Direct Request (CEACR) - adopted 2020, published 109th ILC session (2021)

Right to Organise and Collective Bargaining Convention, 1949 (No. 98) - Australia (Ratification: 1973)

Article 4 of the Convention. Promotion of collective bargaining. Scope of collective bargaining. Building industry. With reference to its previous comment, the Committee recalls that section 11 of the Code for the Tendering and Performance of Building Work 2016 (the Code), accompanying the Building and Construction Industry (Improving Productivity) (BCIIP) Act, prohibits certain types of clauses in collective agreements, including: the reference to the type of contractual arrangement offered by the employer (such as a limitation of casual or daily hire employees) or requiring consultation in relation to the engagement of subcontractors; the terms and conditions of employment for subcontractors or limiting employer decisions about redundancy, demobilization or redeployment of employees based on operational requirements; and providing for the establishment or maintenance of an area which is intended to be designated for use by members, officers, delegates or other representatives of a building association.

The Committee notes that the Government specifies with respect to some of these exclusions that the Code does not ban consultation with unions, but only prohibits the inclusion of clauses requiring consultation on specified matters. The Government considers that the measures in section 11 of the Code are necessary to enable effective and productive business management, given the circumstances within the building and construction industry, such as evidence that unions use the clauses in question to apply undue pressure for employers to give preference to union subcontractors and workers. Clauses not permitted by the Code can still be included in agreements with builders who do not wish to undertake taxpayer-funded work and thus do not need to comply with the Code. However, the inclusion of these restrictions in the Code enables the Government through its purchasing power to use one of its strongest levers to change the culture of disregard for the law that has pervaded parts of the building and construction industry.

The Committee notes the Government’s reference to the examination of this legislation by the Committee on Freedom of Association (CFA) within the framework of Case No. 3278 (see 388th Report, March 2019, paragraphs 109–165). The Committee, like the CFA, once again recalls that legislation or measures taken unilaterally by the authorities to restrict the scope of negotiable issues are often incompatible with the Convention and underlines that, in light of the increasing impact on conditions of employment of the diversification of contractual work arrangements, parties should not be penalized for deciding to include such issues in their negotiations. The Committee notes the latest information provided by the Government that it had released a discussion on the Code in February 2020, welcoming the views of the stakeholders, including the social partners, on its operation and potential areas where it could be strengthened to ensure it remains fit for purpose. As a result of COVID-19, however, the consultation process has been paused. The Committee requests the Government to inform of the review process of the Code once it has been recommenced and to indicate the progress made within this framework, in particular to review section 11, in consultation with the social partners, with a view to removing restrictions on collective bargaining matters.

Greenfields agreements. The Committee recalls that section 182(4) of the Fair Work Act (FWA) establishes a new process for the negotiation of single enterprise greenfields agreements (an agreement between a union and a new employer that has not yet employed any employees, used for new projects to provide more certainty on labour arrangements) which enable an employer to apply to the Fair Work Commission for the approval of its greenfields agreement where an agreement cannot be reached with the relevant employee organization within six months.

The Committee notes the information provided by the Government relating to the 2017 independent Greenfields Agreement Review, which received submissions from Australia’s social partners and a range of other workers’ and employers’ organizations. The Government indicates that the review specifically supported the retention of the mechanism to resolve greenfields bargaining impasses (Recommendation 6). The Review was satisfied with the protections provided in this regard and in fact noted that, in the context of all the information provided to it, a six-month negotiation period represented a substantial possible delay and could very likely jeopardize either a final project approval decision or a contractor’s capacity to participate in a project. The Review also considered that the application of the prevailing pay and conditions test would most likely extend the normal approval time for a greenfields agreement. For all these reasons, including the employment significance of the successful negotiation of greenfields agreements, the Review was satisfied that a capacity to resolve disagreements about greenfields agreements was necessary and further recommended the reduction of the six-month period for negotiation, which it considered to be too long (Recommendation 7). The Government indicates however that it has not implemented the recommendation to reduce the bargaining period. In response to the Australian Council of Trade Unions (ACTU) allegation that employers may seek to withhold consent to an agreement to take advantage of these provisions, the Government recalls that the requirements for bargaining in good faith also extend to the negotiation of greenfields agreements and that the Fair Work Commission may make bargaining orders if it is satisfied that one or more of the bargaining representatives for the proposed agreement have not met or are not meeting the good faith bargaining requirements. The Fair Work Commission advised the Review that no applications had been made up to that point for a bargaining order in relation to a greenfields agreement. The Government adds that no agreements have so far been approved by the Commission under section 182(4). The Government adds that a greenfields agreement is not imposed on negotiating parties but rather all parties have an opportunity to present their case and the Commission must be satisfied that the Agreement, considered on an overall basis, provides for pay and conditions that are consistent with the prevailing pay and conditions with the relevant industry for the equivalent work (section 187(6)). Finally, the Government indicates that on 26 May 2020, the Prime Minister announced the establishment of five industrial relations working groups comprising of employer representatives and employee representatives to develop proposals for a reform agenda aimed at job creation, one of which is considering potential reforms to current greenfields agreements arrangements. Recalling that compulsory arbitration may be permissible in the case of first collective agreements so as to promote collective bargaining where the first steps to sound industrial relations in new contexts may be difficult, the Committee requests the Government to continue providing information on any cases in which the Fair Work Commission has approved agreements pursuant to section 182(4), as well as on the outcome of the working group considering potential reforms to greenfields agreements.

Individual flexibility arrangements (IFA). In its previous comments, the Committee noted that, pursuant to section 202 of the FWA, an enterprise agreement must include a term that enables an employee and their employer to agree to an individual flexibility arrangement varying the effect of the enterprise agreement in relation to the employee and the employer, in order to meet their genuine needs. The Committee took note of the concerns of the ACTU that employers frequently use individual flexibility arrangements to undercut the terms contained in a collective agreement or modern award and apply pressure to employees to accept unfair arrangements while the Fair Work Amendment (Remaining 2014 Measures) Bill 2015 would give primacy to inferior individual agreements over collective agreements, expand the range of matters subject to individual agreements and modify the operation of the better off overall test to enable non-monetary benefits to be taken into account.

The Committee notes the Government’s indication that the FWA provides safeguards to address the ACTU’s concerns, including that an employee must be better off overall under any IFA (section 203). The Government adds that both parties must genuinely agree to an IFA, an employee cannot be forced to sign an IFA to secure a job, and an employee has a right to refuse to agree to an IFA. If an employer were attempting to exert undue influence or pressure on an employee to agree to an IFA, an employee would have recourse to the general protections provisions of the FWA. If an employee and employer agree to an IFA, the IFA is taken to be a term of the agreement, and the usual remedies for breach of the terms and conditions of an agreement would apply. While the Government considers that the measures in the Fair Work Amendment (Remaining 2014 Measures) Bill 2015 would have allowed employees and employers greater capacity to tailor working arrangements to suit their individual needs, it informs the Committee that the Bill lapsed at the prorogation of the Parliament on 15 April 2016.

As regards the application of IFA provisions in practice, the Government indicates that, between 1 July 2015 and 30 June 2018, 9 per cent of employers who responded to the Commonwealth’s Survey of Employer’s Recruitment Experiences reported that they had made at least one IFA. Of these, the highest proportion of employers indicated that the IFA varied a condition of employment in a modern award (36 per cent), while 25 per cent of respondents indicated that the IFA varied an enterprise agreement. Twenty-nine per cent indicated that they had made IFAs which varied both a modern award and an agreement. The Government recalls that an IFA can be made at any time after the employee has started working for the employer and ended at any time by written agreement between an employer and employee. In the event there is not agreement, an IFA can be ended by giving the other party appropriate notice (13 weeks’ notice under an award, no more than 28 days as specified in enterprise agreements).

Duly noting that the flexibility term in an enterprise agreement must require the employer to ensure that any individual flexibility arrangement results in the employee being better off overall, a notion which may be difficult to objectively define, the Committee requests the Government to continue providing information on the application of the provisions of the FWA concerning individual flexibility arrangements in practice, as well as any supervision or complaints submitted in relation to these arrangements.

Conclusion of an enterprise agreement with a group of employees.  The Committee’s previous comments concerned the practice raised by the ACTU which permitted under the FWA the conclusion of an enterprise agreement, negotiated with a small number of employees, and its subsequent extension to cover a larger number of employees hired afterwards. The Committee recalled that, under the terms of the Convention, the right of collective bargaining lies with workers’ organizations of whatever level, and with employers and their organizations, and that collective bargaining with representatives of non-unionized workers should only be possible when there are no trade unions at the respective level. It requested the Government to take measures to ensure that collective bargaining with workers’ organizations is not undermined in practice and to provide detailed information on the application of these provisions.

The Committee notes the Government’s indication that the provisions in the FWA that deal with genuine agreement (including with respect to agreements voted on by small voter cohorts) are currently operating as intended and are reasonable and proportionate to support the objectives of Fair Work and the Australian industrial environment. In particular, the provisions in conjunction with the developing case law provide adequate protections regarding genuine agreement, including avenues available to parties to seek review of approval decisions. The Government adds that an employer that will be covered by a proposed enterprise agreement must take all reasonable steps to give Notice of Employee Representational Rights (NERR) to each employee that will be covered by the proposed enterprise agreement, as soon as practicable, and no later than 14 days after the notification time. Provision of the NERR ensures that employees are aware of their rights around appointing bargaining representatives, including in workplaces where there is no union member and hence no union as a default bargaining representative. The provision of the NERR to employees also assists the Fair Work Commission to determine who is proposed to be covered by the enterprise agreement. The Fair Work Act also contains a requirement for the Fair Work Commission to be satisfied that an agreement has been genuinely agreed to by the employees employed at the time who will be covered by it. Moreover, the Explanatory Memorandum of the Fair Work Bill 2008 indicates that, when an agreement contains a large number of classifications in which employees are not employed, there may be a question as to whether the agreement was genuinely agreed to under section 188 of the Fair Work Act. While the High Court of Australia has made clear that enterprise agreements with broad coverage can properly be made with small cohorts of employees, some agreements have not been approved due to concerns that the small voting cohort in those particular matters could not have genuinely agreed to an agreement that covers a large number and variety of classifications. Finally, the Government indicates that, before approving an enterprise agreement, the Fair Work Commission must be satisfied that each award covered employee and prospective award covered employee will be better off overall under the proposed enterprise agreement than if the relevant modern award applied (section 186(2)(d)). The Committee requests the Government to provide statistics on the number of agreements concluded by small voter cohorts and information on any cases observed of such agreements interfering with established workers’ organizations or of having been found to extend to a large coverage of workers that could not be considered to represent genuine agreements.

State jurisdictions. New South Wales (NSW). In its previous comments, the Committee requested the Government to provide information on the measures taken to review the restriction imposed by clause 6(1)(f) of the 2014 Industrial Relations (Public Sector Conditions of Employment) Regulation, in consultation with the social partners, so as to promote collective bargaining on all matters related to terms and conditions of employment for public servants not engaged in the administration of the State.

The Committee notes the Government’s indication that the NSW Government is committed to consulting with its employees in relation to the terms and conditions of their employment. While clause 6(1)(f) of the Industrial Relations (Public Sector Conditions of Employment) Regulation 2014 (the Regulation) states that policies regarding the management of excess public sector employees are not to be incorporated into industrial instruments, the policy is enacted through Premier’s Memorandum M2011-11, alongside other mechanisms by which the Government consults its employees. The Government also refers to Premier’s Memorandum M2016-02 (Transfer of Government Sector services or functions to the Non-Government Sector) and the NSW Government Guidelines on Change Management, which require agencies to consult with employees and the relevant union(s) on the content of a change management plan, including details of employee services and any proposed voluntary redundancy programme. While these policies sit outside the Regulation, agencies are obliged to consult with public sector employees and their representatives according to the provisions in industrial instruments, such as awards. For example, the major award covering public sector employees, the Crown Employees (Public Sector Conditions of Employment) Reviewed Award 2009, contains obligations that departments consult with unions, both formally and informally, regarding change.  Recalling the importance placed in Article 4 of the Convention on promoting collective bargaining on all matters related to terms and conditions of employment, the Committee requests the Government to indicate the precise categories of public servants covered by the 2014 Regulation, and in particular whether they may cover public servants not engaged in the administration of the State, such as teachers or those working in state institutions or enterprises.