Wright, C.F. & Kaine, S. (2021). Employment relations in Australia. In: Bamber, G., Cooke, F.L., Doellgast, V.

& Wright, C.F. (eds), International and Comparative Employment Relations (7th edition). London: Sage.

Employment relations in Australia

Chris F. Wright and Sarah Kaine1

Australia is a federation of former British colonies that federated as one country to form the
Commonwealth of Australia in 1901. The Australian States (i.e. the former colonies) initially
had substantial powers over employment relations. Over time these powers were gradually
ceded to the Commonwealth (i.e. federal- or national-level) jurisdiction, which is the main
focus of this chapter.

Australia has a wealth of mineral and energy resources and is sparsely populated, except
along its eastern coastline. In 2019, Australia had a population of 25 million people in an area
almost the size of the United States mainland, a GDP exceeding US$1.3 trillion and was the
world’s fourteenth largest economy. Out of its total civilian workforce of approximately 12.9
million people, 80 per cent are employed in services, and 16 per cent in manufacturing and
construction. Australia’s economy remains highly dependent on export earnings from mining
and agriculture, which employ only 5 per cent of the total workforce. However, a
longstanding reduction in manufacturing employment has underlined Australia’s dependence
on mining, which is subject to periods of boom and bust.

Prior to the impact of COVID-19 Australia had enjoyed strong economic growth and
prosperity since the early 1990s. Compared to most other countries, it was affected relatively
mildly by the 2007-08 global financial crisis due to the success of economic stimulus policies
and international demand for mineral resources. In 2018, Australia’s annual GDP growth rate
was 3.4 per cent, price inflation was 2.1 per cent, wage growth was 2.1 per cent and
unemployment was 5.2 per cent. Australia’s labour force participation rate was 71 per cent
for men and 61 per cent for women (Oliver and Yu 2019). The structure of employment has
changed radically in recent years, with a decline in full-time permanent work, the expansion
of various forms of non-standard work, such as ‘casual’ or temporary jobs, and increased the

1The authors are grateful to Greg Bamber, Bradon Ellem and Russell Lansbury for their comments on this
chapter. Earlier editions of this chapter were co-authored variously by Russell Lansbury, Nick Wailes and Ed
Davis, and this chapter builds upon their work.

1
use of outsourcing and labour market intermediaries (Campbell, Macdonald & Charlesworth
2019).

Australia is widely regarded as a liberal market economy with a relatively flexible labour
market (Hall & Soskice 2001: 19). However, these features have emerged only in recent
decades. Since the early 1990s, there has been a shift away from the centralised and
collectivist system of compulsory arbitration that characterised Australian employment
relations for much of the 20th century towards a decentralised and more individualised
regulatory framework. Nonetheless, the continued existence of a (weakened) system of
occupation- and industry-specific minimum standards, known as ‘awards’, allows for some
coordination in the determination of wages and conditions and a stronger safety net for
workers than other liberal market economies such as the United States, the United Kingdom
and New Zealand (McLaughlin and Wright 2018).

This chapter examines the main features of the Australian employment relations system.
After outlining the changing roles of the main employment relations actors – the state, trade
unions and employer associations – it examines two key processes – wage determination and
industrial conflict. The chapter then explores three significant issues that all relate to
precarious work, which is salient to contemporary public debate in Australia: gender equality,
the expansion of the temporary migrant workforce, and the emergence of gig-work. Finally,
the likely future directions of the Australian system are considered in the conclusion.

The employment relations parties

The state

Compared to other liberal market economies, the state has traditionally played a highly
interventionist role in employment relations in Australia and continues to do so, albeit in
much altered ways. In 1901, the former colonial governments agreed to establish the
Commonwealth of Australia. This resulted in the Commonwealth government being given
limited jurisdiction over employment relations, with the State governments (i.e. the former
colonies) retaining considerable power. Under the Constitution of the Commonwealth of
Australia, the Commonwealth government was empowered to make industrial laws only with
respect to ‘conciliation and arbitration for the prevention and settlement of industrial disputes
extending beyond the limits of any one State’ (Section 51, para. xxxv). While this restricted

2
direct intervention by the Commonwealth government, industrial tribunals operating
independently of the legislative and executive branches of the state played a central role in
resolving disputes. This resolution was achieved through the creation of ‘awards’ that
specified minimum wages and conditions for all employees in a particular industry or
occupation. This system came to cover most employees (Ellem & Cooper 2020).

During the 1990s there were major changes to this system. The Industrial Relations Reform
Act 1993, introduced by the centre-left Labor federal government led by Paul Keating,
allowed for the possibility to certify non-union (as well as union) agreements, which had not
been permitted previously in the Commonwealth jurisdiction. The election of a centre-right
Liberal–National ‘Coalition’ federal government in 1996 under the leadership of John
Howard (in office 1996-2007) heralded further, and ultimately far more significant, changes
to the employment relations system. These reforms came in two stages. First, the Workplace
Relations Act 1996 attempted to limit the power of the main industrial tribunal operating at
the Commonwealth (or federal) level, the Australian Industrial Relations Commission, which
later became the Fair Work Commission (‘the Commission’). For the first time it became
possible to register individual (non-union) contracts, known as Australian Workplace
Agreements, giving them primacy over collective agreements (McCallum 1997). Second,
upon securing majority support in both houses of parliament, the Howard government in
2005 introduced fundamental changes to the Australian employment relations system through
its Work Choices legislation.

Work Choices represented a comprehensive attack on arbitration, unions and collective

bargaining. So sharp was the break with Australia’s employment relations policy legacy that
even many employers were taken by surprise. Key objectives of this legislation included the
creation of a single national employment relations system, expansion of Australian
Workplace Agreements that could replace awards, further restrictions on union activities, a
reduced role for the Commission and exemption from unfair dismissal laws for businesses
with fewer than 100 employees. One of the most significant aspects of Work Choices was
changing the constitutional foundation for Commonwealth employment relations legislation
from the conciliation and arbitration power to the corporations power. Among other things,
this allowed the Commonwealth government to set minimum terms and conditions of
employment directly without recourse to the making of awards in the settlement of an
industrial dispute. Work Choices proved to be highly controversial, and contributed to the

3
loss of government by the Coalition parties at the 2007 federal election (Cooper & Ellem
2008).

After its 2007 election victory, the Labor governments in office from 2007 to 2013 under
Kevin Rudd and his successor Julia Gillard promised to implement a ‘fair and balanced’
employment relations policy through the Fair Work Act 2009. However, as the details of the
policy were revealed, critics argued that it appeared to be ‘more a retreat from the excesses of
Work Choices than a fundamental recasting of industrial relations’ (Hall 2008: 376). Despite
much criticism, the Fair Work Act 2009 continues to serve as the main legislation governing
Australian employment relations. Its main features are as follows (Bray et al., 2018):

• The Fair Work Commission is the government body tasked with settling industrial
disputes through mediation and conciliation and unfair dismissal claims, reviewing
the terms of awards, certifying enterprise agreements and making orders relating to
industrial action. The Commission is also tasked with setting the national minimum
wage and conducting annual wage reviews. The Commission replaced several
existing bodies, but no longer has arbitration powers that defined its role for much of
the 20th century.
• The Fair Work Ombudsman is the government inspectorate responsible for promoting
and enforcing compliance with and investigating breaches of workplace laws and the
terms of awards and enterprise agreements. Trade unions traditionally had a de-facto
role in enforcing these labour standards, but their capacity to perform these functions
has been weakened by declining membership and legal restrictions on union activities
(Hardy & Howe 2009).
• Ten legislated National Employment Standards set minimum conditions for all
workers covered by the Commonwealth system. The National Employment Standards
include provisions for annual leave, personal leave, flexible work arrangements for
parents, notice of termination and redundancy pay.
• A modified system of ‘modern awards’ provides industry- and occupation-specific
safety nets for most employees.
• Enterprise agreements (or collective agreements) can be established between an
employer and their employees. In order to certify an enterprise agreement, the
Commission must be satisfied that employees’ wages and conditions are ‘better off
overall’ compared to the relevant award. Employees may or may not be represented
by a union during agreement negotiations, but a union that has acted as a bargaining

4
 agent for the employees may apply to the Commission to be covered by the
agreement.
• There is limited provision for the making of collective agreements covering multiple
enterprises in low-paid industries. Very few multi-employer agreements have been
established in practice.
• Employers and unions are required to bargain in good faith during enterprise
agreement negotiations, although they are not required to reach an agreement.
However, the Commission is permitted to make a workplace determination where a
party ignores a good faith bargaining order and is empowered to settle disputes
between parties where there is protracted industrial action deemed to be causing
damage to people or the economy. This rarely happens.
• Union officials are given rights to enter workplaces to hold discussions with
employees provided that they hold a permit issued by Commission and that they abide
by certain conditions of that permit. However, many of the powers that unions once
had to exert influence over wages and working conditions have been curtailed (Ellem
& Cooper 2020).

There has been limited change in the powers and activities of the state since the Fair Work
Act 2009 came into effect. In the period since then the Coalition parties have “expended
considerable effort neutralizing community concerns about industrial relations in election
campaigns” (Cooper 2016: 80). Consequently, Coalition governments in office since 2013
have largely maintained the key features of Australia’s employment relations system. The
creation of the Registered Organisations Commission, which was established in 2017 to
provide greater oversight of the activities of trade unions and employer associations, is the
main exception to this. The Coalition government justified the creation of this new body
following several high profile cases of union corruption. However, unions have been highly
critical of the Registered Organisations Commission on the grounds that they believe it to be
a partisan initiative that provides heavy-handed and unnecessary scrutiny of the internal
activities of democratic organisations (Forsyth 2017).

The impact of COVID-19 on Australia’s employment relations system was not fully apparent
at the time of writing. Like most other countries the threat of the pandemic resulted in large
numbers of business closures and job losses in the first half of 2020. The Australian
government responded by creating the JobKeeper scheme whereby businesses affected by
COVID-19 were given a weekly A$750 payment – equivalent to 70 per cent of the median

5
Australian wage – for each eligible worker for six months, which businesses were required to
pay to their workforce. Eligible workers included all full-time employees, part-time
employees, casual employees with at least 12 months service, and sole traders including self-
employed and gig economy workers. Casual employees with less than 12 months service and
temporary migrant workers other than New Zealanders were not eligible for the JobKeeper
payment (Wootton 2020). Despite the longstanding antagonism and ideological hostility
between the Coalition parties and the union movement, the Australian government designed
the scheme with the input and cooperation of the Australian Council of Trade Unions and
received the support of the Australian Labor Party opposition (Crowe & Bonyhady 2020).

Trade unions

The establishment of the arbitration system encouraged the rapid growth of unions, which
workers were required to form in order to be represented under this system (Ellem & Cooper
2020). By 1921, approximately half of the Australian labour force was unionised. Although
union membership declined during the Great Depression of the early 1930s, the 1940s
witnessed a steady increase in density and a peak of 65 per cent was achieved in 1953. Union
density in Australia has fallen sharply from 41 per cent in 1990 to 13 per cent in 2016, with
only nine per cent of the workforce in the private sector unionised compared with 39 per cent
of those in the public sector (see Table 5.1). With the decline of industries in which male blue
collar workers were dominant, the ‘union heartland’ has become the public sector and certain
service industries. Women workers are now more likely to be union members than men.
Whereas the decline in membership density has been especially sharp among general and
conglomerate unions and to a lesser extent industry-based unions, unions organised on the
basis of occupational or professional identity have managed to sustain or even increase their
membership (Nicholson, Pekarek & Gahan 2017).

The reasons for the long-term decline of union membership include changes in the structure
of the economy, which has seen contraction of employment in manufacturing, a sector in
which unions traditionally have been well organised, and the growth of the private service
sector, in which unions are weaker. A related change is the falling proportion of full-time
employment and the rise of non-standard employment. Yet these phenomena characterise
most advanced economies, not all of which have experienced as much decline in membership
as Australian unions (Baccaro & Howell 2017). Other factors contributing to the decline of

6
unionism include growing anti-unionism among employers, new laws making it more
difficult for unions to organise and the removal of institutional arrangements enshrined under
the arbitration system (such as de facto compulsory unionism). Hostile policies towards
unions by centre-right Coalition governments, including State governments in the 1990s,
have also contributed to the decline in union membership (Peetz 1998). While the Fair Work
Act contained some provisions favourable to workers and unions, it did not accommodate
union requests to widen the scope of matters that could be bargained for in enterprise
agreements or to lift restrictions on unions’ right of entry to workplaces and penalties for
industrial action (Wright & Lansbury 2014).

The Australian Council of Trade Unions (ACTU) is the sole national union confederation. It
was formed in 1927. Now 38 unions and eight State and Territory peak trade union
organisations representing the vast majority of union members are affiliated to the ACTU.
Under the ACTU’s direction, unions have adopted strategies aimed at reversing membership
decline in recent years. During the 1990s, the union movement focused on amalgamations,
which resulted in the merger of 360 unions into 20 mostly industry-based ‘super unions’. The
rationale for these mergers was to release resources for improved provision of services to
members. While the strategy changed the structure of Australian unions and reduced their
number, it did not halt membership density decline. Nevertheless, there have been two recent
prominent union amalgamations that led to the formation of the Construction, Forestry,
Maritime, Mining and Energy Union in 2018 and the United Workers Union in 2019 (Bray,
Macneil & Spiess 2019). Reverting to a strategy that was seemingly unsuccessful previously
in addressing membership decline may appear rather curious. However, studies have
indicated that union amalgamations in the 1990s limited the magnitude of union membership
decline, even if they did not completely prevent it (Wooden 1999). Consolidating resources
in order to further contain membership losses once again appears to be the logic of the 2018-
2019 union amalgamations. Nevertheless, they are indicative of a lack of coherence in the
strategies adopted by Australian unions.

Aside from amalgamations, the ‘organising model’ was the other main strategy promoted by
the ACTU following the decentralisation of the employment relations system in the 1990s.
Unions were encouraged to build workplace activism, develop alliances with the broader
community and strengthen their capacity for strategic campaigning. The objective was for
unions to redefine themselves as more autonomous and less dependent on the state. In 1994,
the ACTU initiated the ‘Organising Works’ program, based partly on the experience of US

7
unions, in order to build the organising skills and capacities of Australian unions. This
strategy was formally launched at the ACTU Congress in 2000, which emphasised the central
role of the organising model in building a more inclusive, social movement approach to
unionism (Cooper 2000). While many unions adopted organising, it has not been embraced
universally. For instance, the Shop, Distributive and Allied Employees Association,
Australia’s second largest union representing workers in the retail sector, favours a “bargain
first, recruit later” approach. This is based on developing cooperative and enduring
relationships with large employers and using this to negotiate enterprise agreements, which
then forms the basis of a ‘servicing’ strategy to recruit workers into membership (Bailey et al.
2015: 6).

More recently, some unions have adopted ‘comprehensive campaigning’ strategies to

broaden their appeal to a wider range of workers and to mobilise union members to influence
government policy decisions. Hence, in the early 2010s, various unions mounted strong and
initially successful public campaigns for state interventions to provide equal remuneration for
social and community service workers, increase funding for better working conditions in the
aged care sector, establish a new agency to improve wages and work safety in road transport,
and stronger regulation to protect the conditions of garment manufacturing workers (Kaine &
Wright 2013). However, this approach has not galvanised popular support for unions nor
have the majority of unions adopted it. Furthermore, several of these regulatory initiatives
were later repealed by the Coalition government that came to power in 2013, thus
highlighting the vulnerability of union strategies aimed at harnessing state power to hostile
governments that can easily unwind previous gains (Ravenswood & Kaine 2015). This
arguably reflects a longstanding tendency of Australian unions to be overly reliant upon the
state as a source of their power ‘from above’, rather than mobilising the workforce ‘from
below’ though workplace organisation formed independent of government institutions
(Howard 1977).

Unions continue to maintain their strong historical links with Australian Labor Party in terms
of voting rights and financial support. These links provide unions with influence over the
Australian Labor Party’s policies and allow former unions officials to have relatively high
representation among the party’s parliamentarians. There have been discussions in recent
years about reducing union influence in the party and moving to a more independent
relationship. However, the formal link with the Australian Labor Party has allowed unions to
exert influence over policy. While union influence during the most recent period of Labor

8
government from 2007 to 2013 was lower compared to previous eras, the adoption of
compulsory superannuation during the Prices and Incomes Accord negotiated between the
ACTU and the Hawke-Keating Labor government (in office 1983-1996) remains a source of
institutional power for unions (Wright & Lansbury 2014). In particular, unions along with
employer associations are jointly responsible for governing industry superannuation funds.
The requirement for these funds to have equal numbers of employee and employer board
representatives has led them to be characterised as exhibiting an ‘employee representation’
governance model. Industry superannuation funds are not-for-profit occupational retirement
savings schemes with substantial coverage of the Australian workforce and which deliver
superior returns for their worker members compared to for-profit schemes governed by
financial organisations (Mees 2018).

The internal governance and financial management of unions has also come under greater
state scrutiny, as mentioned above (Bray, Macneil & Spiess 2019). However, Australian
unions have also demonstrated an ability to adapt to a changing labour market. This is evident
in the new organisations and initiatives that have been created to provide or improve
collective representation among groups of workers not been previously covered by unions.
These include the Young Workers Centre in Victoria, Hospo Voice, which aims to strengthen
representation of hospitality workers in light of problems with low-pay and wage theft, and
an agreement between Unions NSW and Airtasker, a prominent online platform, to establish
minimum standards for ‘gig economy’ workers (Minter 2017; Nicholson, Pekarek & Gahan
2017). Through these and other initiatives described above, some Australian unions have
shown willingness to experiment with new organisational forms and strategies for protecting
workers at risk of marginalisation. This may explain why organisations like worker centres
and civil society organisations aimed at providing alternative forms of collective worker
protection are less prominent in Australia than in other liberal market economies.

Table 5.1 Union membership density in Australia by selected characteristics (%), 1990
and 2016

1990 2016
Gender
Females 35 15
Males 45 12
Age
15–19 25 4

9
 20–24 34 7
25–34 42 10
35–44 44 13
45–54 46 17
55–59 50 21
60–64 47 18
65+ 21 10
Employment type
Permanent 46 19
Casual 19 5
Country of birth
Born in Australia 40 16
Born in another country 43 12
Sector
Public 67 38
Private 31 9
Industry
Accommodation and food services 24 2
Agriculture, forestry and fishing 13 2
Construction 45 9
Education and training 58 31
Electricity, gas, water and waste services 79 25
Financial and insurance services 44 10
Health care and social assistance 41 21
Manufacturing 46 13
Mining 63 17
Retail trade 25 11
Transport, postal and warehousing 58 20
Wholesale trade 19 5
Total 41 15
Source: Australian Bureau of Statistics (1996) Trade Union Members, Australia (ABS Cat. 6325.0); Australian
Bureau of Statistics (2016) Characteristics of Employment, Australia (ABS Cat. 6333.0).

10
Employer associations

The early growth of unions in Australia encouraged the development of employer

associations and led them to place greater emphasis on employment relations functions than
their counterparts in some other countries (Plowman 1989). Disunity and fragmentation
occurred within and between employer associations over many years, although they have
gained greater solidarity since the 1990s in support of more decentralised and individualised
labour market regulations. This partly reflects the waning influence of manufacturing
employers, which have tended to support coordinated wage determination and skill formation
and been more prepared to work with unions, and the growing power of employers in the
mining and private service industries that prefer ‘neoliberal’ or market-oriented and non-
union arrangements (Ellem 2017; Sheldon & Thornthwaite 1999).

Numerous employer associations have a direct role or interest in employment relations.

However, there is variation in their size and coverage, from small, single-industry bodies to
large ‘peak’ organisations that attempt to represent all employers within a particular State. In
1977, the Confederation of Australian Industry was established as a single national employer
association, almost 50 years after the formation of the ACTU. In 1983, a group of large
employers set up the Business Council of Australia (BCA), partly due to their dissatisfaction
with the Confederation of Australian Industry’s ability to service their interests. The BCA’s
membership comprises the chief executives of Australia’s 100 largest corporations, which has
given it a high profile when making pronouncements on employment relations matters. In
1992, the Confederation of Australian Industry merged with the Australian Chamber of
Commerce to form a new organisation, the Australian Chamber of Commerce and Industry
(ACCI), which now serves as a confederation of State chambers of commerce and industry
associations. In 1999, the Metal Trades Industry Association and Australian Chamber of
Manufacturers merged to form the Australian Industry Group (AiG) (Sheldon &
Thornthwaite 1999). A key recent development has been the growing influence of the
Australian Mines and Metals Association (AMMA), which casts itself as one of the four
leading employer organisations. AMMA’s rise is due partly to the significance of the mining
commodities sector to the national economy but also because it has adopted a more radical
agenda of further decentralisation of the employment relations system, which is a popular
position within parts of the wider business community (Ellem 2017).

11
There has been a general trend of employer associations away from an emphasis on industrial
functions, such as involvement in wage coordination and skill formation and providing
representation in tribunal hearings and enterprise bargaining negotiations. Instead, employer
associations have shifted their activities towards providing services for members and
lobbying governments for policies that facilitate greater labour market flexibility (Barry &
Wilkinson 2011). To this end, employer associations, particularly the BCA, have been
influential in policy changes that have decentralised wage regulation and reduced union
influence, shifted towards a ‘market-driven’ system of vocational training, and made it easier
for employers to engage migrant workers (Sheldon & Thornthwaite 1999; Wright 2017).

The influence of peak employer associations over labour market policies has not deterred
them from lobbying for even more advantageous policy settings for their members. Despite a
consistent push for a more flexible or employer-friendly regulatory environment, there have
been differences in employer associations’ strategies and priorities. Notably, a contrast has
emerged between ACCI and the AiG. This split was evident during the 2007 election
campaign when the AiG declined to contribute funds to the ACCI/BCA-led employer
advertising campaign in support of Work Choices. While there was greater unity between the
peak employer associations during the 2013 election when they lobbied for changes by the
victorious Coalition parties, they have since adopted different policy priorities (Thornthwaite
& Sheldon 2019). Recently ACCI has agitated for reform of the existing employment
relations regulations on the grounds they constrain employers from adopting flexible
arrangements. By contrast, AiG has focused on reforms to encourage growth of digitally
enabled work, arguing ‘Australia’s workplace relations laws provide extensive protections for
Australian workers, including those working in the gig economy’ (AiG 2019: 23).

Following the Coalition’s unexpected 2019 election victory, employer associations have been
eager to present their visions for further policy change. In keeping with its activist approach,
AMMA has lobbied to expedite the approval of enterprise agreements and restrict matters
these agreements are allowed to cover (Pennington 2019). The Morrison Coalition
government has opened the way for such changes to the regulatory framework through its
review of the Fair Work Act 2009 that commenced in mid-2019 with the Minister for
Workplace Relations signalling the enterprise bargaining system would be a particular focus
of the review.

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Employment relations processes

The determination of wages

Australia’s system of wage determination has changed significantly since the 1990s, from
one based on compulsory conciliation and arbitration characterised by collectivism to a
decentralised and more individualised system characterised by a greater degree of employer
discretion.

Historically, the arbitration system led to the development of a relatively centralised

framework of wage determination in which the Commission and its predecessors had
considerable influence, despite constitutional limitations. Its early interventions allowed for
decent wages to be set for male workers but directly discriminated against women. The first
major wage decision in 1907, the ‘Harvester judgement’, set the ‘basic’ or minimum wage at
a level intended to meet ‘the normal needs of an average employee, regarded as a human
being living in a civilised community’. The basic wage was designed to support an unskilled
male worker and his family to live in ‘frugal comfort’. The rate for women workers was set at
54 per cent of the basic wage. A custom of wage differentials (or ‘margins’) for skills was
formalised in the 1920s, based largely on historical differentials in the metal and engineering
trades (Hancock 1984). ‘National Wage Cases’ were established as the mechanism through
which the Commission adjusted wages, usually once per year, a process that is still used
today. Employers via their associations, unions through the ACTU and governments each
make submissions to the Commission, which inform its decisions.

The initial system of arbitration was compulsory in two senses. First, once engaged, it
required disputing parties to submit to a mandatory procedure for presenting their arguments.
Second, tribunal awards were binding on the parties. Awards specified minimum standards of
pay and conditions which employers in a given industry or occupation were required to meet
or else face legal penalties. However, unions and employers were free to negotiate above
these minimum standards which led to a considerable amount of workplace negotiation,
generally assisted by conciliation by tribunals. This practice of informal direct bargaining
became much more common during the wages explosions of the 1970s and early 1980s (Isaac
2012).

The Prices and Incomes Accord was established in 1983 to contain the risk of uncontrollable
wage inflation. Under this arrangement, the Hawke-Keating Labor government and the
ACTU presented a joint submission to the National Wage Case. For most of this period, with

13
the one notable exception in 1991, the Commission largely accepted these proposals and
introduced wage principles designed to give effect to them. In its initial stages, the Prices and
Incomes Accord led to the return of centralised wage determination and the ACTU pledged
that unions would make no extra claims in wage bargaining. In return, the government
pledged to strengthen the ‘social wage’ by introducing compulsory superannuation, universal
health coverage and progressive taxation measures. In the early 1990s, wage determination
was decentralised in response to economic stagnation, greater international competition and
growing political pressures. Enterprise-level collective bargaining consequently became a
more important instrument for regulating wages and conditions. Awards continued to play a
role by acting as safety nets for workers not covered by enterprise agreements and by
establishing minimum standards for enterprise agreements (Wright & Lansbury 2014).

The Howard government further decentralised wage determination. The Workplace Relations
Act 1996 retained the award stream and the mechanism of safety net adjustments through the
National Wage Case but reduced the ability of the Commission to vet outcomes of non-union
enterprise agreements and individual agreements. Under Work Choices introduced in 2005,
responsibility for setting minimum wages passed from the Commission to another body,
which had less independence and a greater focus on economic factors rather than the broader
combination of economic and social considerations followed by the Commission.

Following the implementation of the Fair Work Act 2009, the wage determination powers of
the Commission have been restored and individual bargaining has been abandoned. However,
there has been no reversion to compulsory arbitration. Notwithstanding the continued
emphasis on enterprise-level wage determination, awards continue to remain an important
regulatory instrument, especially for workers in non-unionised sectors such as hospitality
(Bray & Macneil 2011). The role of awards has arguably become more important following
the decline from 42% in 2010 to 38% in 2018 in the proportion of employees whose wages
and conditions were determined by an enterprise bargaining agreement. By contrast, in 2018
21% of employees had their wages and conditions determined solely by an award and 37%
had their wages and conditions determined by an individual agreement in the form of a
common law contract or an over-award payment (Australian Government 2019). Enterprise
bargaining coverage rates are much lower if other classifications of workers such as
dependent self-employed and gig workers are included (Pennington 2018).

14
The decentralisation of wage bargaining over the past two decades has contributed to
growing wage inequality. Income dispersion between high and low income earners in
Australia has increased at a faster rate than in some Western European economies, but
remains at lower levels than other liberal market economies, such as the UK and the USA.
This can partly be attributed to the functions of the award system, which continues to extend
increases in the national minimum wage to wage earners in specific industries and
occupations (McLaughlin & Wright 2018). However, the award system has been narrowed
from a mechanism that workers and unions could use to bargain for higher pay to a safety net
for protecting low-paid workers.

This transformation of Australia’s wage determination system is a key factor explaining the
emergence of low wage growth and widening pay dispersion as major policy concerns. The
national minimum wage as a proportion of median weekly earnings for full-time workers has
fallen from 65 per cent in 1995 to 55 per cent in 2018 (Gilfillan & King 2018). The Governor
of the Reserve Bank of Australia, usually a voice for wage moderation, has referred to low
wage growth as a ‘crisis’, which he attributed to increased international competition,
technological change and a decline in workers’ bargaining power (Lowe 2017). While
workers covered by enterprise agreements fare relatively better that those covered only by
awards, enterprise agreement coverage has declined sharply in the private sector in recent
years (Pennington 2018). Furthermore, the original promise that a decentralised system of
wage determination would allow workers to negotiate wage increases in line with
productivity gains increasingly appears to be illusory (Isaac 2018). Low wages and widening
income dispersion are symptomatic of increased precarious work in the Australian labour
market, a theme we return to below.

The settlement of disputes

A principal motivation behind the introduction of compulsory arbitration was to render

industrial disputation unnecessary. The ‘rule of law’ provided under arbitration was supposed
to deter the parties from undertaking industrial action (Macintyre & Mitchell 1989). For
many years, strikes were subject to penalties under the Conciliation and Arbitration Act
1904. It was not until the introduction of Industrial Relations Reform Act 1993 that unions
were granted a qualified and limited right to strike. This allowed either party to notify the
other of its intention to use industrial action during a designated bargaining period. The

15
Commission could intervene and make use of its traditional arbitral functions if it believed
the parties were not acting in good faith, if there was little likelihood of an agreement being
reached or on the grounds of public interest. In seeking to resolve the dispute, parties
engaging in unlawful strikes could be fined as well as have their awards suspended or
cancelled.

The Howard government maintained a limited right to strike during the designated bargaining
period in its Workplace Relations Act 1996, strengthened the Commission’s powers to
address illegal industrial action, prohibited the payment and acceptance of pay or wages for
workers when involved in strike action and restored secondary boycott provisions with
substantial fines for breaches (Lee & Peetz 1998). The Work Choices reforms further eroded
the Commission’s role in dispute settlement by removing its compulsory arbitration powers,
which have not been restored by subsequent governments. The Commission’s capacity to
intervene in industrial disputes is generally limited to instances where industrial action is
causing significant economic harm.

Another older sanction, used sparingly by tribunals, has been to deregister a union that has
acted in defiance of a tribunal order. Since deregistration has tended to be difficult and
complex, tribunals have generally hoped the threat of this sanction would be sufficient.
However, the incumbent Morrison Coalition government has sought to introduce legislation
that would make it easier to deregister unions that breach laws on industrial action and
workplace entry.

Incidence of working days lost through industrial disputes has fallen significantly in recent
decades, as Figure 5.1 illustrates. Regulatory changes and court rulings that have curbed
union power and their capacity to take industrial action, including action during bargaining
negotiations previously considered legally protected, are likely to have contributed to this. As
legal scholars have observed, the legal constraints on unions’ ability to take industrial action
are highly restrictive (McCrystal 2019). By contrast, some of the most prominent industrial
disputes in recent years, such as the Qantas dispute of 2011, have been employer-initiated
lockouts (Cooper et al. 2009; Sarina & Wright 2014). These developments are indicative of a
broad shift in bargaining power from workers to employers, which more generally is
associated with an increase in precarious work, as discussed in the following section.

16
Figure 5.1 Working days lost per 1000 employees in industrial disputes, Australia

Source: Australian Bureau of Statistics (2019). Industrial Disputes, Australia (ABS Cat. 6321.0.55.001).

Current issues

Precarious work is an overarching theme of contemporary public discourse and policy

discussions in Australian employment relations. In addition to low wage growth and the
weakened capacity of workers to take industrial action, the high incidence of ‘casual’ (or
temporary) work arrangements, underemployment and youth unemployment have all been
salient issues in the context of a labour market characterised by worker insecurity. Arguably,
such insecurity is not visible through a singular statistical indicator but is multi-dimensional
(Carney & Stanford 2018). In the following section, we examine current issues relating to
precarious work for three groups within the labour market: women, temporary migrants and
those engaged in gig-work.

Gender and precarious work

With their concentration in industries and occupations defined by low pay and non-standard
employment, women have not fared as well as men in the Australian labour market. Despite
an increase in the participation rate among women over the past decade and at a rate that is

17
higher than the OECD average, women’s participation in Australia remains lower than the
Nordic European economies as well as Canada, New Zealand and Switzerland (OECD 2019).
Furthermore, in 2019 women were much more likely to be underemployed (10 per cent) than
men (7 per cent) and much less likely to be in full-time employment (Australian Bureau of
Statistics 2019). In 2018, 27 per cent of all female employees compared to 23 per cent of
male employees were employed on a casual basis, and 44 per cent of female employees
compared to 16 per cent of male employees were employed on a part-time basis (Australian
Bureau of Statistics 2018).

The gender pay gap, as measured by full-time average weekly ordinary-time earnings, has
ranged between 14 and 19 per cent over the past 20 years (Williamson et al. 2019). In 2019, it
was just over 14 per cent, with private sector industries tending to have larger gender pay
gaps than the public sector (Kaine & Boersma 2018). In the past, major advances towards pay
equity came from test cases in the Commission and its predecessors, where wage increases
were achieved through the application of equal pay principles. However, these advances have
been patchy over the past 15 years. The changes introduced by Work Choices had a negative
impact on women, particularly in relation to unfair dismissal, job security and pay (Pocock et
al. 2008) and the Fair Work Act 2009 has achieved mixed results in relation to gender
equality at work.

The Fair Work Act 2009 promised to improve the situation for women at work in several
ways. The right to request flexible work arrangements was included as one of the 10 National
Employment Standards. In a decision that has significant implications for precariously
employed women, in 2018 the Commission granted casual employees who have worked for
one year in a regular pattern of hours the right to request a permanent position. However, the
decision also provided employers with a range of legitimate reasons to deny such a request
(Williamson et al. 2019). The Commission can also make orders requiring ‘equal
remuneration for work of equal or comparable value’, which replaced the more limited
provision of ‘equal remuneration for work of equal value’. Applicants seeking an equal
remuneration order do not need to prove that discrimination has caused the gender pay gap.
This removed the high threshold of proving that discrimination had occurred, as was required
by the previous Workplace Relations Act 1996, which had discouraged any successful equal
remuneration case from being conducted at the Commonwealth level (Smith & Lyons 2007).
However, results under this provision of the current legislation have been mixed.

18
A noteworthy development occurred in 2010 following an application by unions representing
social and community service workers under the equal remuneration provision of the Fair
Work Act 2009. The Commission determined that these workers experienced pay disparity
compared to their counterparts performing comparable work in other industries, and that this
was partly due to their gender. The Commission subsequently increased the pay rates of the
social and community services award by between 19 and 41 per cent to be phased in over
eight years (Cortis & Meagher 2012). However, this success was not replicated in an equal
remuneration case brought by unions representing workers in the early childhood education
sector. The case ran from 2013 to 2018 with a major setback experienced in 2015 when the
Commission ‘rejected the concept of gender-based undervaluation’ (Williamson et al. 2019:
347), which had been the basis of the decision in the social and community service workers
case. Despite unions altering the claim to rely on male comparators in manufacturing (Kaine
& Boersma 2018), the Commission dismissed the case in 2018 drawing criticism that men are
not required ‘to demonstrate sameness with anyone in order to be entitled to benefits’ (Smith
& Stewart 2017: 119).

Until 2011, Australia was unique among OECD member states (aside from the United States)
in lacking a universal and comprehensive national paid parental leave scheme. However, the
Rudd-Gillard Labor government introduced a scheme that allowed working parents with
primary care responsibility for a newborn child to take 18 weeks of paid leave at the national
minimum wage. Increasing female workforce participation by linking the payment of paid
parental leave directly to employment, improving gender equity in the home and allowing
parents to stay home from work for longer periods after the birth of their child are the three
stated objectives of the scheme. There are indications these reforms have positively impact
return to work behaviour following paid parental leave with the proportion of women
returning to the same job increasing from 71 to 77 per cent between 2011 and 2017
(Williamson et al. 2019). The paid parental leave initiative was accompanied by a ‘Dad and
Partner Pay’ extension of the scheme in 2013, which grants the partners of primary carers two
weeks of paid leave to be used within 12 months of their child’s birth or adoption, but so far
there has been limited use this scheme. The responsibility for family care continues to be
shouldered primarily by women, which constrains their ability to participate on terms equal to
men in the Australian labour market (Baird & Heron 2020).

19
The expansion of the temporary migrant workforce

Migrants have emerged as a group at relatively high risk of precarity in the Australian labour
market. While migrant workers in other countries have long faced such risks, until relatively
recently policy arrangements in Australia were generally effective at preventing employers
from underpaying or mistreating migrant workers. This was achieved through a system of
permanent skilled visa that conferred migrant workers the same rights as Australian citizens
and a strong labour enforcement regime whereby unions had a prominent de-facto role in
ensuring employers complied with awards standards. This scenario has changed dramatically
over the past two decades as signified by the large numbers of reported cases of migrant
worker exploitation (Clibborn & Wright 2018).

In contrast to the low-skilled, low-paid nature of labour immigration prevalent in many

European countries, Australian immigration policy is formally focused on attracting high-
skilled workers. However, since 1996 there has been an expansion and reform of various
‘side door’ visa schemes designed for other purposes, but which have channelled large
numbers of temporary migrant workers into low-skilled work. In particular, employers in
parts of the horticulture, retail and hospitality industries have become reliant upon temporary
migrants on student or working holidaymaker visas for their labour needs. These industries
have low levels of collective bargaining coverage and union membership (see Figure 5.1), a
large number of small and geographically dispersed businesses and a younger workforce with
less access to information about their workplace rights. Such factors make it challenging for
unions and the Fair Work Ombudsman, the Commonwealth government’s labour
inspectorate, to ensure workers are treated in accordance with legal minimum standards. This
has contributed to the significant increase in reported cases of underpayment and
mistreatment of temporary migrant workers in these industries (Berg & Farbenblum 2017;
Clibborn & Wright 2018).

There have also been ongoing concerns about the treatment of migrant workers sponsored on
temporary skilled visas. These workers generally are employed in managerial, professional
and skilled trade occupations in high demand, which gives them a higher degree of agency
than temporary migrants in low-skilled jobs. However, the requirement of temporary skilled
visa holders to work only for their sponsoring employer effectively ties their residency rights
to maintaining their employment relationship. If either party terminates this relationship, the
temporary skilled migrant effectively faces deportation. This poses a significant constraint on

20
these workers’ mobility and has been identified as a factor contributing to their precarious
position in the labour market (Boucher 2019; Wright, Groutsis & van den Broek 2017).

The positions of the employment relations parties on this issue are polarised. Employer
associations claim that liberal labour immigration policies are necessary to address skill
shortages. By contrast, trade unions claim that such policies, especially temporary visa
regulations that deny migrant workers’ the same rights as citizens, undermine labour
standards and deter employers from investing in workforce skills. Nevertheless, it seems clear
that labour immigration policies that ensured migrant workers were employed on equal terms
as Australian citizens have been replaced by policy arrangements that place migrant workers
at high risk of exploitation and marginalisation. Policies that effectively excluded temporary
migrants from the welfare system also made them highly vulnerable in the event of an
economic downturn, such as the one created by the impact of COVID-19. While changes to
visa rules that have restricted temporary migrants’ access to public support and made their
residency rights conditional upon employer goodwill have contributed to this situation, so too
have changes in employment relations policy that have increasingly favoured employer
interests.

The emergence of gig-work

‘Gig-work’ refers to work performed on demand through digital labour platforms that are
operated by companies that create a smartphone application (‘app’) or other digital medium
to provide a service or task. The two main categories of digital labour platforms are web-
based (which can be crowd-work or micro-tasking) or location-based work (Berg et al. 2018).
There are parallels with 19th century forms of sub-contracting and servitude in that gig-
workers generally do not have protections afforded to employees, such as legal minimum
wages, minimum hour regulations, paid leave entitlements and access to union representation
(Flanagan 2019).

It is estimated that just over seven per cent of Australians work or are seeking work through
digital platforms with students, the unemployed and temporary migrants more likely to
undertake gig-work (McDonald et al. 2019). Work on-demand via apps has expanded to a
wide variety of sectors including passenger transport, delivery services, personal care,
cleaning, handyperson services and administration services. Of these, location-based
passenger transport and food delivery services such as Uber and Deliveroo have arguably

21
become the most publicly recognised due, at least in part, to the legal challenges they have
provoked. As in other parts of the world, these challenges have centred around employment
classification issues with the determination of employee status being made on a case-by-case
basis. Generally on-demand gig-workers are classified as ‘independent contractors’ or an
equivalent company-specific term such as ‘partner-driver’ and are required to sign contracts
that specifically acknowledge this arrangement. The narrative by digital labour platforms has
been that they are not direct employers but instead facilitate the activities of ‘micro-
entrepreneurs … rather than telling the workforce what to do’ (Prassl 2018: 49).

There is an obvious incentive for businesses owning digital platforms to aggressively pursue
the position that the workers they engage are self-employed (Kaine & Josserand 2019). It
allows these businesses to avoid paying workers entitlements such as sick leave, holiday pay
and superannuation. Employment status was raised as a key issue in the 2018 Senate Inquiry
into the Future of Work and Workers (2018: viii) with a resulting recommendation being ‘the
Australian Government make legislative amendments that broaden the definition of employee
to capture gig workers and ensure that they have full access to protection under Australia’s
industrial relations system’. However, it should be noted there was a dissenting report from
that inquiry in which the Coalition committee members claimed that ‘sham-contracting’
where employers misrepresent an employment relationship is already illegal under the Fair
Work Act 2009. This positioning of existing labour law as providing sufficient regulatory
oversight for gig work echoes the sentiments of the AiG discussed earlier and suggests the
incumbent Coalition government is unlikely to consider regulatory changes that would limit
the capacity of digital platforms to decide employment status unilaterally. In contrast, the
Australian Labor Party has indicated it will consider new forms of worker protections
including portable entitlements (Martin 2019). With the gig economy growing, the continuing
pursuit of misclassification claims by unions and individuals and the opposing stance of the
major political parties, the question of what constitutes appropriate regulation of non-standard
employment relationships is likely to be a live one for some time.

Conclusions

The shift from a centralised and collectivist towards a more decentralised and individualised
regulatory system since the 1990s has had profound impacts for workers, employers and their
representatives. These changes are both a consequence and a cause of the shift in power from

22
labour to capital in Australia’s employment relations system and its wider political economy.
The maintenance of key features of the award system means that workers in Australia fare
relatively better than their counterparts in other liberal market economies. However, the
weakening of unions and the emergence of a regulatory system designed to meet employers’
needs have contributed to low wage growth, widening income inequality and increased
precariousness at work, particularly for women, temporary migrants and those in the gig
economy. The incumbent centre-right Coalition government has maintained the Fair Work
Act 2009 introduced by the previous Labor government. However, the Coalition’s supporters
in the business community, particularly employer associations representing the dominant
services and commodities sectors, have persistently lobbied for policy changes that would
herald a return to the Work Choices era of individualised employment contracts and further
reduce the influence of unions and the Commission. Such policies may serve the short-term
interests of employers but would undermine the already weakened bargaining power of
workers, particularly those at risk of marginalisation.

23
Discussion questions

1. Using the varieties of capitalism framework, how would you categorise employment
relations in Australia? What are the main ways the Australian employment relations
system differs from other ‘liberal market economies’?
2. What are the main features of the award system operating in Australia? How does the
award system differ from other mechanisms used in Australia and in other countries
to regulate wages and conditions, such as national minimum wage laws and collective
bargaining?
3. What traditional and innovative strategies have trade unions in Australia used to exert
influence and strengthen worker representation? To what extent have these strategies
been successful?
4. To what extent have recent policy changes in Australia been successful at achieving
greater gender equality at work?
5. What challenges do temporary migrant workers in Australia face? How could these
challenges be addressed?

Further reading

• Ellem, B. (2017). The Pilbara: From the Deserts Profits Come. Perth: University of
Western Australia Press.
• Hancock, K. & Lansbury, R.D (2016). Industrial Relations Reform: Looking to the
Future. Sydney: Federation Press.
• Isaac, J. (2018). Why are Australian wages lagging and what can be done about it?
Australian Economic Review, 51(2): 175-190.
• Peetz, D. (1998). Unions in a Contrary World: The Future of the Australian Trade
Union Movement. Melbourne: Cambridge University Press.
• Sheldon, P. & Thornthwaite, L. (1999). Employer Associations and Industrial
Relations Change: Catalysts or Captives? Sydney: Allen & Unwin.

24
Useful websites

• Australian Council of Trade Unions: www.actu.org.au

• Australian Industry Group: www.aigroup.com.au
• Fair Work Commission: www.fwc.gov.au
• Fair Work Ombudsman: www.fairwork.gov.au
• Commonwealth Department of Employment, Skills, Small and Family Business:
www.employment.gov.au

A chronology of Australian employment relations

1788 Start of the British invasion of Australia, with separate Colonial governments
established subsequently.

1856 Building unions in Melbourne win recognition of the eight-hour day.

1890–94 Great Strikes. Following defeat by combined employer and colonial

government power, unions establish Labor Parties in each colony.

1901 Commonwealth of Australia founded.

1904 Commonwealth Conciliation and Arbitration Court established under the

Commonwealth Conciliation and Arbitration Act 1904, with powers of legal enforcement.

1907 Harvester Case establishes the principle of the basic wage above which the
court could award a margin for skill.

1927 Founding of the Australian Council of Trade Unions.

1956 Following Boilermakers’ Case, the Arbitration Court is disbanded.

Conciliation and Arbitration Commission set up with arbitral functions, and Industrial Court
with judicial responsibility.

1983 Prices and Incomes Accord between the Australian Labor Party and the
Australian Council of Trade Unions becomes the lynchpin of the Hawke-Keating
government’s economic and social policies; Return to centralised wage fixation and full wage
indexation; Formation of the Business Council of Australia.

25
1991 National Wage Case decision in October condones shift to enterprise
bargaining.

1993 Further movement towards decentralisation of bargaining, including through

the Industrial Relations Act 1993, which extends the scope of enterprise bargaining.

1996 Election of Liberal–National Party Coalition government led by John Howard,

which later introduces the Workplace Relations Act 1996.

2006 Workplace Relations Amendment (Work Choices) Act 2005 comes into force.

2007 A Labor government defeats the Coalition at an election, when employment

relations policy features strongly, and soon after introduces the Fair Work Act 2009.

2013 Election of Liberal-National Coalition government (re-elected in 2016 and

2019).

26
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