Australian Employment Relations

Subject: Sciences
Pages: 10
Words: 2700
Reading time:
11 min
Study level: College


The history of labor relations in Australia is very complex. Since the early 1990s, there have been numerous legislations that have impacted differently on labor relations in this country. The work choices reforms act was the dominant legislation in the industrial relations field in 2005 when the Howard government was in power. This legislation brought changes in the role of the state in industrial relations and led to the establishment of a body that would be responsible for checking employee wages. It also led to more state controls on industrial action, changes to workplace bargaining, and changes to unfair dismissal protection.

The provisions of this act were criticized as undermining various entitlements for workers and restricting employee expression at the workplace and there were numerous protests across Australia for some provisions to be changed. This came with the fair work bill of 2008 under the Rudd government; the bill was enacted in 2009 and has provisions that have indeed changed the industrial relation in Australia (Aulich, 2008, p.179).

This essay will explore the effects of two pieces of legislation; the fair Work Act of 2009 and the work choices act of 2005 which are considered to have brought significant changes in Australian industrial relations in the recent past. These two laws address a wide range of social, economic and institutional issues that are directly or indirectly related to labor relations. These range from pay equity, the flexibility of working hours, paid maternity leave and gender-related issues especially those concerning women’s participation in labor.

Labor relations under the work choices Act (2005)

Forsyth (2009, p.1) explains that significant changes in the federal industrial relations began in the rarely 1990s and were spearheaded by Paul Keating. The work choices legislation was meant to address various constraints the previous regimes had faced in the management of labor issues. It was intended that through the implementation of this act, more jobs would be created, wages would be better and that productivity would increase. Through this act, there was an intention to create a safety net through which employees would bargain for better payment terms.

According to Hall, 2006, p.291-297, through the work choices act, the government was able to comprehensively cover and exert influence on many employment relationships. This mostly covered trading, financial and foreign-owned enterprises that are subject to regulation by the state. According to (CCH Editors, 2009, p.140, this act saw the introduction of the Australian fair pay and conditions standards which became a statutory requirement for employers. This was a new development because the governments in the past did not go to the extent of influencing employment conditions outside the public sector.

Another important change attributed to this act as noted by Sawer, Abjorensen and Larkin, 2009, p. 93, was the removal of power from the Australian industrial relations commission to arbitrate in industrial disputes. The AIRC could not make deliberations on any industrial dispute unless the parties involved consented that the AIRC gets involved in the matter. What this means is that firms had to resolve their disputes voluntarily and the state’s involvement was limited to a few cases that would warrant the intervention of the AIRC.In cases where disputes cannot be solved by consensus, the parties were then expected to proceed and seek redress of the matter in the courts.

These actions serve to illustrate the shift from the responsive approach by the state to a more rigid approach by the state. Critics of the act argue that this method was not intended to correct the inadequacies that were persistent in the labor market at the time but these were techniques by the government to increase the influence of the state in the regulation of labor issues.

Stewart, 2008, p.30, notes that under the act, employers were also empowered to recruit employees directly without strict adherence to the statutory standards depending on the prevailing economic situation. This was possible as a result of the abolition of the no disadvantage test. Enterprises with more than a hundred employees were protected against unfair dismissal claims by former employees. Such reviews were prohibited due to ‘verifiable operational reasons’.under the work choices reforms, employers were allowed to terminate expired workplace agreements. The responsibility of reviewing pay scales and awards was also transferred from the AIRC to the Australian fair pay commission.

The enactment of the work choices act greatly hampered the activities of labor unions. The government introduced new procedures that had to be followed before that unions could carry out any industrial action. These procedures were time-consuming and costly. Unions for example were required to get consent from employees who voted through a ballot system. The right of union officials to investigate complaints and speak with employees at workplaces was also considerably reduced. Through registered workplace agreements, union officials lost the ability to negotiate for fair entry terms (Holley, Jennings &Wolters, 2008, p.655).

Hunt and Provis, 1995, p.63, explain that restrictions attached to workplace agreements made it hard for unions to bargain for better terms and working conditions especially in the manufacturing and constructions industries. This weakened the power of unions to engage in collective bargaining and as a result, individual Australian workplace agreements were widely used compared to collective agreements that are mostly achieved through union-negotiated deals. There were also restrictions on the freedom to associate and this made it hard for union officials to oppose any employer-initiated shifts to the individual to personal schemes.

Richardson, 1999, p.21, elaborates that the removal of the AIRC had already made it difficult for union officials to deal with bargaining disputes or challenge the decisions of employers who skewed employment agreements to favor them rather than the employees. These were significant challenges to small and large unions that enjoyed majority support from the employees. The anti-union agenda was also reinforced through other legislations. For example, the Cole Royal commission came up with special rules for bargaining and industrial action. The rules made were applied in a differential manner for they mainly targeted the construction and manufacturing industries. Besides the regulations, a well-funded agency -the Australian Building and construction commission (ABCC) was created by the government to oversee the implementation of the rules and regulations made by the Cole Royal Commission.

The work choices reforms had been going on for a long time and considerably created a great volume of legislation resulting from amendments that started with Paul Keating.

Labor relations under the Fair work Act (2009)

The fair work act was enacted in 2009 by the federal government and this was an effort to abolish what many critics consider to be negative changes brought about by the work choices reforms in the year 2006. Many people think that the changes that came with the enactment of the work choices reform were skewed to favor one side; in this case the employers, the need to correct this situation and meet the international labor standards led to the enactment of this act (ILO, 2009, p.55).

The changes that are advocated within this act focus to encourage collective bargaining rather than individual bargaining as it was in the work choices reform. The act also is aimed at creating a more comprehensive and strong safety net for employees.The act also introduced new and broad provisions on the protection of employee welfare across different sectors of the economy. The labor party strongly supported the fair work bill because of the need to enable employees to access the federal unfair dismissal regime through which disputes relating to such matters can be addressed. These provisions were denied to workers under the work choices reform (OECD, 2010, p.56).

The labor party also strongly felt that there was an important need to separate employers in various sectors and business groups so that labor can be effectively tackled. The fair work act represents a promise made to the Australian people by the labor party in the 2007elections. Provisions within this act are bound to have a great impact on the Australian workplace relations system. The act is expected to bring these changes in the following ways;

The act set out new employment standards; the act sets out a minimum of ten employment requirements some of which allow for flexible working arrangements provisions such as redundancy pay are not captured within the current federal laws. Most of the new employment standards in the fair work act are expected to replace the current Australian fair pay and conditions standards. The new employment standards within the fair work act of 2009 and the modern awards now constitute the new employee safety net (Kramp, 2009, p.31).

Besides setting new employment standards, the act also has set out other minimum requirements known as modern awards. Some of the requirements to be contained in the modern awards scheme for example include minimum rates in different industries. The federal government created the Australian industrial relations commission to review the modernization of the new awards as set out in the act. These awards will be streamlined according to the dynamics of different industries (FWA, 2010, Para.2-3).

Another important change that has been introduced through this act is the increased entry rights for labor union officials. Labor union officials are allowed to enter workplaces to carry out investigations on various circumstances than they were allowed in the past. The legislation encourages the different parties that find themselves in labor disputes to use collective bargaining rather than individual agreements. The ‘no disadvantage test’ will no longer be used under the fair work act; it is instead replaced by the new ‘better off overall test’. Furthermore, the distinction between union and non-union employment agreements is abolished within this act ((FWA, 2010, Para.26).

In regard to industrial action, Moens and Jones 2009, p.189, observe that the fair work act still retains some of the rules and regulations that were used to restrict industrial action in the past. Protected industrial actions can only be done through negotiated agreements. The ballot box processes have been ‘streamlined’ by the government so that the process is not very difficult. Under the fair work act, the concept of the’ bargaining period’ will not be used any longer. In addition to the above changes, new general protection guidelines will be introduced. They cover issues like employees participation in industrial activities, discrimination rights and other workplace-related rights. Employers will no longer be able to dismiss their employees based on particular grounds.

Compton and Nankervis, 2009, p.176, explain that in addition to the above changes, a new body –the Minimum wage commission will be part of the Act and the commission will be responsible for setting the minimum wages for employees in various industries. The commission will replace the Australian fair pay commission. Another institution that was established through this act is Fair work Australia which replaces the AIRC, the workplace authority and the workplace Ombudsman and will be responsible for dealing with enterprise agreements, resolving disputes, ensuring good faith bargaining and addressing claims of unfair dismissal.

The FW act also has restored numerous provisions on unfair dismissals. It is important to note that the act also bars employees who have been dismissed genuinely as a result of nonperformance to make a claim. The small business dismissal code serves as a protection for small businesses through dismissal claims (Arup, 2006, p.256).

Comparative Analysis

Following the above explanations, it is clear that significant changes have occurred in six distinct areas as far as workplace relations in Australia are concerned. These particular areas include; the national industrial relations system, the minimum legislative standards, awards, agreements, termination of employment and industrial institutions (CCH editors, 2009, p.4).

According to Price, 2007, p.557, what can be regarded as a national industrial relations system was established during the work choices reform period which covers the period between March 2006 and March 2008. During this time, the federal government intended to improve employment levels and national economic performance by dispensing unfair dismissal laws for companies under a certain size, removing the “no disadvantage test” which had sought to ensure workers were not left disadvantaged by changes in legislation and requiring workers to submit their certified agreements directly to workplace authority rather than going through the Australian industrial relations commission.

On the other hand, the national industrial relations system under the FW act was intended to widen the scope of the federal system through the creation of a uniform system for the private sector. In regard to awards, the role played by awards under the work choices act was rather limited. For example, if an employee was subject to a workplace agreement, the person could not fall back on the awards that underlie the agreement if the agreement was terminated by the employer. The number of federal allowed to be employees was minimal under the work choices. Work choices established a process of verifying awards through the AIRC (Riley &Sheldon, 2008, p.172).

Catanzarite, 2007, p.9 explains that state awards given to employees covered by the workplace relations act were transferred to the federal system and they came to be known as NAPSAS (Notional Agreements Preserving State awards). The new awards system that is being implemented under the FW act differentiates the types of benefits for employees depending on the industry the employees work in. This is being done in order to restore the importance of awards within the Australian workplace relations system.

The modern awards under the FW Act are required to provide a flexible term that allows employees to enter into personal arrangements with their employers’.this makes it possible for particular awards to be altered to suit the needs of the individual employee or those of the employer. It is a must that such arrangements are of benefit to the employee as opposed to benefiting the employer more than the employee. Under the FW Act, employers can opt to exclude high-income employees (above 100,000$) from award coverage by undertaking a guarantee similar to the annual pay of the employee. This is also subject to the voluntary agreement by the employee. In case an employee has an enterprise agreement; it is not possible for such an employee to be covered by an award (FWA, 2010, Fair Work chapter 3).

There were six types of workplace agreements under work choices. These include AWAs (Australian Workplace Agreements), employee collective agreements, union collective agreements, employer green fields’ agreements, union green filed agreements and multiple business agreements. Compared to work choices, the FW act does not encourage individual bargaining but encourages collective bargaining. The use AWAs and ITEAs (individual Transitional Employment Agreements) was abolished by the FW act. Similarly, the FW act allows the formation of four main types of enterprise agreements namely; single enterprise agreements, Greenfields single enterprise agreements, Multi enterprise agreements and finally, Greenfields multi-enterprise agreements (EOCD, 2008, p.123).

Gramberg, 2006, p.77, explains that the FW act gives Australian employees the to make unlawful termination claims in case the employees feel that their dismissal from employment is not justified, this was nearly impossible under the work choices act. Under work choices, labor relations were handled by four key institutions. The AIRC handled termination claims and resolved industrial disputes, The Workplace ombudsman ensured compliance with federal workplace relations law, The workplace Authority was responsible for providing advice and information to both employers and employees while the Australian Fair pay Commission was responsible for setting and adjusting federal minimum and classification wages.

The FW act created the FWA (Fair Work Australia) as the new institution responsible for handling labor relations in Australia, thus effectively replacing the four institutions named above.


According to Signh&IMF, 1998, p.119, it is during the1990s when the Federal Labor Government launched a broad reform strategy in industrial relations, the strategy relied on government purchasing power for its implementation. Under the work choices act, the employers gained more than the workers because the process of making claims on unfair dismissals was lengthy and costly. Labor union officials only enjoyed limited entry rights. Industrialization was tightly regulated through state legislation. The Introduction does the Fw act in 2009 has brought significant changes relating to the national industrial relations system, the minimum legislative standards, awards, agreements, termination of employment and industrial institutions in Australia and this has transformed the administration of labor relations.

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