
level because of illness or lack of interest.

Procedural rules
The legal processes relating to federal and state industrial tribunals, human rights,
discrimination, and workplace health and safety commissions. Procedural rules
comprise ‘how’ to legally conduct employment relations.

Proletariat
Marxist term for waged labour, in which employees sell their labour power to
employers in capitalist labour markets.

Protected action
A set of legal conditions set out in the Fair Work Act 2009 that, if adhered to, allow
employees to take industrial action without being prosecuted under civil law.

Psychological contract
The expectations that employers and employees have of each other when entering into
an employment relationship, beyond the explicit terms of an employment contract.

Quality circles
Collection of organisational members who meet regularly on a voluntary basis for the
purpose of facilitating the transfer of knowledge so that members are better able to
analyse problems and devise solutions.

Radicalism/Marxism
A view of workplace relations that assumes conflict between employers and managers
reflects wider social conflict between competing economic classes, and that conflict
can only be eradicated by overturning the capitalist mode of economic organisation.

Real wage
A monetary sum that represents the total wage paid over a designated period of time,
with consideration of the impact of inflation on its purchasing power.
Registered agreement
A labour contract in the form of a modern award, enterprise agreement or individual
flexibility agreement registered with state or federal industrial tribunals and agencies.

Representative
A person appointed by an employee or group of employees to represent their interests
in bargaining for a proposed agreement, and in any matter before the Fair Work
Commission that relates to bargaining for a proposed agreement.

Safe Work Australia

An independent federal body that leads the development of policy to improve work
health and safety and workers’ compensation arrangements across Australia.

Safety net
A set of minimum terms and conditions that ensure low-paid employees are not
exploited in their pay or workplace treatment.

Salary
A monetary sum that represents the total pay provided over a 12-month period, which
encompasses other payments such as penalty rates, overtime rates, allowance and
annual leave loading.

Scientific management
A model of process engineering based on making workers’ tasks as routine and simple
as possible so as to maximise productivity, enhance managerial control and reduce
workers’ scope for initiative. Also known as Taylorism.

Scope orders
An order issued by the FWC when bargaining is considered to be not proceeding fairly
and efficiently, despite a bargaining representative having met the good faith bargaining
requirements.

Shop stewards (job delegates)

Rank and file unionists voted as representatives of unionists within individual
workplaces.

Social wage
A form of income compensation delivered through government policies, such as
taxation cuts, labour market programmes, and subsidised health and education.

Stagflation
The simultaneous occurrence of high inflation and high unemployment. This
phenomenon emerged in a number of developed economies in the 1970s following the
oil price shocks of the period.

State
The full array of a country’s governing and law enforcing apparatuses, including its
government (executive and parliament) at the national, state/territory and local levels;
judiciary; police; military; and the civil or public service.

Statute law
Law made by Parliament. Statute law forms the basis of the institutional and regulatory
arrangements governing employment relations, particularly the rules under which
negotiations, bargaining and the specification of terms and conditions of employment
occur and become legally enforceable.

Strategic choice theory

Kochan, Katz and McKersie’s (1986) alteration to systems theory, taking into account
the decline in trade union membership; changes in collective bargaining structures; and
new human resource strategies with a stronger unitarist bent.

Strategic Human Resource Management (SHRM)

The planned actions and activities of HR practitioners that are used to help
organisations achieve their strategic goals.

Substantive rules
Legally enforceable employment standards including awards, minimum wages and a
range of statutory rights, such as annual leave, long-service leave, superannuation,
EEO, WH&S, working hours and sick (and other) leave entitlements. Substantive rules
comprise ‘what’ are legally enforceable employment standards.

Superannuation
A legislatively supported scheme that requires employers to pay a proportion of an
employee’s salary or wages into a fund, to be made available upon retirement. That
proportion is presently set at 9.5 per cent.

Syndicalist unions
Syndicalist unions aim to organise workers along industry lines, using direct industrial
methods of boycotts, sabotage and strikes to wrest control of industry from employers
to achieve workers’ control.

Systems theory
Dunlop’s (1958) systems theory consists of a set of informal and formal ‘rules’ for
governing the workplace, with all parties operating under the influence of a broader
economic, social, political, technological and cultural environment. The system is
viewed as being self-correcting as long as the parties recognise the legitimacy of each
other’s roles.

Team briefings
A meeting format applied by management as a means of disseminating organisational
information to employees.

Teamwork
Collection of organisational members with different job roles and responsibilities, who
combine to achieve a set range of specialised tasks in a coordinated manner, engage in
collective problem-solving, or work as an independent group within an organisation.

Total quality management

Collection of organisational members with specialist job roles and responsibilities,
who combine and are trained to manage the continuous improvement of work
performance and product quality with some measure of autonomy.

Trade union
A group of wage-earners concerned about their members’ wages and working
conditions; they also have broader objectives related to equality, fairness and social
justice.

Union density
The proportion of the workforce who are union members.

Unitarism
A view of workplace relations that assumes employees and managers have a common
interest in the success of their organisation, and that collective bargaining and trade
unions create conflict in a relationship that would otherwise be peaceful.

Unprotected industrial action

Illegal industrial activities not approved by the Fair Work Commission.

Wage-fixing principles
A set of principles adopted by the federal tribunal to guide its determinations in the
setting of award wages. Many of the same principles were adopted by state tribunals.

Wage rate
A monetary sum paid per period of time worked, typically calculated on an hourly basis
(e.g. $20 paid for every hour worked).
Wobblies
The nickname given to the Industrial Workers of the World, a radical Anarcho-
Syndicalist organisation active early in the twentieth century.

Work–life balance
A broad concept that includes attempting to balance work (including career and
ambition) on one hand, and life (including areas such as health, leisure, family, pleasure
and spiritual development) on the other.

Workers’ compensation
A form of insurance paid by employers that provides wage replacement and medical
benefits to employees injured in the course of their employment. Australia has a federal
scheme (Comcare), as well as state-based schemes.

Workplace Gender Equality Agency

A federal government agency that advises employers and employees on gender equality
in the workplace, and works to promote and improve gender equality in the workplace.
INDEX
Abbott/Turnbull Coalition Government 267
ABC 37, 42–3
absenteeism 219, 224–5, 251
absolute power 119
ACCI Annual Report 2014 83
ACCI National Member Network 83
The Accord 34, 110, 189–90, 318
case study 40–2
Affirmative Action (Equal Opportunity for Women) Act 1986 259
Age Discrimination Act 2004 257
ageing workforce 254–6
agreement-making 147–52
central to decentralised 146–7, 152
current debates about 168–71
alliance strategies 342
Allianz Australia Workers’ Compensation (NSW) Limited 297
allowances 179
Alternative Dispute Resolution (ADR) process 217, 236
choosing mediators 237–8
criticisms 237
stages of 238–41
See also mediation
ambit claims 121
Ambulance Employees Australia 242, 243
Ambulance Victoria 242
American Federation of Labor–Congress of Industrial Organisations (AFL–CIO) 48
Anarcho-Syndicalist unions 49, 50
arbitrated enterprise agreements 150
Arbitration Commission 121
Arbitration Court 121
See also Arbitration Commission
Asahi Diamond Industrial Australia Pty Ltd case 90
asbestos settlement case study 68–70
Asbestos Injuries Compensation Fund 68
Associated Master Plumbers of Victoria 80
attitude surveys 348–9
Audit Office of New South Wales 224
Australian Bureau of Statistics (ABS) 195, 222, 225
Employee Earnings and Hours (2015) 158
Australian Catholic Council of Employment Relations 168
Australian Census of Women in Leadership 2012 254
Australian Chamber of Commerce and Industry (ACCI) 81, 83, 90
complexity of governance structure 86
criticism of enterprise agreements 171
rejection of minimum wage rise 210
Australian Constitution 56, 307
section 51 118–19, 120, 121, 123, 150, 227
section 52 119
section 122 118, 119
Australian Council of Social Services 169
Australian Council of Trade (ACTU) 34, 70, 84, 256, 266
affiliations 56–8, 59, 61
anti-Work Choices campaign 124
charter of union delegates’ rights 60–1
formation of 50, 54
Medibank national general strike 47
minimum wage push 209–10
views on enterprise and productivity 170–1
See also The Accord
Australian Electoral Commission 165, 229
Australian Fair Pay Commission (AFPC) 123, 126, 190–1
Australian Hotel Association (AHA) 84, 85, 86
Australian Human Resources Institute (AHRI) 327
Australian Human Rights Commission Act 1986 257
Australian Human Rights Commission (AHRC) 258, 265, 266, 294–5
Australian Industrial Registrar 126
Australian Industrial Relations Commission (AIRC) 118, 122, 126, 228, 266
See also Fair Work Australia; Workplace Relations Commission
Australian Industry Group (AIG) 81, 84, 90, 95
criticism of enterprise agreements 171
rejection of minimum wage rise 210
Australian Labor Party 34, 54, 56
breakaway Catholic movement 30, 62
changing ideologies within 35
reforms 34
support for public sector 30
See also The Accord; Democratic Labor Party
Australian Meat Industry Employees Union 90
Australian Public Service Maternity Leave (Australian Government Employees) Act 1973 266
Australian settlement 29, 32
Australian Workers’ Compensation Statistics 2012–13 291
Australian Workers Union (AWU) 50
Australian Workplace Agreements (AWAs) 79, 88, 90, 123, 140, 190, 222
abolition of 130
no-disadvantage test 124
phasing out 151
Australian Workplace Barometer 295
authoritarian employer associations 88, 89
authoritarian unions 47, 51–3
awards 29, 153–7
decreasing industry 152
industrial 149–50
reform case study 97–8
registered 153
system of national 121–2

Balanced Scorecard Strategic Management System 324–6
banking industry’s influence on governments 108
Banton, Bernie 70, 292–3
bargaining orders 162
bargaining period 160, 161
bargaining power 107, 182–3, 185
bargaining representatives 160, 161, 229
BCA See Business Council of Australia (BCA)
behavioural theories 8, 313
Better Life Index 2011 (OECD) 270
Better Off Overall Test (BOOT) 131, 132, 166–7
bifurcation of labour market 38
binding ideology 9, 10
black bans 219
bonus payments 179, 349
Boral settlement case study 139–40
bourgeoise 341
Braverman, H. 12
See also labour process theory
Brodie’s Law 294
case study 301–2
Builders Labourers Federation 90, 91, 219
Building and Construction Industry Improvement Act 2005 136
building unions 136–7
bullying 293, 294–5
Brodie’s Law case study 301–2
Burrows, Sharon 59
Business Council of Australia (BCA) 84, 90, 95
governance 85–6
IR reform case study 97–8
members 81–3

capacity to pay principle 187
capitalism 11, 17, 33, 110
impact on conflict 221
moderating 54
See also laissez-faire capitalism
capital–labour ratio 181
car industry conflict and resolution 12–14
Carer Recognition Act 2010 268
casual workforce, Minimum Wage Orders 192–3
Central Council of Employers of Australia 89
Central Queensland Pastoral Employers’ Association 77
centralised agreement-making 148, 151
centralised bargaining 148, 220
arguments for and against 203–5
union support for 151–2
centralised wage fixation 179, 188, 203–5
certified agreements 122–3
CFMEU enterprise bargaining case study 99–100
CGU Workers Compensation (NSW) Limited 297
Chartered Institute of Personnel and Development (CIPD) 238
Christian socialism 51
class conflict 17, 110–11, 221
See also capitalism
codetermination practices 346
Cold War politics 62
collective agreement-making 148
collective agreements 147, 196, 197
average weekly earnings 198
collective bargaining 48, 53, 127, 148, 151, 334
as form of employee participation 344, 350
HRM’s views of 315
 reliance on 313
weakening 36
ComCare 289, 297
common law 114–18
multi-factor test 115
common law agreements 150–1
common law contracts 137
Commonwealth Bank 34
Commonwealth Conciliation and Arbitration Act 1904 56, 78, 87, 89
Commonwealth Court of Conciliation and Arbitration 78
Commonwealth Workers’ Compensation Scheme 289
communism and influence on unions 49–50, 52–3
company journals 348
company unions 54, 56
comparative wage justice principle 187
Comparison of workers’ compensation arrangements in Australia and New Zealand (2015a) 298
Conciliation and Arbitration Act 1904 89, 121
Conciliation and Arbitration Commission 118, 122, 186
See also Australian Industrial Relations Commission (AIRC)
conciliation and arbitration system 29–30, 118
dismantling 35
effect of legislative reform on 41
Confectionery Manufacturers of Australia 78, 90
conflict 218–20
car industry 12–14
business cycle factors 221
frames of reference 313, 314–15
impact of decentralisation 217
mediation 236–41
organisational factors 221
pluralist approaches 345
political process factors 221
social factors 221
theories on 220–1
See also industrial action
consent agreements 150
consent awards 121
conservatism 51
constitutional law 118–20
Construction Forestry Mining and Energy Union (CFMEU) 99–100, 136
settlement case study 139–40
construction industry
case studies 99–100, 139–40
Construction Worker 99
consumer price index (CPI) 182
contract at will theory 117
core workers 37
corporate social responsibility 323–4
Corporations Act 2001 134
corporations power 120, 123, 124, 135
corporatism 42, 109–10, 111, 112
Court of Conciliation and Arbitration 121
See also Arbitration Court
CPSU v G4S Custodial Services 2014 132
craft employer associations 79–80
craft unions 54, 55
culture
adversarial 29
organisational 27
youth 33

decentralised agreement-making 148, 151
decentralised bargaining 148, 151, 203–5, 220
employer support for 152
impact on IR 316–17
decentralised wage fixing 203
defence power 119
defensive conflict 220
Democratic Labor Party 30, 62
Department of Employment 158, 252
Department of Health and Ambulance Victoria 243
Department of Immigration and Border Protection 251
Department of Immigration and Citizenship 252
direct discrimination 256, 258
Direct Health Solutions 224
Disability Discrimination Act 1992 257
discrimination 249, 256, 258
discrimination legislation and regulation 257–64
state-based agencies 258
dispute resolution (Australia) 227–41
case studies 242–3, 243–5
enterprise agreements 232–4
Fast Food Award 2010 232
modern awards 231–2
role of FWC in 234–5
diversity 249–57
areas of concern 264–72
benefits and disadvantages 250–1
Flight Centre 262–4
Indigenous workers 256–7
migrant workers 251–2
older workers 254–6
women workers 252–4
younger workers 256
Diversity Council of Australia 206
‘Dog Collar Act’ 1928 78
Dollar Sweets dispute 78, 90
Dunlop, J. 9, 10, 48
See also systems theory

economic contexts 28
Economic Planning Advisory Council 78
employee involvement 333, 336–9
categories and forms of 338
coexistence with employee participation 339–43
determining criteria for 334
dimensions of 339
forms of 347–50, 352
frames of reference 340–2
employee participation 333, 335–6
 coexistence with employee involvement 339–43
determining criteria for 334
dimensions of 337, 339
forms of 335–6, 344–6
frames of reference 340–2
legal requirements regarding 350–2
Employee Representation 286
employee turnover 220, 225–6, 251
measuring 325–6
employees
health and safety obligations 285
power-sharing agreements 335–6
employer associations 76, 77, 87
evolving roles 96
FWC registration 91–3
governance 85–6
history of Australian 77–9
industry 80
peak associations 81–4
political influence 90
strategies used by 89–93
structure 84–5
theories used in 87–9
types of 79–84
viability of 93–5, 328
employers 76
anti-discrimination policies 261–4
duty of care 284
legal obligations regarding employee consultation 351–2, 353
power-sharing agreements 335–6
Employers Mutual NSW Limited 297
employment contracts 117–18
employment relations 1, 3–4
American and British 3, 4
common law 114–18
complexities of statutory regulation 120–1
employee participation and involvement 339–43
job requirements 319–20
moving from obligation to contracts 117–18
relationships within 4
state intervention reasons 106–7
theories used in 112
understanding contexts within 24–5
employment relations (Australian)
internal contexts 26–8
period of stability and predictability 29–32
uncertainty and transition phase 32–4
violent period 55–6
enterprise agreements 121, 130–1, 150, 157–68, 334
bargaining period 161
Better Off Overall Test (BOOT) 131, 132, 166–8
case study 173–4
coverage and types 158–9
debates about productivity 169–71
dispute resolution 232–4
 employee coverage 2011–14 159
enforceability of 172
good-faith bargaining 161–3
increase in 152
maternity leave provisions 267
terms used 159–60, 164–5
workplace approval process 166
enterprise bargaining 79, 90, 96, 130–1, 167–8, 223
enterprise flexibility agreements (EFAs) 120, 123
enterprise unions 54, 56
Equal Employment Opportunity (EEO) 269, 316
Equal Opportunity Act 2010 (EO Act) 259
Equal Opportunity for Women in the Workplace Act 1999 (EOWW Act) 259, 269
Equal Opportunity for Women in the Workplace Amendment Act 2012 (the Amendment Act) 259–61
equal pay for work of equal value 187
Equal Remuneration Convention 1951 205
European employee participation 294, 335–6, 346
European Economic Community 32
exclusive power 119
external contexts in organisations 25, 28–9, 38

Factories Act 1878 (UK) 282
Factories and Shops Act 1885 282
Fair Work Act 2009 90, 91, 120, 124–36, 147, 152, 267, 269
awards under 153
building industry provisions 136–7
criticisms about framework 168–71
dispute resolution 228–31
employee consultation legal obligations 351–2, 353
enterprise bargaining 130–1, 167–8
General Protections 135
industrial action penalties 165
key features 135–6, 138
modern awards 128–30
provisions for bullying 294
section 172(1) 130–1
section 311 134
section 329 130
section 385 133
section 526–739 234–5
sections 418–472 229–30
sections 435–469 229
unfair dismissals 132–4
union right of entry provisions 131–2
wage fixation under 179
wage system under 191–4
workplace determinations 132
Fair Work Act permits 290
Fair Work Australia 126
anti-bullying campaign 301–2
Fair Work Building Commission (FWBC) 136–7
Fair Work (Building Industry) Act 2012 136
Fair Work Commission (FWC) 61, 85, 91, 97, 118, 173, 191, 320
Annual Report 2013–14 158
conciliation and mediation role 163
 dispute applications–lodgements 2011–14 234–5
employer associations registration 92–3
extent of power 114, 165
provisions for bullying 294
review of awards 128–30, 152
role and responsibilities 126–7, 154–6, 209, 234–5
waterfront conflict 345
See also Minimum Wage Panel
Fair Work Divisions 128
Fair Work Ombudsman (FWO) 128, 167, 193, 194
mediation case study 243–5
professional mediation 239–41
Fair Work Review Panel 170
Fairfax Media 42–3
fascism, trade unions under 52
Federal Circuit Court of Australia 128
Federal Court of Australia 128, 142, 173, 259, 345
Federal Institute of Personnel Management of Australia (IPMA) 309
Federal Magistrates Court 128, 259
See also Federal Circuit Court of Australia
financial incentives 349, 352
flexible work arrangements 267–9, 271, 351
Flight Centre’s diversity policy 262–4
‘Fordist’ production systems 31
Four Corners 42–3
457 visas 252
exploitation case study 273–4
Fox, Alan 6, 312
See also frames of reference
frames of reference 6–14, 17, 312
case study 18–19
pluralism 9–11
radicalism/Marxism 11–12
unitarism 6–9
Fraser Liberal Government 35
‘free’ markets 33
See also laissez-faire capitalism
freedom of association 127, 135
Friedman, Milton 33–4, 48, 88
Fynwest Pty Ltd 140

gender pay gaps 187, 195
reasons for 205–7, 253–4
general protection provisions 156, 235
general unions 54, 56
Gillard Labor Government 136, 266
GIO General Limited 297
global financial crisis 16, 35, 256
globalisation effects 2, 122, 185–6
Gloria Jean’s underpayment of staff 193–4
going rate 184
good-faith bargaining 127, 161–3, 209, 351
good-faith bargaining orders 127
Gramsci, Antonio 11, 49
green bans 90
greenfields agreements 158, 166
gross wage 179
groupers 62
guild socialist practices 336

Hamersley Iron 19–20
Harvard Business School model 309–10
Harvester Judgement (1907–1983) 186–8, 200
Hawke, Bob 308
Hawke Labor Government 40, 78
health and safety 280–1
codes of practice 287
emerging and current issues 293–6
failure of early legislation 282–3
federal and state legislation 281–3
occupational disease 291–3
regulations 286–7
workplace fatalities and accidents 290–1
Health and Safety at Work 1974 (UK) 283
health and safety committees (HSCs) 285–6
health and safety legislation 316
state-based 283, 284, 353
health and safety representatives (HSRs) 285
case studies 302
Provisional Improvement Notice (PIN) 286
hegemony 11–12
High Court 119, 142
History Of Parental And Family Leave Provisions In Australia (ACTU) 266
Hollis v Vabu 2001 115
Homesafe trial 70
horizontal divisions 26
Hospitality Awards 125–6
hospitality industry
dispute resolution 232
HRM and union case study 329
state intervention in awards 125–6
underpayment of staff 193–4
Howard, John 35, 124
Howard Coalition Government 35, 79, 90, 136
Baby Bonus scheme 266
intervention in MUA dispute 140–2
reforms 36, 123–4, 318
skilled migrant schemes 251–2
wage determination under 190–1
Work Choices 2005 81
HR Nicholls Society 35
human relations theory 7–8
human resource management (HRM) 1, 311–12
accommodating pluralism 318–19
approaches within 310–11
difference from IR 312–15
dimensions of 313–14
dispute resolution (Australia) 235–41
Harvard Business School model 309–10
job requirements 319–20
 managing union relationships 320–1
managing unions case study 329
measuring policies 323–7
new directions 315–23
professional competencies 312
professional development 326–7
strategies to reduce conflict 236
weaknesses 316
See also strategic human resource management (SHRM)
human resource management theory 8–9
human resources 309
Hyman, R. 49

INCI Corp 37
The Incidence of Accepted Workers’ Compensation Claims for Mental Stress in Australia 295
incidental power 119
Indigenous workforce 256–7
indirect discrimination 256, 258, 260
individual agreement-making 148
See also individual bargaining
individual agreements 147, 151, 196, 197
individual bargaining 148
individual contracts See Australian Workplace Agreements (AWAs)
individual flexibility arrangements 159
industrial action 229
covert 219–20, 223–7
number of applications 2011–14 230
overt 218–19, 241
protected 164–5, 229–30
unlawful case study 173
unprotected 230–1
industrial awards 149
industrial conflict 218, 222–7
covert forms 223–7
decline in 222
industrial democracy 336, 344
industrial disputes See industrial conflict (Australia)
industrial power 118–19, 121
industrial relations (IR) 1
areas that need monitoring 321–2
complexity of system 307
conflict approaches 313
difference from HRM 312–15
dimensions of 313–14
federal interventions 118
levels of activities 10
new directions 315–23, 327–8
reforms 227–8
weaknesses 316
Industrial Relations Act 1988 122, 317
Industrial Relations Reform Act 1993 120, 150
industrial relations system 78, 93
federal 120–37
See also IR Club
industrial tribunals See tribunals
Industrial Workers of the World (IWW) 50
See also ‘Wobblies’
industry associations 80
industry awards 152
industry unions 54
Institute of Public Affairs 169
institutionalised individualism 15
internal contexts in organisations 25, 26–8, 38
International Labour Organization (ILO) 61, 205, 266, 281, 269, 296
International Trade Union Confederation (ITUC) 59, 61
interpellation process 12
IR Club 93, 94, 228
Iron Trades Employers’ Association 77

Jackson, David QC 69
Jackson Commission 292
James Hardie, unethical practices 292–3
James Hardie case study 68–70
joint consultative committees 334, 338, 346, 352

Keating Labor Government 79
maternity leave provisions 266
reforms 122–3
key performance indicators (KPIs) 324–5
Keynesian economic policies 29–30, 32, 33

labour and social division in Middle Ages 5
Labour Councils 84
labour inclusion 334
See also employee involvement; employee participation
labour markets
deregulation process 122
factor in wage rates 180–1
reforms 36, 97–8
shifting ideologies about 35–8
labour movement 34
See also The Accord
labour power of workers 2
labour process theory 12
labour productivity 184–5
labour turnover 220, 225–6, 251, 325–6
laissez-faire capitalism 33
laissez-faire employer associations 88
language and discourse, use in shaping behaviour 15
Lenin, Vladimir 16, 49, 52
Liberal Party 30
Liberal/National Government, changing ideologies within 35
lobby groups 77, 91
See also employer associations
lock-outs 165, 218
log of claims 121
See also ambit claims
low-paid authorisation 161

macro-level analysis 3, 108–9
majority support orders 160, 161
management thinking 2–3
managerial prerogative 31, 91, 93, 118, 309, 327–8
threats to 87, 317
Manufacturing Consent (Burawoy) 12
manufacturing industry processes 31
margin for skill principle 187
Maritime Union of Australia (MUA) 59
case studies 140–2, 173
Marx, Karl 11, 49, 110
Marxism 11–12, 14, 17, 65
employee involvement and participation 342
relevance in post-GFC world 16
state interventions 110–11, 112
Marxist–Leninst unions 47, 49–50, 53
Master Builders Queensland 99–100
Master Plumbers Association 79–80
master–servant relationships 5, 115–16
maternity leave 266–7
Maternity Protection Convention 1919 (No. 3) 266
Mayo studies 8
media’s influence on governments 108
mediation
choosing mediators 237–8
in disputes 223, 236–41
dispute resolution case study 243–5
sexual harassment 236–7, 266
stages of 238–41
tips for successful 244–5
Medibank 47, 189, 226
Medicare 47, 189
mesothelioma 69, 292
Metal and Engineering Workers Union (MEWU) 19
Metropolitan Board of Works 80
micro-level analysis 3
migrant workers 272
case studies 42–3, 273–4
sham contracting 37
skilled migrant schemes 251–2
underpayment and exploitation 193–4
unionisation of 31–2
See also peripheral workforce
minimum to median wage ratio 200
minimum wage 199–202
case studies 209–10, 211
gender pay gaps 205
real wages compared internationally 201
and unemployment rates 202
Minimum Wage Orders 192–3
Minimum Wage Panel 179, 188, 191–3
mining industry
bifurcation of labour market 38
deunionisation case study 19–20
influence on governments 108
model dispute resolution process 157
Model Work Health and Safety Act (WHS Act) 90, 283, 284–5, 289–90
regulation and codes of practice 286–7
modern awards
ABS statistics 153
content of 154–6
dispute resolution 156–7, 231–2
enforceability of 172
minimum standards 129
review of 128–30
terms used in 155–6
monetarism 33–4
the movement 62
See also groupers
MUA See Maritime Union of Australia (MUA)
Mudginberri meatworks (1985) dispute 78, 90
multi-employer agreements 148
multi-enterprise agreements 130, 158, 161, 166
multi-factor test 115
Myer 37

National Employment Standards (NES) 124–5, 128, 131, 138, 153, 154, 268
National Farmers Federation (NFF) 78, 90, 141
National Industry Associations 83
National Party 30
national system employees awards 153
national wage cases 121–2
National Wage Order 2014 192–3
needs of the worker principle 187
neo-corporatism 34, 110
neo-human relations theory 8
neoliberalism 33–4, 35, 105
state interventions 108–9, 111, 112
net wage 179
New South Wales Business Chamber 169
New Yorker 16
1949–50 Basic Wage Case 205
no-disadvantage test 124
nominal wage 179
Notice of Employee Representational Rights 161, 166, 168
NSW Government 68, 70
OHS laws 90–1
NSW WorkCover 285

obesity 293, 296
occupational disease 291–3
occupational health 281
occupational health and safety 288–9
See also OHS agencies and regulators
Occupational Health and Safety Act 2004 284
occupational unions 54, 55
Occupy Wall Street movement 16
OHS agencies and regulators 288–90
One Big Union concept 50, 54
ordinary hours 154
organicist unions 47, 51, 53
Organisation for Economic Cooperation and Development (OECD) 61, 270
Organisation of Arab Petroleum Exporting Countries (OAPEC) 32
organisations
alliance strategies 342
conflict within 241
culture 27–8
dealing with employee feedback 349–50
glass ceiling 206, 207, 254
internal and external contexts 25–9, 38
measuring KPIs 324–5
over-award agreements 150
over-award payments 122
over-award rates 187–8
overtime rates 179

P&C Stevedores 141
Panlock, Brodie 294, 301–2
paper disputes 119, 121
paramedics pay dispute case study 242–3
parent awards 152
Patrick Stevedores (Patricks) 140
peak associations 79, 81–4
political influence 81, 90, 95, 96
structure 85–6
penalty rates 179
peripheral workforce 36, 37–8
person conducting a business or undertaking (PCBUs) 284–5
personal injury settlement case study 68–70
Personnel Officers Association of Australia 309
pickets 219
piece rates 178, 179
Pig Out and impact of state intervention 125–6
pluralism 3, 4, 9–11, 17
conflict approaches 313, 345
decline of 16
employee involvement and participation 341
employment relations 112
insights into adversarial culture 29
limitations of 39
state intervention approaches 108, 111, 112
pluralist employer associations 88–9
pluralist unions 47, 48, 53
Police Officers Association 141
political contexts, in organisations 28
postmodernist theories 14–15, 16
power See bargaining power; industrial power
presenteeism 224, 226–7
Prices and Incomes Accord 78, 189, 308
See also The Accord
PricewaterhouseCoopers 224, 226
proactive conflict 220
procedural rules 114, 344
Productivity Commission 97, 137, 138
proletariat 341
protected action ballot order 165, 229–30
protected industrial action 164–5, 229–30
Provisional Improvement Notice (PIN) 286
psychological contracts 36–7
public transport wages and conditions case study 70–1

Qantas 34, 218
QBE Workers Compensation (NSW) Limited 297
quality circles 347
Queensland workers’ compensation schemes 297

Racial Discrimination Act 1975 257, 258
radicalism 11–12, 16, 17
employee involvement and participation 341–2
insights into adversarial culture 29
labour process theory 12
See also Marxism; syndicalist unions
Rail Tram and Bus Union (RTBU) 70–1
reactivity theory 87–8
Reagan, Ronald 33, 34
real wage 179
register of injuries 298
registered awards 153
retail industry
bifurcation of labour market 38
sham contracting 37
underpayment case study 42–3
Rio Tinto 19–20
See also Hamersley Iron
Roben’s Inquiry into Safety and Health at Work (Roben’s Report) 283
Royal Commission into trade unions (2015) 137, 138
Rudd, Kevin 293
Rudd Labor Government 124
Rudd/Gillard Labor governments 36
Russian Revolution 1917 49

sabotage 220
Safe Work Australia 287, 288, 290–1, 295, 298, 300
safety net provisions 138, 153, 171, 190, 209
See also National Employment Standards (NES)
salary 178, 179
scabs 218
Scandinavian corporatist approaches 34, 109
scientific management theory 7, 16, 31
scope orders 161
7-Eleven underpayment case study 42–3
Sex Discrimination Act 1984 258–60, 266, 269
sexual harassment 265–6
case study 274–5
mediation 236–7, 266
sham contracting 37
shop stewards 59, 60–1
single-employer agreements 148
single-enterprise agreements 130, 158, 166
sit-ins 218
Small Business Fair Dismissal Code 133–4
Snowy River Hydro-Electric Scheme 30
social Catholicism 51, 53
social contexts 28
social partnerships 336
Social Security Legislation Amendment (Family Measures) Act 1995 266
social wage 34, 189, 222
socialism, trade unions under 52
Society for Human Resource Management 325
Special Commission of Inquiry 69–70
Spotless 37
stagflation 33
the state
building industry legislation 136–7
changing role of 39
complexity in governance 113–14
interventions 106–7, 125–6
regulating wage indexation 188
striking balance between employers and employees 105–6
theoretical frameworks 108–12
State and Territory Chambers of Commerce and Industry 83
state-based employer associations 79
state-based trade unions 59
states referral to federal power 120
statute law 118, 120–1
Stevens & Ors v Fernwood Fitness Centres Pty Ltd (1996) 259
Stevens v Bodribb Sawmilling 1986 115
Stonemasons’ Society 77
Storey, J. 309, 313–15
strategic choice theory 10, 107
strategic human resource management (SHRM) 311
stress 293, 295–6
strike-breakers 218
strikes 55–6, 47, 77, 78, 118, 218, 223
substantive rules 114, 344
Sunshine Harvester pay dispute 186
superannuation 156
Supervision of Workrooms and Factories Act 1873 282
Sweden and history of corporatism 109
Sydney Water mediation and conciliation process 163
syndicalism 336
syndicalist unions 47, 50, 53
systems theory 9, 10, 107

Taylor, F. 7, 16
See also scientific management theory
team briefings 348
teamwork 347
technology, in organisations 27
telecommunications call centre case study 18–19
temporary working visas 252
case study 273–4
See also 457 visas
territory-based employer associations 79
Thatcher, Margaret 33, 34, 109
total quality management 347–8
trade and commerce power 119
Trade Practices Act 1974, s 45D 90
trade union membership 63–7
British context 66
correlation to size of workplaces 66
declining 10, 46, 63–4
factors for increased 66–7
union density 63, 64, 319
trade unions 46–55
ability to influence governments 67
affiliation with ACTU 56–8
awards system process 121
bargaining power and effect on wages 182–3
bargaining rights 131
broad political campaigns 54
charter of union delegates’ rights 60–1
eight-hour day campaign 77
HRM approaches to managing 320–1
case studies 19–20, 68–70, 173, 301–2, 329
influence of communism on 49–50, 62
legal proceedings against 136
opposition by employers associations 89–91
organisational structure 62
reasons for joining 65–7
registration with FWC 85, 86, 91
reinforcing legitimacy 29
right of entry 131–2
role in OHS 290
Royal Commission into corruption 137, 138
structure 59–62
theories that ignore role of 8
working with workplace bargaining 318
See also building unions; state-based trade unions
Trades and Labour Councils 77, 84
transfer of employee 134
Transition to Forward With Fairness Bill 2008 124
Transport Workers Federation (ITF) 59
tribunals 78, 91, 114, 118, 178–9
erosion of power 79, 93
federal industrial 118–20
Tripartite Australian Manufacturing Council 78
Turnbull Liberal Government 137, 138
TWU v Qantas 2012 132, 218

unfair dismissals 132–4
union delegates 59, 60–1
See also shop stewards
union density 46, 63
Unions in a contrary world (1998) 63–4
unitarism 3, 6–9, 15–16, 17, 108–9, 313
conflict approaches 314–15
employee involvement and participation 340
insights into consensual culture 29
limitations of 39
state intervention approaches 111
unitarists 6
United Kingdom 3, 4
health and safety legislation 282, 283
trade union membership 66
United States of America 3
bullying incidence 294
cost of presenteeism 227
work–life balance 269
United Voice 37
unprotected industrial action 230–1

Vehicle Builders Union (VBU) 13
vertical divisions 26
vicarious liability 261
Victoria
case studies 70–1, 139–40, 242–3, 301–2
early craft employer associations 80
legislation 259, 284
occupational health and safety 287, 288–9, 294
referral to federal IR power 120, 153
workers’ compensation schemes 297
Victorian Civil and Administrative Tribunal (VCAT) 259, 266
Victorian Employers Chamber of Commerce and Industry (VECCI) 91, 94–5
Victorian Equal Opportunity Board 259

WA Health 270
wage fixation 179, 188, 203–5
wage rates 179
wage setting 195–7, 198
wage-fixing principles 186–7
wages 178–9
ability of organisations to pay 183
average earnings by employment sector 199
average weekly cash earnings 2014 196
bargaining power and effect on 182–3
case studies 42, 70–1, 209–10
centralised system 190–1
contributing factors 208–9
cost of living factors 182
debates about minimum 199–202
economic circumstances 181–2
gender pay gaps 187, 205–7
globalisation effect 185–6
going rate 184
government policies and 185
history of wage determination 186–8
industry variations 181
job requirements 180
labour productivity 184–5
Minimum Wage Panel reviews 193
psychological and social factors 180
statistics 195–9
supply and demand factors 180–1
two-tiered system 189
types and determinants 179–86
Western Electric Company 7–8
WHS Act See Model Work Health and Safety Act
Williams v AMWU 2010 136
‘Wobblies’ 50
women in workforce 252–4
common occupations for aged 255–6
flexible work arrangements 268
participation rates (1966 and 2011) 253
positions of leadership 254
See also gender pay gaps
work and importance to self-identity 1–2, 17
work bans 219
Work Choices 130, 204, 318
Work Choices Act 2005 36, 88, 90, 120, 124, 171, 191, 228
Work Health and Safety Act 2011 289
workers’ compensation 280, 297–9
workforce diversity 251–7
workforce employed by the state 113
WorkHealth programs 296
work–life balance 264, 269–72
Workplace Authority 126
workplace authority, the legitimacy of 5–6
workplace bargaining 96, 318
workplace conflict 9, 11, 48
workplace determinations 132
Workplace Gender Equality Agency (WGEA) 205, 207, 261
Workplace Health and Safety (WH&S) permits 290
workplace inspectors 289–90
Workplace Ombudsman 128
Workplace Relations Act 1996 (WR Act) 36, 120, 123, 151, 190
Workplace Relations Amendment (Work Choices) Act 2005 123–4, 190
Workplace Relations Commission 118
WorkSafe Victoria 288–9, 295
anti-bullying campaigns 301–2
Employee Representation 286
WorkHealth programs 296
work-to-rule 219
work-wage bargain 178
World Health Organization (WHO) 281

Xchaning Integrated Services Australia Pty Ltd 297

Yarra Trams 70–1
younger workers 256–7

Zujis v Wirth Bros 1955 115