Observation (CEACR) - adopted 2010, published 100th ILC session (2011)

Labour Inspection Convention, 1947 (No. 81) - Australia (Ratification: 1975)

The Committee notes the comments made by the Australian Council of Trade Unions (ACTU) in a communication dated 31 August 2010 as well as the Government’s response thereto. It finally notes the observations by the ACTU dated 25 October 2010 and requests the Government to communicate any comment it deems relevant in this regard.

Articles 3(1), 16, 17 and 18 of the Convention. Impact of legislative developments on the functioning of the system of labour inspection. 1. In its previous comments, the Committee had noted that following the replacement of the Workplace Relations Act (WR Act) by the Fair Work Act 2009 (FW Act), the Workplace Ombudsman, i.e., the inspection body which had been previously criticized by the ACTU for using aggressive methods of investigation in order to determine whether trade unions and workers had been in breach of the workplace legislation, had ceased operations on 30 June 2009, all of its functions having been assumed by the Office of the Fair Work Ombudsman (FWO).

The Committee notes with interest from the Government’s report that the FWO is committed to encouraging and enforcing compliance with the provisions of the FW Act and other specified legislation through procedural fairness and that the FWO’s authority has expanded to include oversight of almost all workplaces in New South Wales, Queensland, South Australia and Tasmania as a consequence of the referral to the Commonwealth of the industrial relations power of these states on 1 January 2010. In this framework, contracts for services were signed with the New South Wales, Queensland and South Australian industrial relations agencies, as a result of which, 203 inspectors from these provinces have been appointed as fair work inspectors and will carry out investigations under the direction of the FWO. In addition, the FWO has appointed 12 inspectors from the Western Australian labour inspection agency to investigate federal matters that have some relevance to the Western Australian state system. Fair work inspector numbers have therefore increased by approximately 74 per cent.

The Committee also notes that the FWO implements a compliance model that combines complaints, investigations, targeted education and compliance campaigns (undertaken upon the basis of evidence of systemic non-compliance, or in the presence of a higher percentage of vulnerable workers within a given industry), and prosecutions deemed to be in the public interest. The Committee notes in particular with interest from the annual report of the FWO the increased use of civil litigation as a form of insistence on compliance and the significant penalties awarded by the courts which confirms according to the FWO that “the light-handed approach to industrial regulation is a thing of the past”. From 1 July 2009 to 30 June 2010, the FWO had: finalized over 21,070 investigations; recovered AU$21,312,749 on behalf of employees; and had 66 proceedings commenced and enforceable undertakings received for breaches of the FW Act.

Furthermore, the Government indicates that extensive education efforts are continually being applied to allow employers and employees to understand their rights and obligations through a range of guides, tools and educational material, the Fair Work Infoline, the Transition Assist Service (aimed at unions and industry groups), the National Employer Branch (to assist large national enterprises) and media campaigns.

The Committee requests the Government to continue to provide information on the activities of the FWO, and to indicate in particular the matters in relation to which most violations were found, prosecutions initiated and penalties imposed.

Furthermore, the Committee notes from the Government’s report that the FWO has tried a new compliance technique, termed assisted voluntary resolution (AVR), which is typically applied in the first 30 days of a complaint, and involves fair work inspectors facilitating communication between complainants and the other party to reach mutually acceptable outcomes; the FWO will roll out this method more widely during 2010–11. The Committee would be grateful if the Government would provide detailed information on the scope of activities carried out by the FWO and the range of subjects addressed in the framework of the AVR and also indicate the percentage of labour inspection activities dedicated to AVR and their outcomes.

Article 5(b). Collaboration between officials of the labour inspectorate and employers and workers or their organizations. In its previous comments, the Committee noted that the FW Act maintained certain restrictions initially imposed by the WR Act on the wide powers traditionally conferred upon trade unions to ensure enforcement of awards and agreements and transferred most of this power to a public authority, namely, the FWO. The Committee notes that according to the latest comments by the ACTU, despite some improvements in relation to the former statutory regime (the WR Act), the FW Act has retained much of the WR Act architecture on the right of entry, i.e., a permit system, the prohibition of obtaining, through collective bargaining, entry rights that are superior to those in the statutory regime and the possibility for a party (e.g., employer) to apply for a “representation order” which may have the effect of preventing a trade union from representing certain classes of employees (including with regard to the access to workplaces to investigate suspected breaches of workplace laws). According to the ACTU, it is very important for the application of the new statutory provisions to be closely monitored so as to ensure that these provisions do not unduly limit trade union access to workplaces. The ACTU indicates certain improvements in relation to regular consultations taking place with the social partners on issues such as targeted education and compliance campaigns and best practice guides available on the FWO website.

According to the Government, collaboration and consultation with employer and employee organizations is an integral part of the FWO’s activities in respect of development and implementation of framework policies as well as in the conduct of complaints, investigations and targeted education and compliance campaigns. The Government refers to the example of the development of the FWO’s education and advice material such as best practice guides, and guidance notes, including the interpretation of transitional arrangements created by the national workplace tribunal, Fair Work Australia. However, the Government acknowledges that the coverage of the system of the FWO has considerably expanded so that inspections of all businesses within its jurisdiction is not possible.

In this respect, the Committee is of the view that the establishment of a mechanism of collaboration between the FWO, and the organizations of workers could help maximize the effectiveness of the labour inspection system, notably through information exchange, the submission of complaints etc. Moreover, tripartite bodies and cooperation agreements at various levels could play an important role to this end (see General Survey of 2006 on labour inspection, paragraphs 163–171).

The Committee would be grateful if the Government would furnish information in its next report on arrangements made or envisaged in order to promote collaboration between the Fair Work Ombudsman and employers’ and workers’ organizations. The Committee would also appreciate statistical data on the exercise by trade unions of the right of entry to workplaces for compliance purposes.

Article 3(1) and (2). Building and construction industry. The Committee recalls that in its previous comments it took note of the serious concerns expressed by the ACTU on the conduct of the Australian Building and Construction Commission (ABCC), established on the basis of the Building and Construction Industry Improvement (BCII) Act, 2005, mainly in relation to an unbalanced approach of the ABCC in favour of employers and wide-ranging coercive powers bestowed upon it by the BCII Act. In particular, the ACTU had criticized the fact that the ABCC can carry out interrogations in private and the interviewees are generally not allowed to disclose to anyone else what happened during the interrogation on penalty of six months’ imprisonment.

The Committee takes note of the comments by the ACTU dated 31 August 2010 according to which despite electoral commitments to abolish the ABCC and replace it by a specialist division of the general labour inspectorate, in June 2009 the Government introduced legislation to Parliament to amend the BCII Act by replacing the ABCC with a separate and autonomous statutory agency working in parallel with, but independently of, the FWO. The Bill proposes to retain the power of coercive interview for this specialist statutory agency, but in an amended form with some procedural safeguards. Although the Building and Construction Industry Improvement Amendment (Transition to Fair Work) Bill 2009 was introduced into the Parliament in June 2009, it has not passed through the Senate. Consequently, the BCII Act remains unamended and the ABCC continues to operate as it has done since September 2005. The ACTU believes that the retention of such a separate labour inspectorate runs counter to the principle of a single central system of labour inspection which is embodied in Article 1 of the Convention. It notes in this regard that Australia is moving rapidly towards a single national system of labour law as all but one state have referred their industrial powers to the Commonwealth Government. The ACTU also notes that the ABCC does not operate in such a way as to enforce the legal provisions that are designed to protect workers in their employment. Rather, workers themselves are the subject of ABCC investigation, interrogation and prosecution for alleged breaches of industrial relations law (which includes wages and hours of work) and the BCII Act while only 4.5 per cent of the ABCC’s investigations in 2008–09 were directed at employers. The ACTU provides detailed data to support this view:

–           the ABCC has adopted an “understanding” with the former Workplace Ombudsman (now the FWO) that the ABCC will not deal with allegations of non-payment of wages and entitlements in accordance with applicable awards and agreements, despite the fact that the construction industry has been recently ranked as the fourth highest for employer non-compliance with legally binding awards and agreements that set employee rates of pay and conditions of employment;

–           in its most recent annual report, the ABCC disclosed that 63 per cent of all its investigations were directed at trade unions and a further 8.5 per cent concerned the conduct of workers in 2008–09. In 2006–07, the corresponding figures were 73 and 11 per cent respectively. Unions or employees were the subject of on average 76.5 per cent or more than three-quarters of all ABCC investigations between 1 July 2006 and 30 June 2009;

–           the ABCC’s report on the exercise of compliance powers for the period 1 October 2005 to 31 March 2010, shows that out of 197 “examinations” conducted in the period, 135 were directed at employees and ten at union officials; only 50 examinees were management/employer representatives. One worker is presently on trial for allegedly refusing to attend a coercive interview facing a possible penalty of six months’ imprisonment. An earlier criminal prosecution against a union official had been withdrawn in November 2008;

–           as of 8 July 2010 there had been 37 ABCC prosecutions before the courts. Of these, 36 identified a trade union, trade union official or employee as respondents to the proceedings. Only one of the 37 matters has been taken by the ABCC against an employer. The number of ABCC prosecutions against unions and workers has dramatically increased in the last 18 months.

The ACTU therefore considers that the ABCC disregards the functions which should be the primary responsibility of any labour inspectorate under the Convention and exercises unwarranted powers which should not be bestowed on a body dealing with contraventions of the civil law and potentially minor breaches of industrial instruments. According to the ACTU, this situation also undermines a key element of the Convention, namely, the impartiality of inspectors in their relations with employers and workers. Finally, the ACTU observes that the ABCC remains extensively resourced, with a total workforce of 156 people, and a recent addition of AU$33,342,000 to its annual funding.

The Government replies that the Building and Construction Industry Improvement (Transition to Fair Work) Bill 2009 has been based on the recommendations of a former Federal Court Judge and Chief Justice of the Industrial Relations Court of Australia (Transition to Fair Work Australia for the building and construction industry, March 2009). The Bill gave effect to the Government’s commitment to abolish the ABCC and replace it with a new independent regulator, the Fair Work Building Industry Inspectorate (the Inspectorate) which was designed to ensure compliance with relevant workplace relations laws by actively pursuing the unlawful or inappropriate conduct of all building industry participants including, importantly, the underpayment of employee entitlements, such as wages.

However, the coercive interrogation powers currently given to the ABCC were retained since according to the abovementioned report: “there is still such a level of industrial unlawfulness in the building and construction industry, especially in Victoria and Western Australia, that it would be inadvisable not to empower the [Inspectorate] to undertake compulsory examination. The reality is that, without such a power, some types of contravention would be almost impossible to prove” (op. cit., paragraph 1.23). However, the Bill also included a number of safeguards to ensure that these coercive interrogation powers vis-à-vis workers and their organizations are used in a fair and balanced manner. The Bill passed the lower house on 13 August 2009 and was introduced into the Senate on 17 August 2009 but lapsed when, on 19 July 2010, Parliament was prorogued for General Election for the House of Representatives and half the Senate. The re‑elected Australian Government is committed to reintroducing this legislation as a matter of priority. A ministerial direction which had been issued on 17 June 2009 to circumvent the application of coercive powers and the conduct of compulsory interviews by the ABCC, was finally overturned in full by the Senate on 25 June 2009.

The Committee notes with concern that the enforcement of legal provisions on the protection of workers constitutes a very small percentage of the ABCC’s activities; this body has according to the ACTU declared that it will refrain from its primary functions under the Convention, i.e., investigating allegations of
non-payment of wages and entitlements, directing instead the main bulk of its activities at the investigation, examination and prosecution of workers and trade union officials, notably for industrial action. The Committee cannot emphasize enough that under Article 3 of the Convention, the prosecution of workers does not constitute part of the primary duties of inspectors and may not only seriously interfere with the effective discharge of their primary duties – which should be centred on the protection of workers under Article 3(1) – but also prejudice the authority and impartiality necessary in the relations between inspectors and employers and workers as provided for in Article 3(2). With regard to the “unlawfulness” which justifies according to the report on “Transition to Fair Work Australia for the building and construction industry” the exercise of such functions by the labour inspection system, the Committee notes that it essentially relates to industrial action (strikes) (op. cit., paragraph 1.17) and refers in this regard to its comments under the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87).

Noting with concern that the manner in which the ABCC carries out its activities seems to have led to the exclusion of workers in the building and construction industry from the protection that the labour inspection system ought to secure for these workers under the applicable laws, the Committee urges the Government to ensure that the priorities of the ABCC (or the Fair Work Building Industry Inspectorate) are effectively reoriented so that labour inspectors in the building and construction industry may focus on their main functions in full conformity with Article 3(1) and (2) of the Convention. The Committee would be grateful if the Government would provide detailed information in this regard.

Noting the steps taken so far to introduce safeguards in the way in which the ABCC exercises its activities the Committee requests the Government to indicate the progress made in reintroducing and promoting the adoption of the Building and Construction Industry Improvement (Transition to Fair Work) Bill as a matter of priority.

The Committee is raising other points in a request addressed directly to the Government.