Symposium: State Systems of Industrial Relations

The plan to demolish state jurisdictions: Consequences for Queensland

Margaret Lee, Griffith University

INTRODUCTION

Over the past fifteen years, employers and the conservative political parties have argued that Australia’s economic performance is seriously hindered by compulsory conciliation and arbitration. Centralised wage fixation by industrial commissions, collective bargaining by unions, and legislative protections against unfair and capricious dismissal are all said to inhibit economic growth. The conservative mantra is that simplifying and freeing up the statutory framework, paring down the unfair dismissal provisions, and providing more ‘opportunities’ for bargaining on an individual basis, unfettered by awards and the involvement of trade unions and industrial commissions, will usher in a new golden economic age (Reith 1997; Howard 2005).

More sinister imperatives underpin the unitary scheme than a simple inclination for legislative tidiness.

Successive Liberal and National Party governments at state and federal level have all engaged in legislative reform to reflect this agenda, although some state experiments have subsequently been wound back by incoming Labor governments (Deery & Mitchell 1999). The Howard government has recently announced plans for sweeping further reform. One of the most controversial aspects of these plans is the proposal to use the corporations power in the Commonwealth Constitution to demolish state industrial jurisdictions in favour of an all encompassing unitary system to more strictly reflecting the conservative view than the present Workplace Relations Act 1996 (Cth).

Yet it seems more sinister imperatives underpin the unitary scheme than a simple inclination for legislative tidiness. Many scholars have pointed out that the proposed federal legislative framework will shift the balance of power even further in favour of employers, undermining the rights of employees and making it difficult for unions to bargain over and defend their members’ rights and entitlements. Indeed, David Chin’s contribution to this symposium supports the view that one of Howard’s principal objectives is to attack key areas of union strength and neutralise ‘repeat players’. These are the well organised and powerful unions with the financial and political will to challenge legal frameworks in the commissions and courts with a view to altering the legal rules, as well as devising and testing innovative industrial tactics on the ground. Such unions include the Construction, Forestry, Mining and Energy Union (CFMEU), the National Tertiary Education Union (NTEU) and the Australian Manufacturing Workers Union (AMWU). By pursuing sometimes risky legal challenges and creative industrial strategies, such unions have shifted the legal framework and industrial landscape in ways that benefit other less powerful unions and workers’ rights generally (Lee 2004; 2005a).

Few would deny that industrial laws should be as free of complexity as possible. Yet most would agree that legislative reform ought, at a minimum, preserve existing rights, entitlements, and freedoms at work and that any new laws should be just and fair. Prime Minister John Howard has unrepentantly resiled from his pre-election promise that no worker would be worse off under his government, so clearly at least some workers will be deprived of at least some of the rights and freedoms they currently enjoy under the proposed new system.

Queensland has a long history of compulsory conciliation and arbitration.

So what effect is successful implementation of Howard’s industrial relations plans likely to have on the Queensland industrial jurisdiction? Most importantly, will workers it currently covers will be worse off? What they might lose? Which groups of workers might fare the worst? To answer these questions sensibly, we need to understand the structure of the Queensland labour market, the coverage pattern of the Queensland jurisdiction, and the spread of enterprise bargaining compared to the degree of reliance on Queensland awards and statutory minimum standards.

A SHORT HISTORY OF QUEENSLAND INDUSTRIAL LEGISLATION

Queensland’s first industrial statute in 1908 created a system of wages boards, which was soon replaced by the Conciliation and Arbitration Act 1916 (Qld). The Act established a conciliation and arbitration system modelled on the one in place at the time in New South Wales.

In 1990, the Goss Labor Government repealed this act and introduced the Industrial Relations Act 1990 (Qld), which retained and strengthened the conciliation and arbitration process, including acceptance of the role played by unions in representing the rights and interests of Queensland workers. This Act was amended in 1994 to mirror the federal Industrial Relations Reform Act 1994 (Cth), and introduced provisions to facilitate the making of collective certified agreements. The new act also specifically provided for processes and remedies to deal with termination of employment, even though the Queensland Industrial Relations Commission (QIRC) had long exercised a power to determine disputes about dismissal.

In 1997, the new National Party Government introduced the Workplace Relations Act 1997 (Qld) (the WR Act), this time mirroring a new Coalition federal government’s act of the same name. Two years later, the incoming Queensland Labor Government under Premier Beattie lost no time in cancelling the award stripping process that had barely begun under the WR Act, appointing a tri-partite Review of Industrial Relations Legislation in Queensland and later enacting the Industrial Relations Act 1999 (Qld) (the IR Act) which adopted most of the Inquiry’s recommendations.

Thus, despite a recent Coalition attempt at reform, Queensland has a long history of compulsory conciliation and arbitration by an independent commission charged with acting fairly and equitably to hear and determine industrial disputes and set wages and conditions. Since 1916, the QIRC has made awards providing for wages and conditions, including common rule awards, with over award payments and informal agreements subject to the award standards also forming part of the system. And throughout this period, Queensland unions have had rights to represent workers in discussions with employers, seek awards, engage in bargaining and bring disputes before the QIRC for settlement.

THE QUEENSLAND ECONOMY AND LABOUR MARKET

About one million workers are covered by the Queensland industrial jurisdiction.

Despite many similarities with other Australian industrial jurisdictions, the Queensland economy, labour market, and union structure and behaviour have developed in particular ways, with consequences for how regulation of industrial relations works in practice. These Queensland-specific developments will determine how the proposals for a unitary system actually play out in the state.

A state the size of Queensland is inevitably geographically, geologically, and climatically diverse. A crucial feature of its industrial and political landscape is the decentralisation of industry and population, and the importance of its regions. The total population of Queensland is relatively small at only 2.8 million in 2002.

The population is concentrated in the south east coastal corner and in regional towns and cities. And each region has distinctive economic features and so different labour markets (ABS 2005). The regions are centred on fairly large regional cities, such as Rockhampton and Emerald which serve agricultural industries and coal mining in Central Queensland; Toowoomba, which serves agriculture in the Darling Downs; and Mt Isa, which is the metalliferous mining centre of North West Queensland.

Although a large geographical area of the state is given over to agriculture and mining in the regions, and both contribute significantly to the Queensland economy and export earnings, these industries do not provide a high proportion of jobs. The total number of Queenslanders employed in 2002 was 1.7 million (ABS 2005), and almost two thirds of them work in the south east corner, mostly in service industries such as education, retail, tourism, business and financial services and government services (QIRC 2001, p. 28). Indeed, a key characteristic of the Queensland labour market is that service industries provide a higher proportion of jobs in Queensland than in other states, with the retail industry the largest employer (ABS 2005).

Another difference is that the Queensland labour market is growing very quickly. It grew more than 30 per cent between 1992 and 2002, compared with 16 per cent for the rest of Australia. However, a higher proportion of jobs are part-time in Queensland than in other states. Around 1.2 million Queenslanders worked full-time, and 492,000 worked part-time in 2002. The number of part-time jobs grew by 56 per cent between 1992 and 2002, but full time employment increased by only 22.8 per cent (Mangan 2005).

Further, small business and the public sector provide a slightly higher proportion of employment than is the case for Australia as a whole. Small business is especially significant in the regions: over 90 per cent of regional businesses employ twenty or fewer employees (Industrial Relations Taskforce 1998, p. 38).

As far as gender balance in the workforce is concerned, women in Queensland participate in the labour market (56.8 per cent) at a slightly higher than the Australian average (QIRC 2001, p. 27). Women comprise about 33.8 per cent of the full-time labour force in Queensland and more than 50 per cent of employees in service industries. They are a minority in manufacturing and mining (QIRC 2001, pp. 28–32). Women are much more likely than men to be employed on part-time or casually: 84 per cent of men work full time, while only 53 per cent of women do (ABS 2005).

As in other states, enterprise bargaining has contributed to widening wage dispersal.

These structural features have influenced industrial relations patterns in Queensland, especially the pattern of enterprise bargaining compared to award coverage.

PATTERNS OF QUEENSLAND AWARD AND ENTERPRISE BARGAINING COVERAGE AND THE PROBLEM OF EQUITY

About one million workers are covered by the Queensland industrial jurisdiction. About 28 per cent of Queensland workers are covered by the federal jurisdiction, with 55 per cent relying on Queensland awards and agreements and the remaining 17 per cent being award free (Industrial Relations Taskforce 1998, p. 17). Award free employees remain entitled to the minimum standards in the IR Act.

The existing pattern of award and enterprise agreement coverage is in part a reflection of the nature of the economy and labour market, but also of union structure and density. Union density in Queensland is similar to other states at about 23 per cent, and is highest in the public sector, education, health, mining, manufacturing, and transport industries (Peetz 2004, p. 60–61). Collective agreements tend to be concentrated in the sectors where density is high, but this has not meant high levels of industrial unrest. Although industrial action figures for Australia as a whole are now mainly linked to bargaining for a new agreement, industrial action in Queensland in December quarter 2004 was less than half the national average: only 2.5 days per thousand in 2002, compared to a national average of 6.1 days (Mangan 2005).

In the rural areas and regional centres, up to 50 per cent of workers rely on Queensland awards and statutory minimum standards alone (Industrial Relations Taskforce 1998, p. 19). Greater reliance on awards rather than collective bargaining is especially typical of small businesses, which are also likely to offer part-time and low wage work. Bargaining in the Queensland jurisdiction is not as extensive as it is in the federal system, with only 24 per cent of all Queensland workers covered by agreements made under the Queensland legislation in 1998, the majority being in the public sector. On the whole, bargaining is concentrated in large enterprises, high wage areas, the public sector and metropolitan areas (Industrial Relations Taskforce 1998, p. 22–23).

As in other states, enterprise bargaining has contributed to widening wage dispersal, especially between employees relying only on awards and those covered by enterprise agreements. Women are more likely than men to be in the awards-only stream, now considered to be comparatively low paid (QIRC 2001, p. 43). The gender wage gap in 2002 was around 17 per cent, calculated on the basis of hourly rates of pay (QIRC 2001, p. 2).

The federal government’s proposed unitary system will cover a minimum of 70 per cent of Queensland workers. The remaining 30 per cent left in the Queensland system will be made up of those employed by non-corporate businesses and public sector workers, apart from those employed by state owned corporations (Mangan 2005). So what can workers shifted into the new unitary world can expect?

THE QUEENSLAND FRAMEWORK AND THE PROPOSED UNITARY SYSTEM: A COMPARISON

Awards

The Queensland pay equity principle is now having a genuine impact in low paid ‘women’s jobs’.

Workers reliant on Queensland awards only tend to be in workplaces with low union density, in service industries, in small business and in the region, as I noted above. Queensland awards are not limited to twenty matters as federal awards currently are. They are reviewed every three years by the QIRC, and kept relevant, up-to-date, appropriate to current community standards of fairness to employees, and suited to efficient performance needs of particular enterprises (s 130). The QIRC also sets the minimum wage for the state. The QIRC commenced the first review of its more than 300 awards in 2000 and there has been a high degree of collaboration among the parties throughout the process, so that awards have been ‘modernised’ almost entirely by consent (QIRC 2001–2002, p. 15).

In contrast, under the Howard government’s proposals, federal awards will be limited to only sixteen matters and face further ‘simplification’ by the proposed Fair Pay Commission. The Australian Industrial Relations Commission will no longer hold National Safety Net Wage Cases, which currently provide wage increases for workers on awards only, inevitably the lowest paid workers in the federal system. Minimum wages will be transferred to the new commission, an administrative body which will set minimum wages without the benefit of public submissions and argument from unions and employers (Howard 2005).

Statutory minimum standards and Beattie’s safety net

In addition to the award system, the Queensland IR Act also contains statutory minimum standards which currently apply to all employees in Queensland who are not covered by the federal system. The present Queensland minimum standards are:

  • 52 weeks unpaid parental, including long term casuals (ss16–38)

  • two days bereavement leave (s40)

  • eight days sick leave, 5 days of which can be used as carer’s leave (s10, s39)

  • four weeks annual leave (ss11–14)

  • thirteen weeks long service leave after fifteen years service for full time workers, with provision for casual workers (ss42–58)

  • Regulation of working hours

  • Payment for all public holidays (s15)

  • Equal pay for work of equal value (ss59–66)

  • A minimum wage to be set by the QIRC (s8A)

  • Protection of employee entitlements when there is a transfer of business (ss67–71).

Under the equal pay provision, the state government established a Pay Equity Inquiry in 2000, chaired by a member of the QIRC. The Inquiry’s report recommended that the QIRC adopt a statement of principle regarding pay equity. The principle was adopted in 2002, and is now applied to awards when they are being made and reviewed.

The proposed federal legislation provides plenty of penalties against union action.

The pay equity principle is now having a genuine impact in low paid ‘women’s jobs’. On 7 September 2005, the QIRC handed down its first decision based on the new ‘equal pay for work of equal value’ principle in LHMU, Queensland Branch v Australian Dental Association, Queensland Branch. This decision, which is Australia’s first arbitrated pay equity decision, increases the wage rate of dental assistants by 11 per cent plus a further annual increase of 1.25 per cent.

The proposed unitary system does not contain any equivalent process for addressing the systemic discrimination in the labour market which inherently undervalues work classed as ‘women’s work’ (see the discussion in QIRC 2001). Rather, what we know at this stage suggests that there will be only five minimum standards in the proposed unitary system. The subject matter of those standards will be minimum wages, annual leave, sick leave, unpaid parental leave and hours of work.

Thus Queensland employees enjoy substantially superior statutory minimum standards compared to those proposed for the unitary system. The Beattie government recently introduced legislation aimed at maintaining the existing minimum standards and providing statutory protection of existing shift and overtime penalty rates in Queensland awards and agreements (the Industrial Relations Amendment Act 2005 (Qld). Federal legislation will have be carefully drafted to specifically override this new act, a politically tricky decision which could hand considerable moral high ground over to Labor, because it would signal the federal government’s clear intention to reduce conditions of work.

Enterprise bargaining

The IR Act provides for the making of individual as well as union and non-union collective agreements, all certified by the QIRC and subject to a very strong no disadvantage test (the NDT) that is far superior to the current federal NDT. The Queensland NDT requires that a proposed agreement be compared not only to the award and minimum standards (the federal NDT) but also to the wages and conditions prevailing in a certified agreement (s 161).

If the Queensland jurisdiction were to be abolished, Queensland workers would have to rely on the federal NDT. This would weaken their rights. The stripping of awards and the relatively low increases granted in award rates has already watered down the federal NDT to the point where it is widely regarded as failing to protect workers against exploitative agreements. And there is now substantial evidence that even this sub-standard test is rarely strictly applied by the OEA when approving Australian Workplace Agreements (AWAs) (Mitchell & Fetter 2004). The NDT in the unitary system will comprise only the five federal minimum standards, administered by Office of the Employment Advocate (the OEA) in respect of both collective agreements and AWAs (Howard 2005).

In the proposed system, effective enforcement against employers will almost certainly decline.

The Queensland bargaining process is supported by a sophisticated bargaining in good faith regime (s 146), including a peace obligation of 21 days after the commencement of a bargaining period (s 147), during which neither party is permitted to take industrial action. There is no express requirement that employers must bargain fairly in the federal legislation, but it provides plenty of penalties against union action (Lee 2005b). The unitary framework will maintain this situation, but also introduce further restrictions on union pressure tactics and substantial increases in the range and level of sanctions and fines against unions and employees taking unprotected industrial action.

Other individual protections: Employees, independent contractors and unfair dismissal

The Queensland legislation assists workers at the individual level in several very important ways. Section 5 provides a wide definition of ‘employee’ (including deeming outworkers in the clothing industry to be employees), and provides procedures by which the QIRC can determine whether a worker is an employee (s 275) and whether a contract for work is fair (s 276). These provisions are crucial for maintaining benefits and rights for employees who may otherwise be unwillingly ‘converted’, on pain of dismissal, into sham independent contractors on worse wages and conditions by unscrupulous employers. Such protections will not be part of the unitary system.

The unfair dismissal jurisdiction in Chapter 3 of the Queensland IR Act provides for minimum notice periods and redundancy pay, and an uncomplicated process for disputes about dismissals to be resolved. Small businesses are not excluded from the provisions. Under the new federal system employees at workplaces with less than 100 employees will be excluded from seeking relief for unfair dismissal, effectively disenfranchising employees in 98 per cent of businesses in Australia (Mangan 2005). Every new employee will be on probation for six months rather than the present three months, during which the employer may dismiss at will. Maximum compensation amounts will reduced, probably to three months’ pay.

The Howard government justifies these changes with arguments that the current provisions harm employers because most unfair dismissal applications are merely speculative, and that cutting back the dismissal jurisdiction will increase employment. Although these arguments have been resoundingly defeated by recent independent research, the government is going ahead with its proposals (Senate 2005). Removing the fundamental human right not to be dismissed unfairly offends ordinary standards of justice and fairness. Handing employers a right to dismiss without fear of legal proceedings will enormously enhance their power in nearly every aspect of workplace life.

Enforcement: The forgotten issue

The present rights and entitlements of workers under the Queensland industrial system are thus far more extensive than those offered by Howard’s proposed unitary system. But not only are they superior, they are effectively enforced by the Queensland Department of Industrial Relations. In 2004, the Department finalised more than 8500 wage complaints, carried out 300 court actions and recovered almost one million dollars in unpaid entitlements under Queensland awards, agreements, and legislation from employers (DIR Queensland 2005).

Disadvantaged workers are most likely to be casual, female, young, and indigenous.

In contrast, the policy of the main federal enforcement agency, the Office of Workplace Services, is to engage in court recovery actions and prosecution of offending employers only rarely. The other federal agencies, the OEA and the Building Industry Taskforce, both have a history of largely ignoring employer law breaking and pursuing unions almost exclusively, usually on allegations of unlawful coercion and freedom of association breaches (Lee 2005a). In the proposed unitary system, effective state enforcement of awards and agreements against employers will almost certainly decline, and responsibility will inevitably shift to unions and those who are least able to afford the cost of enforcing their rights: the underpaid workers themselves.

CONCLUSION: A FAREWELL TO JUSTICE AND EQUITY AT WORK IN QUEENSLAND

The economic performance argument for industrial relations reform has been hotly debated, but recent evidence suggests that it is, at best, suspect and in respect of the Queensland economy is largely unfounded (Mangan 2005).

In the event that the proposed unitary system is successfully implemented, workers currently in the Queensland jurisdiction who are shifted into the new system will suffer an immediate loss of statutory minimum entitlements. Those working for businesses of less than 100 employees will immediately lose unfair dismissal protections. Queensland awards that become federal awards will be stripped to sixteen matters. Queensland workers transferred to the federal system will have to bargain to gain improvements, but they will face a much more difficult bargaining regime.

These changes will inevitably result even wider disparities in wages and conditions. The gender wage gap will grow and recovery of unpaid entitlements will fall more heavily on workers. The workers likely to fare worst are those who rely on awards, those in low union density workplaces, those employed in small business in the regional areas, and those who are not union members. These workers are most likely to be casual, female, young, and indigenous. The pity of it is that while targeted unions like the CFMEU and the NTEU will probably emerge ‘bloodied but unbowed’ from Howard’s unitary experiment, the most vulnerable of Queensland workers will lose a large part of their current rights, entitlements and protections and will have little access to justice at work.

REFERENCES

Australian Bureau of Statistics (ABS) 2005, Queensland in Review, Economic Characteristics of Population, Employment, Labour Force Status in Queensland (June 1992–June 2002).

Deery, S. & Mitchell, R. 1999, Employment Relations: Individualisation and Union Exclusion, Sydney, Federation Press.

Queensland Department of Industrial Relations (DIR Queensland) 2005, Industrial Relations Perspectives, Issue 21, March.

Howard, J. 2005, Address to Parliament: Workplace Relations Reform, Parliament House, Canberra, 26 May.

Industrial Relations Taskforce 1998, Review of Industrial Relations in Queensland: Issues Paper, Queensland Department of Employment, Training and Industrial Relations, Brisbane, September.

Lee, M. 2004, Shaping a Preferred Bargaining Paradigm: Labour Law Remedies, the Scope of Agreements and Union Influence, Proceedings of the Eighteenth AIRAANZ Conference, New Economies: New Industrial Relations, vol 1, pp. 293–302.

Lee, M. 2005a, Whatever happened to the Arbitration Inspectorate? The reconstruction of industrial enforcement in Australia, Proceedings of the Nineteenth AIRAANZ Conference, vol 1, pp. 339–346.

Lee, M. 2005b, ‘Crafting Remedies for Bad Faith Bargaining, Coercion and Duress: ‘Relative Ethical Flexibility’ in the Twenty-first Century,’ Australian Journal of Labour Law, vol. 18, no. 1, pp. 26–52.

Mangan, J. 2005, Shifting Industrial Relations Jurisdiction from the Queensland Government to the Commonwealth Government: Some Potential Implications, Queensland Department of Industrial Relations, Brisbane.

Peetz, D. 2004, The Decline of the Collectivist Model: Report, Queensland Department of Industrial Relations, Brisbane.

Mitchell R. & Fetter, J. 2004, The legal complexity of workplace regulation and its impact upon functional flexibility in Australian workplaces, Centre for Employment and Labour Relations Law, Working Paper No 31.

Queensland Industrial Relations Commission (QIRC) 2001, Valuing Worth: A Report of the Pay Equity Inquiry, Queensland Department of Industrial Relations, Brisbane.

Queensland Industrial Relations Commission (QIRC) 2002, Annual Report 2001–2002 Queensland Department of Industrial Relations, Brisbane.

Queensland Industrial Relations Commission (QIRC) 2004, Annual Report 2003–2004 Queensland Department of Industrial Relations, Brisbane.

Reith, P. 1997, ‘Opening Address’, in Workplace Relations, eds M. Lee & P. Sheldon, Butterworths, Sydney, pp. 11–17.

Senate Employment, Workplace Relations and Education References Committee 2005, Report of Inquiry into Dismissal Policy in the Small Business Sector, Commonwealth of Australia.

Margaret Lee is Lecturer in the Department of Industrial Relations in the Griffith Business School in Brisbane. Margaret has a industrial relations practitioner background, working in the public sector, for the Mining and Energy Division of the Construction Forestry, Mining and Energy Union and acting as industrial relations consultant to business and unions during the period 1982-1994 before she entered academia.