The government’s Fair Work Bill is the latest phase in the long evolution of Australian industrial law, writes Freehills special counsel, Alan Colman. 

Marx said of Darwin’s The Origin of Species that, “although it is developed in the crude English style, this is a book which contains the basis of natural history for our views”. In 1873, Marx sent Darwin a copy of Das Kapital. Darwin sent Marx a polite and complimentary reply, in English style. The book remained in Darwin’s library for many years. The pages remained uncut.

Natural selection, or dialectical change, is at work in the Australian industrial relations system.

The government’s Fair Work Bill is the latest phase in the 105-year evolution of Australian industrial law. The Bill will introduce substantial mutations into the industrial relations organism, particularly in relation to enterprise bargaining and transmission of business, in line with the government’s election commitments. However, the reforms will also exhibit a marked legislative inheritance from the Howard government’s reforms of 1996 and 2006. In the lead-up to the new laws’ commencement in July, this inheritance deserves some consideration.

There have been three significant waves of industrial relations reforms in the last 15 years. Each has attracted debate and controversy, both legal and political. Each has led to constitutional challenges to the validity to the reforms, and each has survived the challenge largely or completely intact. Each phase of the evolution has also produced certain characteristics which have gained a high level of acceptance in the public discourse, and have subsequently been selected and received into the next generation of reforms.

In 1993 the Keating government introduced a legal right to strike, a formal system of enterprise bargaining, and broadly applicable unfair dismissal laws. These were species-altering reforms, which attracted public debate and controversy, however, they endure to this day.

In 1996, the Howard government built on the Keating reforms, and established a system of enterprise bargaining which more fully devolved the responsibility for setting terms and conditions of employment to employers, unions and employees, at the workplace level. Critically, except in limited circumstances, the Australian Industrial Relations Commission no longer had the general power to settle disputes and impose conditions. Awards were simplified, and reconfigured as genuine safety net instruments that provided minimum terms and conditions only. The Commission did however retain a roll in vetting workplace agreements, and benchmarking them against awards to ensure employees did not suffer an overall disadvantage under the agreement (the ‘no disadvantage test’). Bargaining evolved in another important way. For the first time, statutory individual agreements (AWAs) could be entered into, which departed from the collective terms of awards and agreements. Two important conditions were that the AWA pass the no disadvantage test, and that no duress be applied to make the AWA.

What will the 2009 reforms inherit from the 1996 reforms? Rather a lot. Enterprise bargaining at the workplace level remains a centrepiece of the IR system. The parties, not the Commission (to be rebranded Fair Work Australia), will in almost all cases determine the industrial regulation that should apply at their workplace. Awards will remain safety nets, and will be further simplified, rationalised and reduced in number. Although AWAs are dead, statutorily-sanctioned individual employment arrangements live on. Facilitative provisions in collective agreements and awards will allow the employer and employee to make individually tailored, enforceable arrangements which depart from the collective framework.

The criticisms of the Work Choices reforms of 2006 are fresh in the public consciousness. In particular, the removal of the no disadvantage test as a benchmark for collective agreements and AWAs appears to have been a mutation that was not politically or industrially selectable. An important feature of the 2009 reforms is the resurrection of the no disadvantage test. However, Work Choices also introduced important new concepts whose prospects for longevity are promising, and which will at least survive into the next generation of reforms this July. Three features stand out.

First and foremost, Work Choices established a national system of industrial relations for corporations. The duplication, waste and inefficiency of multiple (federal / state) IR systems have been largely removed for most employers. Secondly, Work Choices required a union to submit any proposed industrial action to its members for approval through a secret ballot. This is important, meritorious genetic material in the IR organism. It establishes the desirable phenotype of industrial democracy in the taking of lawful industrial action. 

Thirdly, a small but important change removed the requirement of an employer to obtain a certificate from the Commission, prior to bringing civil action against a union for loss and damage associated with unlawful industrial action. This has made unions more accountable for their actions, and has removed the 72-hour period during which unions previously enjoyed impunity in relation to unlawfully inflicted economic damage.

Each generation of reform, including those of the Howard years, have left an important inheritance that has survived change of government. With ideas, as in nature, the fittest survive.  

Alan Coleman is a special counsel in Freehills' employee relations practice group.