THE ALBANESE GOVERNMENT’S IR LEGISLATION: TWO VIEWS

The Albanese Government’s 2024 industrial relations reform legislation generated tension with employers who saw it as a hand shake with the union movement. Others saw it as a long overdue update on handling the gig economy and increasing use of casual labour. Two voices at the centre of the debate – Jessica Tinsley, Director Workplace Relations at the Australian Chamber of Commerce & Industry and Ed Cavanough, Director of Policy & Acting CEO, McKell Institute addressed The Sydney Institute on Monday 25 March 2024 to offer some explanation as to how the new rules will work.

THE ALBANESE GOVERNMENT’S IR LEGISLATION: TWO VIEWS

JESSICA TINSLEY

I would like to begin by acknowledging the Traditional Owners of the land on which we meet this evening. And pay my respects to Elders past and present. I’d also like to thank The Sydney Institute for inviting me to speak and for hosting this evening. Thank you to my sparring partner, Ed Cavanough, from the McKell Institute. These events are always more fun when you have someone to bounce off. And, of course, thanks to all of you for coming out tonight.

I started at the Australian Chamber a few months into this first term of government and, as an industrial relations practitioner, it’s certainly kept me busy. First, we had the Jobs and Skills Summit, then we raced into consultations for the Secure Jobs, Better Pay legislation[1], which was swiftly rushed through both Houses, and then we had the lower profile Protecting Worker Entitlements legislation[2], followed, most recently, by the contentious Closing Loopholes Amending Acts Numbers 1 and 2[3].

It’s quite remarkable really. In less than two years the Albanese Government has re-written nearly every part of the Fair Work Act, and expanded its size by approximately 539 pages, or nearly 50 per cent when all new provisions commence. We have been right there in the trenches the whole time – consulting with government, working with our members, the opposition and other business groups, and lobbying the crossbench.

So, tonight is a good opportunity to rise above all that, to look back and ask: what has been the point? What is the purpose of the Albanese Government’s IR agenda? And how will it change our workplaces?

The government tells us, in short, that the laws are about:[4]

1. Getting wages moving;
2. Ending so called job “insecurity”; and
3. Closing “loopholes” that allegedly allow employers to undercut wages.

It’s a tidy narrative, and an effective one. But if you look past the slogans, you’ll see that the primary purpose of the government’s IR legislation is to give trade unions relevance.

This is not to say that the government isn’t genuine in its desire for higher wages and better conditions for workers. It’s just they believe that these aims can only be achieved by elevating the position of trade unions.

We know that trade union membership has plummeted from 41 per cent in 1992 to 12.5 per cent in 2022.[5] This is only 8 per cent of all private sector employees,[6] which the Fair Work Act primarily relates to. If your world view is that conditions can only improve when trade unions are strong, then this downward trend is truly depressing, and in need of urgent action to fix. Which is where the government’s IR laws come in.

Having spent hours ploughing through the various iterations of these laws, it’s clear that they create what I like to describe as a “union paywall”. To the extent that there are wins for workers in these laws, and they are difficult to access unless you are a member of a union. Want the benefits of this legislation? Simple; “join a union”.

Now I’m no union basher – trade unions clearly have a place in our system, as a cost-effective way for employees to access advice and advocacy, but a “union paywall” is inherently unfair and impractical. How can laws which effectively lock out 92 per cent of private sector employees from their “benefits” be good for workers?

Tonight, I want to explore this view further. I’ll walk you through the highlights (or lowlights) of the laws as I view them. And then once you’re convinced, as I am, of the existence of the government’s new “union paywall”, I’ll point out the impact this is having, and will have, on our workplaces, including on productivity and wages, on complexity and compliance and on flexibility and fairness.

Part I: the union paywall

What evidence is there of a “union paywall”? It is threefold.

First, there are special rights provided especially for unions and new rights for employees which can only be effectively accessed on their behalf by a union representative. Let’s start with the government’s flagship wages growth policy – multi-employer bargaining. While this policy is destined to fail in its chief aim, let’s pretend it works for a moment.

A multi-employer agreement cannot exist without trade union involvement[7]. Unless an employer obtains a voting request order, a single union, representing only a couple of employees, can veto the agreement even where the employers and most employees support it.[8] Similarly, if the majority of employees and the employer want to leave a multi-employer agreement, for their own enterprise level deal without a voting request order, the union can veto that too.[9]

Let’s move to the government’s “same-job same-pay” changes. These changes have been designed to stop employers who have an enterprise agreement in place (usually a union deal) from obtaining the services of labour hire providers (who are less likely to have a union deal in place). If the business with a union deal does engage labour hire workers and they are paid at a lower rate, then an Order can be sought from the Fair Work Commission enforcing the primacy of the union deal.[10]

Unions that are merely entitled to represent the interests of an employee can apply for Orders even if they don’t actually represent any employees.[11] So, when the government talks of “closing loopholes”, let’s be honest – the loophole being closed here is the existence of labour hire providers with no union-deal in place. Never mind the views of the labour hire workers themselves.

Other rights include new expanded rights for workplace delegates – those employees who represent the union on-site – to access workplace facilities to undertake union work, to paid time off to undertake paid training and much more.[12] From 1 July, union representatives will be provided expanded entry rights, to access worksites to investigate suspected employer non-compliance.[13]

Second, these laws give unions greater access to non-traditional workers. Think here, gig workers. The government’s “employee-like” changes go much further than just rideshare and food-delivery and will, potentially, impact many other independent contractors who advertise their services online.[14]

While we supported the provision of minimum standards to ride share and food delivery workers only, the government has failed to provide clarity on what these minimum standards should be – delegating it to the Fair Work Commission. This complex process will be impossible for workers to navigate themselves – leaving their case to be made by the Transport Workers’ Union, or others like it. Collective Agreements can also be made between unions, on workers’ behalf, and gig companies[15]. So, if you’re a rideshare driver and want a say over the standards which will apply to you, well, join your union.

The Albanese Government’s IR laws also place significant practical restrictions on employers engaging non-permanent workers such as casuals[16] who are essential for an effective and fair labour market, but also far less likely to be a union member.[17] Reduce these types of worker, the union theory must go, and you’ll boost the number of full-time permanent – or union – jobs. But we know it’s not so simple, and that these laws risk exacerbating existing workforce shortages.

Finally, the IR laws are riddled with complexity. Complexity makes IR laws inaccessible to employees without the support of a lawyer or, more likely, a union representative. Creating a barrier for most employees trying to access their rights.

The recent changes to the casual employment laws, move away from a simple test, focused on the understandings of both the employer and the casual as set out in the contract, to a confusing, legalistic definition spread across four pages.[18] While the government talks up its increased rights for casuals to convert to permanency, it requires the casual to prove that they don’t meet this confusing test. Spare a thought for the employee trying to navigate this system alone.

Another source of frustration for employees and employers alike is the significant increase in discretion provided to the Commission. Instead of setting out rights and obligations clearly in the legislation or leaving individual employers to negotiate with their own workforces, the government has effectively delegated decision making to the Commission. The Commission is a natural playground for the union movement, with its complex processes and legalese.

Which delivers us another brick for the “union paywall”.

Part II: consequences

My speech tonight is not meant as an ideological attack on the union movement. I’m less focused on what benefits unions are getting than with the kind of IR system we have been left with as a result. What are the consequences of a system which seeks to elevate the role of the union movement?

As a result of these changes, we have a system which is more adversarial, more complex, more rigid and one which shifts decision making away from the workplace and into the Fair Work Commission. And what are the consequences of this?

Conflict is the antithesis of harmonious workplaces. Complexity breeds non-compliance – what’s the point of enhanced workplace rights and obligations if you don’t understand them, so don’t comply with them? Inflexibility in our workplaces, brought on particularly by restrictions to casual employment and the so-called new right to disconnect, will particularly hurt women and those with caring responsibilities who have thrived in our modern, flexible workplaces.

The Reserve Bank, the Fair Work Commission, the Productivity Commission and the Treasury Department have all recognised the crucial link between higher wages and productivity. Yet the government appears determined to continue our productivity growth decline, by making our workplace relations system more rigid and returning us to a form of centralised wage fixing, including, but not limited to, encouraging sector wide bargaining and compulsory arbitration – hallmarks of an antiquated system overhauled by the Hawke and Keating Governments, in favour of productivity boosting enterprise-level bargaining.

Conclusion

So, in conclusion, it’s safe to say that the view you have received from this side of the Albanese Government’s IR laws is rather bleak.

Let me be clear, the full impact of these laws won’t be felt for years to come. I urge you to ignore cheap “see the world hasn’t fallen in” arguments pushed by the government and its proponents. The purpose of the IR laws is essentially to return Australian workplaces to a time when union membership sat closer to 40 per cent.

The 1970s and 1980s. A time when our workplaces looked more male, more blue collar and more rigid. Our workplaces have moved on, and so should our workplace laws.

[1] Fair Work Legislation Amendment (Secure Jobs, Better Pay) Bill 2022, accessible here: https://www.legislation.gov.au/C2022A00079/asmade/text

[2] Fair Work Legislation Amendment (Protecting Worker Entitlements) Bill 2023, accessible here: https://www.legislation.gov.au/C2023A00043/asmade/text

[3] Fair Work Legislation Amendment (Closing Loopholes) Bill 2023, accessible here: https://www.legislation.gov.au/C2023A00120/asmade/text; Fair Work Legislation Amendment (Closing Loopholes No 2) Bill 2024, accessible here: https://www.legislation.gov.au/C2024A00002/asmade/text

[4] Minister for Employment and Workplace Relations, the Hon Tony Burke MP, Address to the National Press Club, 31 August 2023, accessible here: https://ministers.dewr.gov.au/burke/speech-national-press-club-closing-loopholes-bill

[5] Australian Bureau of Statistics, Characteristics of Employment, Australia, August 2022.

[6] ‘Union membership in private sector shrinks to 8pc’, David Marin-Guzman, the Australian Financial Review, 15 January 2023, accessible here: https://www.afr.com/work-and-careers/workplace/union-membership-in-private-sector-shrinks-to-8-per-cent-20230112-p5cc42

[7] Fair Work Act 2009, section 249(1)(b)(i).

[8] Fair Work Act 2009, section 180A.

[9] Fair Work Act 2009, section 180B(2).

[10] Fair Work Act 2009, section 306E.

[11] Fair Work Act, section 306E(7)(c).

[12] Fair Work Act 2009, section 350C.

[13] Fair Work Legislation Amendment (Closing Loopholes No 2) Bill, sch 1 items 104 to 123.

[14] Fair Work Legislation Amendment (Closing Loopholes No 2) Bill, sch 1 item 248 (section 15L).

[15] Fair Work Legislation Amendment (Closing Loopholes No 2) Bill, sch 1 item 249 (section 536MK(2)).

[16] See Fair Work Legislation Amendment (Closing Loopholes No 2) Bill 2024, sch 1 item 1 (section 15A); Fair Work Act 2009, section 333E and section 306E.

[17] Australian Bureau of Statistics, Characteristics of Employment, Australia, August 2022 (Catalogue no 6333.0, 14 December 2022).

[18] Fair Work Legislation Amendment (Closing Loopholes No 2) Bill 2024, sch 1 item 1 (section 15A).