AMMA Publications
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AMMA Submissions

Australian Mines and Metals Association

Submission to Senate Employment Workplace Relations, Small Business and Education Committee

  Inquiry into the Workplace Relations Legislation Amendment (More Jobs Better Pay) Bill 1999

September 1999

Contents

Section 1 Background and Senate Committee Terms of Reference

Section 2 Australian Mines and Metals Association Profile

 Section 3 Beyond Enterprise Bargaining

 Section 4 Review of Workplace Relations (More Jobs Better Pay) Bill 1999

Section 5 Opportunities for Strengthening the Current Regulatory Model

Attachments

Copy of Beyond Enterprise Bargaining : The Case for Ongoing Reform of Workplace Relations in Australia July 1999

Future Reforms of the Workplace Relations Act - Transcript of Speech of Senator Andrew Murray made to Australian Mines and Metals Association, Perth September 10, 1999

Section 1 Background and Senate Committee Terms of Reference

On June 30 1999, the Hon Peter Reith MP, Minister for Employment Workplace Relations and Small Business, introduced the Workplace Relations Legislation Amendment (More Jobs Better Pay) Bill 1999 (the Bill) into the Parliament.

The Bill seeks to implement the Coalition’s More Jobs Better Pay policy that the Government took to the last election. The policy measures are discussed in more detail in the Minister’s Implementation Discussion Paper, "The Continuing Reform of Workplace Relations: Implementation of More Jobs, Better Pay."

Following introduction of the Bill to Parliament, the Senate referred it to the Senate’s Employment, Workplace Relations Small Business and Education Legislation Committee for review.

Under the terms of reference the Committee intends to examine:

(a)    the impact of the Workplace Relations Act 1996 (the Act), including (but not limited to):

(i)    whether the principal objects of the Act (particularly paragraphs 3 (G) and (K) ) have been fulfilled in practice;

(ii)    the impact on wages, employment, productivity and industrial disputation levels;

(iii)    the impact on job security, unfair dismissals, job prospects, the protection of employee entitlements and conditions, and whether these can be improved;

(iv)    the impact on the balance between work and family responsibilities, and whether these can be improved;

(v)    the balance provided between the roles, rights and obligations of employers (including small business), employees and their respective organisations;

(vi)    the powers, standing and procedures of the Australian Industrial Relations Commission, the office of the Employment Advocate and the Industrial Registra;

(vii)    whether provisions to promote industrial democracy and employee ownership can be enhanced; and

(b)    in light of the Committee’s findings in relation to the matters listed in paragraph (a) above, the provisions of the               Workplace Relations Legislation Amendment (More Jobs, Better Pay) Bill 1999 and all relevant matters related thereto.

The Committee has invited persons and organisations wishing to express their views relating to this matter to lodge submissions no later than 17 September 1999.

Section 2      Australian Mines and Metals Association Inc

Australian Mines & Metals Association Inc (AMMA) is the national employer association for the mining, hydrocarbons and associated processing and service industries.

AMMA’s Board is comprised of the following senior executives of member companies from a cross section of industry sectors within AMMA’s membership:

• Terry Palmer (AMMA President) - Chief Executive - Comalco Limited

• Ross Brewer (AMMA Vice President) - Managing Director - P &O Maritime Services Pty Ltd

• Doug Buckley (AMMA Vice President) - General Manager - North West Shelf Venture - Shell Development (Australia) Pty Ltd

• Robert Logan - Chief Executive Officer - Roche Bros Pty. Ltd

• Paul Hallam - Executive General Manager - Base & Precious Metals - North Limited

• Greg Travers - Executive General Manager - Corporate Human Resources & Development   - WMC Resources Limited

• Mike Menzies - General Manager -  Operations Services - M.I.M. Holdings Limited

·         Michael Folie - Managing Director - Acacia Resources Limited

·         Dr Ian Gould - Group Managing Director - Normandy Mining Limited

In operation since 1918, AMMA includes companies engaged in the following industry categories:

·         Exploration for minerals and hydrocarbons

·         Metalliferous mining and smelting

·         Refining

·         Non-metallic mining and processing

·         Hydrocarbons production (liquid and gaseous)

·         Associated services such as:

Construction and Maintenance

Diving

Transport

Support & Seismic Vessels

General Aviation (Helicopter)

Catering

Bulk Handling of Shipping Cargoes

Underlying all AMMA’s activities is the belief that direct, co-operative and mutually rewarding relationships between employers and employees at the enterprise level are the best way to achieve efficient and productive workplaces.

In 1988, AMMA – The Way Ahead was released as a blueprint for industrial relations reform. It advocated the move to enterprise–based bargaining which has since occurred. In its most recent research project titled Beyond Enterprise Bargaining AMMA seeks to make the case for genuine self regulation in employee relations based on high standards of managerial leadership and fair and effective systems for the internal regulation of employee relations.

AMMA believes that these standards once met, should enable an organisation and its employees to be free from extensive external interference and control. The industrial relations legislative framework in Australia must be reformed so that the realisation of this vision by Australian enterprises can be encouraged and sustained.

It is in the context of the above described vision that AMMA has reviewed the proposed Bill and the extent to which it contributes to the direction and scope of what AMMA believes are further necessary workplace relations reforms.

Section 3     Beyond Enterprise Bargaining

Most organisations have had success with enterprise bargaining but many are now dealing with the limitations of this process including limited productivity improvements, "trade off" fatigue, the high level of third party involvement, complex procedures and high transaction costs.

Many organisations have developed sophisticated human resource and employee relations policies and procedures and pay well above award specified minima. For these organisations, in the most part, the current high level of workplace regulation is unnecessary and only adds unwarranted transaction and compliance costs and inhibits productivity.

It was in this context that AMMA initiated its Beyond Enterprise Bargaining Project which led to the release of a report titled Beyond Enterprise Bargaining (the BEB Report) in July 1999. A copy of the BEB Report is enclosed with this submission.

The BEB Report involved commissioned research into international trends in collective bargaining, the history of Australian industrial relations reform, key economic indicators for Australia and case studies on various overseas operations.

The BEB Report is relevant to the Senate Committee’s review of the operation and impact of the Workplace Relations Act 1996, as it makes out a strong case for maintaining the direction of reform in the area of labour law. The direction of reform that has been pursued through the 1990s has been that of the progressive devolution of responsibility for workplace relations matters away from the centralised system that operated for most of this century. The move that has occurred is one where the direct parties have assumed greater responsibility for matters pertaining to the workplace.

The following summary is provided on the key findings of the BEB Report research.

 Economic Analysis

Chapter 2 of the BEB Report is titled Key Changes in Economic Structure and Workplace Relations in Australia. It details the profound changes that have occurred in the economic environment in which industrial relations legislation has operated and workplace relations have been conducted. It particularly examines key aspects of economic performance associated with these major changes.

The process of change in the economic system has been supported by changes in the industrial relations system from a centralised system of wage and conditions negotiations to a system of enterprise and even individual based bargaining.

Legislative reforms by both Labor and Coalition Governments have helped to achieve a major breakthrough in dismantling Australia’s inflation-prone centralised wage fixing system. This has allowed governments to maintain a higher level of economic growth than previously would have been possible.

Superior economic outcomes for wage and salary earners and the community have been realised during the decade of the 1990s (see Figure 2.6 at p 17 of the BEB Report). The outcomes reflect the benefits of micro economic reform, low inflation and sustained real earnings growth associated with the operation of a more flexible labour market.

Substantial increases in labour productivity are also identified as occurring (see Figure 2.8 p 18 of the BEB Report).

The continuation of the current economic and industrial relations policy direction holds out the prospect of further reductions in unemployment while at the same time entrenching a much more resilient and adaptive economy than was apparent in previous decades.

The current industrial relations system has evolved over many years through a process of legislative reform, but the rapidity of the change in the global market is significantly increasing and we need to continually re-evaluate our system to ensure it continues to meet business needs.

To re-inforce the economic data traversed within the BEB report it is worth quoting from a recent speech made by the Australian Democrats Workplace Relations Spokesperson Senator Andrew Murray to a meeting of AMMA members in Perth on Friday 10 September 1999 when providing an assessment of the Act. A transcript of the speech is appended to this submission.

"So on the key economic criteria set by Labor for the 1996 law, it has been clearly a success in delivering better economic outcomes. That is evidenced by higher real wages, employment and productivity"

 The Industrial Relations Pendulum

With the further legislative reform proposed within the Bill being examined by this Senate Committee it is worth reflecting on the positions adopted by the major political parties on key aspects of industrial relations laws over the period 1956 to 1997. This is examined in Chapter 3 of the BEB Report.

It is evident that in a number of areas of the Act, the positions of the major political parties have been divided over the years. When viewed over the longer term the positions of the parties on these matters have changed, sometimes to the extent that they are on different sides of the same argument.

The Act consolidated and built upon the direction of reform instituted by the previous Labor Government. The changes made by the previous Government and the current Liberal/National Coalition government are in dramatic contrast to the philosophy and procedures of the industrial relations legislation that had existed up to the 1990s.

The reforms of the 1990s were a necessary response to the changes in the economic fundamentals that occurred throughout the 1980s and the nature and structure of workplace relations emerging over that period. The operation of these reforms in the industrial relations system, in the context of fundamental economic change, have been associated with better industrial relations performance in terms of low levels of industrial disputation and sustainable real earnings growth (refer Chapter 2 of BEB Report).

Above all, now is not the time for the quality and substance of debate about the future of industrial relations and workplace reform to fall back to the sterile process of political product differentiation that has characterised the past.

The Committee should guard against accepting arguments of those proponents for swinging the "pendulum" back significantly towards greater centralisation and external regulation of employee relations. A "one size fits all" approach would hamper the development of employee relations as a source of competitive advantage.

Members of the Committee may speculate for themselves about what the impact would be on our exchange rate, inflation and living standards should calls for a return to a centralised wage system and compulsory arbitration be heeded.

Section 4     Review of the Workplace Relations (More Jobs Better Pay) Bill 1999

It is noted that the changes proposed in the Bill build on the reforms introduced by the Liberal / National Coalition Government in 1996. To the extent that the amendments build on the direction of reform pursued through 1990s by both Labor and Coalition governments, they are strongly supported by AMMA.

AMMA does however express concern that an opportunity may be missed in tackling some of the fundamental weaknesses within the existing regulatory model. More will be said about this in Section (5) of this submission.

Notwithstanding our views on opportunities missed, there is much to commend within the Bill from AMMA’s perspective, including:

·         provisions designed to streamline agreement making processes;

·         tightening of compliance provisions that deal with unprotected industrial action; and

·         further award simplification and extending the presumption in favour of State awards, agreements and relevant contracts of employment.

 Objects of the Act

A new object is proposed, that being:

"3 (ca) enabling employers and employees to choose the most appropriate jurisdiction for the regulation of their employment relationship;"

Combined with the proposed s111AAA(1), the object appears to extend the protection afforded to employees and companies operating under various state jurisdictions. Considerable time and expense is incurred by businesses fending off unwanted attempts by unions seeking to rope those organisations into the federal system. Employers and employees deserve greater protection when a strategic choice has been made by such organisations and their employees to operate under a particular state instrument.

Placing of greater emphasis on the rights of employers and employees to make such a strategic choice, and affording that choice enhanced protection, deserves support.

Submissions of ACCI in relation to objects 3(d)(ii) and (iii) are strongly supported by AMMA.

Insertion of a new object 3(ea) further strengthens the move towards the direct industrial parties being required to live with the outcome of their bargaining. Such an object is strongly supported by AMMA. Object 3(ea) provides;

"3(ea) recognising that industrial action that is not protected under Division 8 of Part VIB is inconsistent with the purposes of this Act and providing mechanisms enabling the Commission and courts to stop or prevent such action in an effective and timely manner where the action is happening or in prospect;"

With respect to a further new object 3 (eb) it is hard to mount any credible argument that persons directly taking industrial action (ie employees) and suffering a consequent loss of wages, should not have a fair and democratic say in the decision to take such action. This object provides strong recognition of that important principle;

"3(eb) ensuring that decisions about the taking of protected industrial action are supported by the employees directly concerned through the holding of fair and democratic secret ballots;"

 Australian Workplace Relations Commission

AMMA supports the proposed changes to the name and structure of the Australian Industrial Relations Commission (the Commission) and would draw attention to the particular proposal contained at s 16(1A) (see p 9 of Bill) where it provides for fixed-term appointments:

"(1A) Subject to subsection (1C), a member of the Commission (other than the President) may be appointed for a period of 7 years but is eligible for reappointment."

AMMA firmly believes that provision for fixed term appointments should be supported by this Committee. Provision for such fixed terms is already provided for in relation to certain state jurisdictions. There is also provision for the fixed term appointment of state Commissioners to the Federal Commission(see s16(2) of the Act).

The provision for fixed-term appointments will assist with the objective of introducing contemporary management and business practices into the Commission and is strongly supported by AMMA.

Awards

AMMA draws particular attention to the following points:

(i)

"s 111AAA(1) if a State award, State employment agreement or relevant contract of employment governs the wages and conditions of employment of particular employees whose wages and conditions are the subject of an industrial dispute in relation to those employees, the Commission must cease dealing with the industrial dispute in relation to those employees, whether or not the Commission began to deal with, or has dealt with, the industrial dispute before the commencement of this subsection."

The above amendment strengthens the presumption in favour of lawful state employment regulation instruments and gives proper effect to the proposed new object 3(ca). The change is welcome as it recognises that where employers and their employees have made a strategic decision to operate under a State instrument, that decision should, other than in exceptional circumstances (s111AAA(1A)(b), see p 72 of Bill), be respected and protected. The provision gives further protection against the practice of unions, without invitation or authorisation, seeking to move companies from the state jurisdiction into the federal sphere.

It should not be presumed that the state systems which offer simpler, more efficient agreement-making options to that of the federal system, represent an inferior regulatory framework. It is often the reduced transaction costs and the opportunity for greater flexibility and innovation that attract the parties to those state systems.

It is also the experience of AMMA in representing employers subject to attempts by unions to bring them within the federal jurisdiction, that such attempts are often borne out of union frustration at their own inability to influence the direct parties on particular issues, for example a particular agreement-making option. Such union action may have little or nothing to do with the expressed wishes of employees.

(ii)

" s113(3 A) If an application is made to vary an award to make a safety net wage adjustment, the Commission must not vary the award to make the adjustment until the award has been reviewed in accordance with Part 2 of Schedule 6 to the Workplace Relations Legislation Amendment (More Jobs, Better Pay) Act 1999."

The above provision seeks to introduce a "carrot and stick" approach to award simplification. Simply put, where required award simplification has not been completed, safety net adjustments (SNAs) will not be made to those awards.

ACCI correctly points out in its submission the links that existed between SNAs and award restructuring over the period 1988–1994, through a succession of National Wage Case decisions.

Certainly, progress on award simplification in relation to many awards has been slowed due to delaying and frustrating tactics employed by unions seeking to thwart the proper implementation of award simplification. It is also true to say that the process has been hindered by a lack of resources available within the AIRC and a lack of interest on the part of some employers.

From a resource sector perspective, AMMA is not convinced that withholding SNAs will act as a sufficient catalyst to the parties given the resources issue highlighted above. With that in mind it would seem unfair to deny access to minimum wage increases to those employees on base award wages and conditions for what is largely an administrative process and which has no legal effect. To deny such SNA increases in the described circumstances would also appear contrary to the proposed object 3(d)(ii).

Balanced against the potential for further award simplification to be delayed in the absence of a "carrot and stick", is the fact that non-allowable matters cease to have effect anyway "at the end of the interim period" (s43(1) p 79 of the Bill). This particular mechanism is strongly supported by AMMA as, notwithstanding the progress made (or lack of) by the award parties and Commission in the conduct of award simplification, identified non-allowable matters cease to be enforceable after the defined interim period concludes.

As a general comment, measures that will lead to further simplification of awards, introduction of mediation services and reduced Commission compulsory conciliation powers are supported as these measures will assist in further devolving responsibility for workplace relations matters to the direct parties. This is consistent with the direction of reform advocated by AMMA.

 Termination of Employment

AMMA supports measures proposed in relation to termination of employment, particularly those that will have the effect of discouraging unfair dismissal claims lacking in merit. Particular attention is drawn to the following comments:

(i)

"170CCA Division to cover the field in certain cases.

(3) The provisions of this division, insofar as they relate to Federal award employees covered by paragraph 170CB (1) (c) or (d) but not covered by an award that relates to termination of employment apply to the exclusion of:

(a) the provision of any other law of the Commonwealth; or

(b) the provisions of any law of a state or territory or of any award made under such a law;

that relates to relief in respect of termination of the employment of such employees."

This proposed clause clarifies the intention that persons covered by a federal award should not be able to pursue a claim in a state jurisdiction. Removal of the potential for "forum shopping" deserves support.

(ii)

Clarification and tightening of what constitutes a "constructive dismissal" (s170CDA p.87) is welcome given the imprecision currently present in determining whether such a dismissal has taken place.

(iii)

The proposed repeal of subsection 170CE (8) and insertion of a new s170CE(8) and (8A) addresses an area of major frustration and cost to employers, that of out of time applications. It is proposed to insert the following:

"S170CE (8) The Commission may accept an application that is lodged out of time only if the Commission is satisfied that it would be equitable to accept the application."

"(8A) The Commission can only be satisfied that it would be equitable to accept the application if the applicant establishes that:

(a)    the circumstances of the late lodgement are exceptional; and

(b)    there is an acceptable explanation for the delay in lodging the application;

(c)    the aplicant took action of any kind to contest the termination of his or her employment within 21 days after the day the termination took effect; and

(d)    prejudice would not be caused to the respondent by the acceptance of the late application."

It is apparent from the drafting of the clause that it is intended to significantly reduce the discretion of the Commission to grant an extension of time. This is done by imposing a threshold test to establish whether "exceptional" circumstances exist. A number of other tests are also to be applied. The use of the word "exceptional" or lack of clarity as to what that means is an area that causes some concern to AMMA. The potential for interpretation of what circumstances are exceptional provides scope for watering down of the apparent legislative intention. We would urge that attempts be made to tighten this provision to ensure greater certainty.

The changes proposed are welcome given the experience of employers being forced to deal with out of time applications and the avoidable and unnecessary costs that are incurred.

While AMMA does not take issue with the principle that out of time applications may be heard by the Commission, it believes that the tests applied in granting such applications should be sufficiently stringent so as to screen out all but "exceptional" cases. The changes proposed generally meet this expectation.

(iv)

It is proposed, through the insertion of a number of new provisions in s170CF (commences p 89 of the Bill), to prevent applicants from proceeding to arbitration of their claims where the Commission has found at the conclusion of the conciliation phase, that "on the balance of probabilities" the case was unlikely to succeed.

The proposed changes would in all likelihood lead to a greater presentation of material and evidence at the conciliation phase. To work effectively there would need to be a greater preparedness of the Commission to make a proper assessment of the case during the conciliation phase, and not merely focus on "managing" an agreed outcome.

It is a common experience of many employers during the conciliation phase of an unfair dismissal case to feel "pressured" to settle, even in circumstances where a case is absolutely lacking in merit on the part of the applicant. This pressure is borne out of the costs to employers of fighting a case to conclusion and the limited prospects of recovering costs if and when the case is "won". A commercial decision on the part of employers to settle is often motivated by the prospect of escalating legal or representative costs. Consequently measures that discourage pursuit of claims lacking in merit are strongly supported.

Should the Senate Committee reject the proposals contained within s170CF an alternative proposal worthy of consideration is that of providing a more direct link between recovery of costs and the assessment of the merits of the case at the conclusion of the conciliation phase. Simply put, if at the conclusion of the conciliation phase the AWRC indicated that on the balance of probabilities the claim was unlikely to succeed, the applicant would bare the costs of the respondent company if he or she (the applicant) proceeded to arbitration and "lost", or withdrew during the arbitration phase.

(v)

Another area of the Termination of Employment provisions within the Bill strongly supported by AMMA is that of section 170CG(4) (see p 94) which provides:

"If the employment of a particular employee or group of employees is terminated on the ground of, or on grounds that include the ground of, the operational requirements of the employers undertaking, establishment or service, the termination is not to be taken to be harsh, unjust or unreasonable."

The resource sector is highly exposed to intense international competition and the vagaries of fluctuating commodity prices. The capacity of resource sector companies to compete in difficult international markets is in part dependent on their responsiveness and resilience in the face of demand and price fluctuations. This has been evident in base, precious metals and hydrocarbons industry sectors over the past eighteen months. Significant cutbacks in employment numbers within the industry over that period have occurred as less economic operations have closed while others have rationalised.

When faced with the need to reduce labour costs to maintain viability, companies must also factor in the likely costs of unfair dismissal claims arising from such reductions. The potential for such additional costs are unjustified in AMMA’s view in the circumstances where operational circumstances have dictated that labour force reductions are necessary. Consequently AMMA strongly supports the provision proposed.

 Certified Agreements

AMMA strongly supports the provisions within the Bill relating to the making and registering of certified agreements, with one notable exception being that of the amendment to paragraph 170LB(2)(a).

During 1997 and 1998, meetings of AMMA members expressed concerns over limitations imposed on the use of project agreements. Specifically, the capacity to put project agreements in place for substantial capital projects in the resource sector was regarded as essential given the need for stable employee relations from an investment viewpoint.

The "More Job Better Pay" Bill appears to reduce the capacity for multiple-employer agreements.

Currently the Act reads as follows:

"170LB (2)(a) if two or more employers carry on a business, project or undertaking as a joint venture or common enterprise, the employers are taken to be one employer;"

Under the amendment proposed to s 170LB(2)(a) (p106 of the Bill), the words "or common enterprise" are to be omitted, thus reducing the scope for multiple-employer agreements. It is recognised that the option of proceeding to a Full Bench with a "multiple business agreement" under s170LC remains, however unlike single-employer agreements, a public interest test (170LC(4) of the Act) is required on s170LC agreements prior to certification of such agreements.

AMMA remains committed to the view that the capacity for registering project agreements that exists under the current Act through the operation of 170LB(2) should be retained. This is particularly the case in the environment of intense global competition faced by the resource sector, where the ability to ensure stability and certainty in employee relations arrangements are a consideration in the investment planning stage. This view may be tempered by a demonstrable improvement in the operation of compliance provisions. In the interim, AMMA supports the retention of some mechanism enabling project agreements.

Features of the Bill in relation to certified agreements that AMMA would identify as being of particular merit are outlined below:

(i)

The establishment of a capacity to lodge agreements and have them approved without the necessity of a formal hearing is particularly welcome.

By and large, resource sector companies operate in remote locations. The costs incurred by a company in ensuring attendance of both company representatives and employees (where required) at hearings for the approval of agreements are unnecessary and avoidable for the vast majority of agreements.

Insertion of the proposed Division 2A – Certification of Agreements by Workplace Relations Registrar is a sensible initiative that will reduce costs without compromising the protection of the parties’ interests. Capacity for the referral of agreements to the Commission by the Registrar in certain circumstances will ensure that adequate protections remain (s170MG see p116 of the Bill).

(ii)

The Bill includes a new provision, s170LVA (see p 120 of the Bill) the effect of which is to enable an agreement, purportedly made under s170LJ but not executed, to be registered as if it were made under s170LK.

The above-referred provisions would enable the direct industrial parties, employers and employees, to more easily overcome the unwillingness of a union to execute an agreement made under s170LJ. Under the current Act, a union is able to delay or frustrate the registration of an agreement made under s170LJ by withholding signing of the agreement. To overcome this, an employer and its employees (who had voted in support of the agreement) would have to recommence the agreement making process under s170LK, thus extending the time required to finalise the agreement and increasing the costs to the employer.

Enabling employers and their employees to more easily convert a "derailed" s170LJ agreement to a s170LK agreement has AMMA support. A union should not be able to frustrate a valid decision of a group of employees to approve an agreement, merely for reasons of internal union policy or politics.

 Australian Workplace Agreements

During 1997 and 1998, forums of AMMA members were held in order to review the operation of key aspects of the Act, including the AWA agreement-making stream. The following key issues were raised in those forums in relation to AWAs:

(i) procedural complexities and unnecessary formalities associated with the registering of AWAs;

(ii) requirement to conduct, what is at times, a complex "no disadvantage" test for AWAs against often irrelevant Awards; and

(iii) lengthy delays experienced in the registration and approval of AWAs. It should be noted that substantial improvements have been made since these comments were made.

Measures contained within the Bill will address, to a large extent, many of the concerns raised by AMMA members. The following particular measures are welcomed:

(i)

The filing period and procedures are to be significantly amended. The current 21 day filing period is to be replaced by a 60-day period. Additionally the filing receipt process is removed and is replaced by the employer filing a declaration.

These proposals will streamline the agreement registering process.

(ii)

S170VCB(2) (see p141 of the Bill) provides the following:

"(2) An AWA is taken to pass the no-disadvantage test if, as at the start of the AWA’s period of operation, the employees rate of remuneration under the AWA is more than $68,000 per year and;

(a)    the application for approval of the AWA is accompanied by a declaration referred in paragraph 170VC(4)(a); but

(b)    the employee has not made the request referred to in paragraph 170VC(4)(b)."

From a resource sector perspective, the above provision is a step in the right direction. It holds out the potential for substantially reducing procedural and administrative requirements when processing AWAs in the circumstances where the remuneration available under the AWA is well above the award and over $68,000.

AMMA strongly support the replacement of the "no disadvantage" test with a simpler mechanism. Specifically the testing of an AWA’s terms and conditions should be against a schedule of minimum conditions of employment. We do however recognise that the removal of the test is not proposed in this Bill. Consequently an improved operation of the test in the above-described circumstances is a sound measure.

(iii)

The current Act requires an employer to offer AWAs in the same terms and conditions to all comparable employees. Such a provision limits the capacity of employers to put conditions and arrangements in place for an individual that are appropriate to their circumstances. It also restricts the ability to distinguish between "comparable" employees on the basis of their performance and/or value to the organisation.

Removal of the requirement to offer AWAs to comparable employees is a sensible move that will enable organisations and their employees greater flexibility in agreement making.

 Industrial Action

Historically low levels of days lost due to industrial action have been experienced over the past two years. Much of this can be attributed to the effective operation of the Act in encouraging an "enterprise focus" and discouraging the disruptive and costly industry-wide campaigns that were so much a feature of Australia’s industrial relations landscape in 1970s and 1980s (see Figure 2.9 in AMMA’s BEB Report at p 20).

As stated at page 19 of AMMA’s BEB Report:

"It is perhaps ironic that the move to an industrial relations system which includes significantly enhanced scope for enterprise bargaining is also associated with historically low levels of industrial disputes and working days lost." (see Figure 2.9).

While there is no doubt that declining levels of industrial time lost is a worldwide phenomenon in western market economies, the industrial relations system for Australia in the 1990s, which emphasises enterprise-based bargaining, is performing better than the conciliation and arbitration system which was founded on the explicit objective of preventing and settling industrial disputes."

Notwithstanding the recent experience in relation to lost time, flaws remain in the operation of the Act in terms of curtailing unlawful industrial action. The flaws identified include:

(i) a tendency of both the Commission and the Federal Court to exercise significant discretion in dealing with applications for s127 orders and applications for injunctive relief in enforcing such orders;

(ii) frustration of the legislative intention that industrial action taken during the life of an agreement would be unlawful and that quick effective remedies would be available;

(iii) capacity of employees to take "protest" type industrial action during the life of an agreement; and

(iv)    capacity for protected industrial action to be taken during the nominal life of agreements made under previous Acts.

 Section 127

Having identified some flaws with the operation of the current Act, AMMA strongly supports the measures proposed that would tighten up the operation of s127. Measures highlighted included:

(i)    S127 orders must be issued where jurisdictional prerequisites are satisfied (s127(1B) see p180 of the Bill).

(ii)    S127 orders will not be required to state specific industrial action to which it applies (s127(1D) p 180 of the Bill).

(iii)    Orders may be sought by any person directly or indirectly affected by industrial action (s127(2)(b) p 180 of the Bill).

(iv)    The Commission must deal with s127 applications within 48 hours. Where it is unable to determine applications within 48             hours, the Commission will be required to issue an interim order (s127 (3A) p 181 of the Bill).

(v)    Enforcement of s127 to be able to be pursued through Supreme Courts as well as Federal Courts (s127AAA (8) p 183           of the Bill).

(vi)    S127 (6) and s127 (7) are to be repealed and replaced with s127AAA in an attempt to limit the discretion of Courts to            not issue injunctions. S127AAA (see p182 of the Bill) states that Courts must issue injunctions where they have found,            as a matter of fact, that the respondent has engaged or is proposing to engage in conduct in breach of an order.

Passage of the above-described provisions will ensure a stronger presumption that parties who bargain and form agreements should live with the outcomes. This will in turn ensure "better quality" agreement-making, as parties will more clearly understand that the ability for a union or its members to pursue extra claims during the nominal life of an agreement will be further restricted.

 Protected Action and Bargaining Periods

A number of measures are proposed that will address the rights and responsibilities of the parties in the context of bargaining:

(i)    Pattern bargaining is specifically expressed to be unprotected. Measures to address the threat posed by industry wide       campaigns (eg The AMWU’s June 2000 campaign in Victoria) are strongly supported, particularly in light of the danger of         consequential flow-ons to other industry sectors. Such campaigns have absolutely no regard to the efficiency and performance of individual businesses and threaten the competitive position and viability of those businesses that do not have the resources to withstand industry campaigns.

(ii)    Period of notice prior to taking industrial action extended from three to five days. This is a sensible measure that will allow all parties to take steps to minimise the losses that they might incur during a period of protected industrial action.

(iii)    Mandatory ballots for pursuing protected industrial action are to be introduced. A number of conditions are to be met before the Commission can order a protected action ballot. This gives effect to the proposed new object at s3(eb).

(iv)    An amendment is proposed to s170MN(1) (see p 187 of the Bill) to clarify that any industrial action taken during nominal life of certified agreement is unprotected, thus overcoming "protest" type industrial action. This addresses a clear flaw in the operation of the Act and is consequently supported.

(v)    Protected action may only occur within a bargaining period. This is supported as it is AMMA’s strongly-held view that once an agreement is reached and registered it should provide protection against damaging industrial action. There can be no balance in the negotiation of an agreement, when having had the immunities conferred by a bargaining period, unions and/or their members are then not constrained once an agreement is registered.

(vi)    A definition is to be inserted into s4(1) of the Act (see p 178 of the Bill), that defines old IR agreement as an agreement made under a previous act. Further amendments are made within the Bill that prohibit industrial action prior to the nominal expiry date of an agreement made under the Act or an old IR agreement. This seeks to overcome the situation of protected industrial action occurring during the nominal life of agreements made under previous Acts. The proposed amendment is overdue and would overcome a drafting error within the current Act that has left exposed to protected industrial action during the nominal life of Agreements, those companies with agreements made under the 1993 Reform Act and 1992 Amendment Act.

(vii)    Suspension or termination of bargaining periods is to be provided for, allowing for cooling off periods. Circumstances requiring termination of a bargaining period are to be clearly specified, including pattern bargaining. The measures proposed will address the issue of damaging and intractable disputes.

(viii)    Suspension of a bargaining period (s170MW(1) p 189 of the Bill) must take place in certain specified circumstances including where 14 days has elapsed since protected industrial action first occurred, except if it is in the public interest that the bargaining period continue.

It is noted that suspension of the bargaining period may only occur on application of one of the parties (s170MW(4) p 190 of the Bill). A concern that arises is that of the capacity of a union to initiate industrial action and then orchestrate suspension and ultimately termination of a bargaining period for the purposes of obtaining an arbitrated outcome from the AWRC. There does, however, appear to be sufficient safeguards to protect against such action (ss170MW(3),(4), (5)& (6) p 190 of the Bill).

The measures proposed in relation to suspension of bargaining periods appear to strike a reasonable balance between the interests of employees in their pursuit of an agreement and the legitimate interests of employers to not have their business ruined by unrestrained industrial action.

Strike Pay

Strike pay provisions are to be amended to make it clear that no payment is to be made for any day on which industrial action is taken (s187AA(1A) see p 203 of the Bill). This proposed provision would apply to both protected and unprotected industrial action.

AMMA sees difficulties with the operation of this provision as it would appear to guarantee that the minimum period of time that will be lost due to industrial action will be a full "day" irrespective of the actual period of industrial action. Thus, short periods of industrial action, for example one hour, would lead to a prohibition of payment of a full day’s pay. Such an outcome may have the unintended consequence of encouraging industrial action of at least one day. If this is the legislative intention then AMMA is unable to support the provision as it is currently drafted.

AMMA supports the need to clarify the manner in which the strike pay provision operates however we do not believe the Bill achieves this in a practical way.

 Right of Entry

AMMA supports the tightening of Right of Entry provisions. Of particular merit is that:

(i)    For the purpose of a union official entering a site to hold discussions with members, an invitation from a member or members is required (s285C(2) at p 246 of the Bill). Opportunity for anonymity will provide protection of employees where required. This "invitation" provision will assist in avoiding "fishing expeditions" commonly undertaken by unions. It will also encourage a greater service-oriented approach from unions. In other words unions will be required to respond to genuine needs.

(ii)    An employer will be entitled to direct that discussions between a union official and a member or members take place in a particular place or room (s 285 DA(1) & (2)) during meal breaks only. Given the nature of remote location operations that exist within the resource sector and the use of twelve hour shifts rosters, regard should be had in those circumstances to the importance of rest and meal breaks during shifts. Consequently there should be a capacity for directing the conduct of meetings between union officials and members, when invited, to occur at the commencement or conclusion of shifts.

This provision reinforces and strengthens current restrictions on a union’s ability to unduly interfere with the normal operations of the premises that they enter. It is also a sound practice from a resource sector occupational health and safety perspective, where mine managers for example have significant statutory responsibilities given the hazards present with the industry.

 Freedom of Association

AMMA has long held the view that the principle of freedom of association should be a fundamental tenant operating within Australia’s workplace relations system. This view was advocated in AMMA – The Way Ahead in 1988, long before community and political opinion had moved sufficiently to give legal effect to it.

Measures that support the elimination of "closed shops" and union preference arrangements are consequently supported. We also share ACCI’s concern regarding the proposed reversal of onus placed upon employers in the situation where they face closed shop proceedings within a 12 month period of a previous order made against them in relation to closed shop proceedings (s298VA(4)) (see p 271 of the Bill).

The following comments are made in relation to particular provisions proposed:

(i) It is noted that the Bill proposes to provide greater protection for sub-contractors and employees against indirect pressure            or coercion. That conduct or "prohibited reason" includes the following:

s298BA(i) (m) refuses, has refused, proposes to refuse or has proposed to refuse to enter into a restrictive agreement or arrangement;

"restrictive agreement or arrangement means a written or an unwritten agreement (other than a industrial instrument) or arrangement that requires a person to provide the same, or substantially the same, terms or conditions of employment or engagement (other than excluded terms or conditions) to some or all of the persons employees or independent contractors that work at a workplace or in an industry as are provided to another person’s employees or independent contractors who also work at that workplace or in that industry."

The Explanatory Memorandum accompanying the Bill identifies the target of this amendment as including "site agreements" or pattern bargaining (see pg 75 of the Explanatory Memorandum)

Resource sector projects require large capital investment. The significance of the financial investments required, dictate that consideration must be given in the planning phases to the employee relations arrangements to be put in place on a project. Certainty and security of an investment on a project is a key consideration. To that end, the capacity to ensure stability in employee relations is fundamental.

AMMA expresses reservations regarding the above provision if a consequence of its passage is to further limit the capacity to use project agreements on major projects. This area is particularly vexing given the need to ensure certainty and security in employee relations when considering large financial investment.

Prohibition of "encouragement clauses" are provided for in the definition of what constitutes an objectionable provision as follows:

"S298Z(5) An objectionable provision is a provision, however expressed that:

(c)    indicates support either for persons being members of an industrial                association or for persons not being members of an industrial association;"

It is naive in the extreme or misleading to suggest that the presence of so-called "encouragement clauses" within agreements do not lead to the placement of unreasonable pressure on employees or prospective employees to join or remain a member of a particular industrial organisation. The current Act has been interpreted as permitting such clauses.

Pressure through "encouragement clauses", direct or implied, runs counter to the principles of freedom of association. AMMA therefore strongly supports the above provision as doubt will be removed as to what constitutes an unlawful provision. This should assist in overcoming the difficulties in identifying "ducks" (see Clout Engineering P/L v AFMEP&KIU C3721 Dec98 Print Q7710).

Section 5       Opportunities for Strengthening the Current Regulatory Model

As noted earlier within this submission, the measures proposed within the Bill continue the direction of reform that have been pursued through the 1990s. It does so in an incremental manner by attempting to address issues that have arisen in relation to the operation of the current Act.

Clearly the current system is not the last word in perfection. There are significant limitations that arise that are not addressed by the current Bill. Certainly, many of the changes to the Act that are proposed are strongly supported. They maintain the direction of reform that was initiated in the early 1990s by a Labor Government and have been substantially built upon by the present Government through the Workplace Relations Act 1996.

In making this submission it would be remiss of AMMA to not highlight those areas that, if addressed by the political parties, would substantially strengthen the federal system of regulation of workplace relations.

 Over prescription

Workplace relations laws and regulations deal with the minutiae of workplace processes. Even under the proposed changes to the Act currently being scrutinised by this Committee, there is a very high degree of regulation of the relationship of the parties within the workplace.

Many organisations complain, with justification, about the complexity and transaction costs involved in reaching and registering both collective and individual agreements and the need to rely on expensive legal and other professional advice to manage the complexity of the system. Measures contained within the Bill will not fundamentally alter this.

Arguably, many good employers are over-regulated and the current extent of workplace relations laws is unnecessary as well as potentially adding unwarranted transaction and compliance costs and inhibiting firm productivity. The reason that many employers can justifiably argue that they are over-regulated is because many of those Australian businesses have put in place very sophisticated organisational improvement and human resource management systems.

These employers also have a long history of providing pay levels and conditions for their employees that are well above award-specified minima. They will maintain these practices to enhance their corporate reputation, to attract and retain skilled staff, to improve their productivity and increase their profits. Despite this, these workplaces remain as intensively regulated as the most marginal of businesses with the poorest employment practices.

Dealing with over-regulation and the complexity of the current system is a cost for any organisation, and as such, impacts on the bottom line of business performance and competitiveness. To operate in the "unprotected" global market of the future, any additional costs to business will affect international competitiveness.

 Over the last decade, other bodies of prescriptive regulation have been simplified by the regulatory reform agenda, for example occupational health and safety regulation, with the result that the regulation actively encourages the adoption of quality practices throughout the business community, while simultaneously reducing prescription, compliance costs and avoidance. The workplace regulatory system has been by-passed by developments in other areas of business regulatory reform.

 Conflicting state and federal laws operating at a worksite

Under the current system of workplace relations, it is often difficult to determine the source of an employment right or obligation, or the appropriate procedure or tribunal to deal with an issue with both federal and state legislation and awards applying at a worksite.

 Lack of options other than registering workplace agreements

If an organisation and its employees choose to deal directly with each other, without going through the lengthy and costly process to get an agreement registered, they are often constrained by either a federal or state award (except for some organisations in Victoria) which underpins their employee relations arrangements.

Organisations taking this path may be subject to a roping-in claim, a notice of bargaining period, the award simplification process for an award which has no relevance to the workplace and under some state systems, the right of entry of union officials who are uninvited by either the employee or employer. Organisations faced with these situations confront complex legislation and a plethora of tribunal and court decisions to come to terms with to ensure their actions are not open to legal challenge. To many companies, these are ‘side issues’ which distract attention from business imperatives.

 Episodic nature of workplace change as a result of the current bargaining process

The pattern of collective enterprise bargaining is by its very nature episodic. It is a bargaining process, not a business process, and therefore arbitrary and discontinuous dependent upon the term of collective agreements. This drives behaviour which tends to postpone organisational change in the short term to provide bargaining power in the process of re-negotiation of the workplace agreement. Of course, the pressures on the organisation for change are continuous and the pattern of bargaining therefore restricts the adaptability and the rate of change within the organisation. As the competitive pressures arising from reduced tariff barriers and the entry of foreign- owned competitors intensify, so the costs of episodic organisational change around bargaining periods escalate. A critical factor to be addressed in supporting continuous improvement is how to move away from the notion of fixed-term agreements.

It worth reflecting on an address made to the National Press Club by the Minister for Workplace Relations and Small Business on the 24 March 1999 in which he identified a number of issues relating to our current workplace relations system worthy of further consideration. Issues raised by the Minister included:

·         Use of the conciliation and arbitration power is at the core of many of the complexities of the current system.

·         Use of the conciliation and arbitration power confers rights on third parties over and above the rights of actual employers and employees.

·         A different constitutional foundation is advanced, that of the use of the Corporations power. With one legislative act, the complexity and cost of paper disputes, ambit logs of claims, dispute findings, notional interstateness, competing award respondency and dual registration could be removed.

·         A step forward to towards building a better structure for the protection of safety net wages and conditions of employees could be made.

The option of extending the use of the Corporations power is one that deserves strong consideration, particularly as from AMMA’s viewpoint it would provide the means of introducing an option of internal regulation (see pg 27 of this submission).

 How do we promote international competitiveness?

By early next century the remaining vestiges of economic protection on which the workplace relations institutions of the nation were built in the early 1900s will have further diminished if not disappeared. Australian companies will be operating in an environment fully exposed to the rapid transformation of the world market place and international capital flows. More Australian organisations will be important players on this international stage in their own right.

The ability of Australian companies to react quickly when opportunity or threat is recognised must be facilitated, not restricted, by the framework of industrial relations law.

An aim of the regulatory system should continue to be the provision of fair and equitable terms and conditions of employment. The regulatory system should target those organisations which are not complying with their legal obligations and provide a clear and simple system for dealing with workplace issues. Equally it should promote world-competitive enterprises based on flexibility and good managerial leadership where people:

·         are productively engaged;

·         feel their work is valued; and

·         are treated fairly.

A key to improving business efficiency and hence international competitiveness is to promote and improve managerial leadership. It is suggested that organisations that have developed an environment supported by internal systems in which employees are willing and able to work to their full capability will be more effective and productive.

Because the current workplace regulatory system does not provide sufficient incentives to shift the focus of the workplace onto results over processes, it does not promote the wider adoption of higher quality people management and human resource practices and hence the capacity to be more effective and productive.

AMMA research to date leads to the conclusion that the regulatory system should actively reward good employers by providing an incentive for good managerial leadership.

The question which begs to be asked is: "How can the workplace relations system provide an incentive to adopt good managerial leadership".

AMMA believes the answer lies in offering a further option for workplace arrangements that of an option of Internal Regulation. The option would requires high standards of managerial systems and leadership and the support of a high percentage of employees to enter into, and which once in, reduces the transaction costs and episodic nature of bargaining experienced under the current Workplace Relations Act and the proposed "second wave" reforms.

 Model of Internal Regulation

The model of internal regulation being developed by AMMA would have a number of important features;

·         Such a model would be underpinned by the use of the Corporations Power.

·         The option would be additional to, not in replacement of, current options available under the Act.

·         To move to Internal Regulation, an organisation would need to satisfy certain defined minimum conditions of employment.

·         A move to Internal Regulation could only be achieved with the free and informed support of an organisation’s employees.

·         Operating within an internally regulated environment would significantly reduce the difficulties associated with having to deal with a plethora of state and federal laws governing the "minutiae" of workplace processes.

·         Transaction costs associated with operating within the existing system, would be substantially reduced within an internally regulated environment.

·         The model would provide substantial protections for employees.

AMMA is currently refining its position on an internal regulation model and to that end is developing a "prototype" which will describe the features and operation of the model. This will form the basis of a separate submission to the Government in due course.

This submission was prepared by the Australian Mines and Metals Association Inc.

Contact details:

Ian Masson

Australian Mines and Metals Association

Level 7, 10-16 queen Street

Melbourne Vic 3000

Tel (03) 9614 4777

Fax (03) 9614 3970

E-mail ian@amma.org.au