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Reform priority in focus: Industrial Action

WITH the Productivity Commission’s ‘Review of Australia’s Workplace Relations Framework’ representing a unique opportunity for fundamental reform, AREEA’s submission Getting Back on Track: Delivering the Workplace Relations Framework Australia Needs presents a comprehensive suite of proposed reforms to facilitate new investment, job creation and economic growth in Australia’s resource sector.

In each weekly AREEA News Update, we are dissecting one of the priority issues flagged by AREEA in detail in its submission, backed by evidence from AREEA’s membership. This week, the focus is on industrial action.

The resource industry and the wider economy have much to gain from reforms that better balance the right for employees to take protected industrial action with appropriate safeguards and processes to protect employers, third parties and the broader community from the damage of premature or irresponsible industrial action.

In our submission, AREEA details the core challenges of the current Fair Work Act 2009 and presents an alternative policy framework to ensure industrial action is taken only as a last resort to minimise the costs to both employers and the Australian community.

Reforms drive damaging disputation

Under reforms passed by the Keating government in 1993, the right to take “protected” industrial action while bargaining for a collective agreement was introduced for the first time into Australian legislation.

The introduction of the Fair Work Act 2009, the AREEA submission says, made industrial action easier to take and over a wider range of matters than the previous Howard government workplace relations system. The Fair Work Act did this by:

  • Allowing a greater number of matters to be subject to protected industrial action, including those that do not pertain to the relationship between employees and employers;
  • Allowing bargaining representatives to pursue matters that do not pertain, so long as they genuinely hold a view that they do pertain at the time they pursue them; and
  • Allowing protected industrial action to occur without bargaining even having commenced.

AREEA’s submission argues that the Fair Work Act does not have appropriate regard for the true impact of industrial disputation on both individual enterprises and the broader national competitiveness. The official figures also fail to show that the threat of industrial action, even when it is not actually taken, can be equally as costly.

“Threats of industrial action and the taking of industrial action dramatically change the bargaining dynamic into an unavoidable adversarial contest, and the system should minimise the possibility of employees resorting to industrial action in prosecution or defence of their claims,” AREEA’s submission says.

“It also remains a fact that industrial action which has either been threatened or taken in pursuit of higher wages and conditions claims has negatively impacted Australia as a reputable destination to invest and do business.”

Costs of the current system

In its submission, AREEA points to recent practical examples from the resource industry to support the argument there is a ‘limited capacity to terminate protected industrial action, even when it can result in significantly high costs to innocent third parties’.

“(On the Pluto LNG Project) Woodside indicated that the cost for each day of potential strike action would be in the realm of $3.5 million, but the Fair Work Commission indicated the substantial losses Woodside was exposed to as a result of delays caused by strike action against another contractor were not ‘significant’ when considered in the context of the project as a whole to warrant suspension of protected industrial action,” the submission argues.

“This has set such a high bar to companies who feel they need to experience extreme circumstances to meet the threshold of significant harm, and AREEA is concerned that the bar is set so high that few companies would be able to sustain such losses and would not be able to apply to the FWC for relief.”

Recommendations for a fairer, balanced system

Backing its proposals with research from its own members and economic analysis by KPMG, AREEA’s submission presents a suite of recommendations to remedy the flaws of the current system and minimise the risk and impact of industrial action. Recommendations include:

  • A limitation on the claims that can be subject to protected industrial action to those of the employer-employee relationship;
  • The implementation of a new test which would require a bargaining representative seeking a protected action ballot order to demonstrate that the industrial action is not contrary to the public interest;
  • The requirement of greater precision regarding the type and duration of industrial action sought by protected action ballot forms; and
  • A restriction on the Fair Work Commission from authorising industrial action where the bargaining claims are deemed to be manifestly excessive (AREEA notes this remedy is contained in a Bill tabled by the Abbott government that is currently before the federal parliament but is by no means guaranteed of passing).

“The Fair Work system should recognise that protected industrial action should only be accessed as a last resort and when good faith bargaining has been attempted and exhausted,” AREEA’s submission reads.

“Current rules for when industrial action can be taken should be strengthened in a number of areas.

“The system should recognise how important the resource industry is to the Australian economy and how industrial action can be damaging to employers, employees, third parties and Australia’s overall reputation as a stable and competitive destination to invest.”

To read AREEA’s submission in full, click here.

Read KPMG’s research report Workplace Relations and the Competitiveness of the Australian Resources Sector by clicking here.

Stay tuned for next week’s ‘Issue in Focus’, covering union workplace entry laws in Australia.

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