Sally McManus is Secretary of the Australian Council of Trade Unions
Good morning, it’s a pleasure to be with you today.
I want to pay my respects to the Garna people and their elders past and present.
Today I want to talk about the union movements change the rules campaign and how necessary that campaign is because the rules at work are broken.
There is now widespread acceptance that our industrial laws are broken.
Employer groups complain about the rigidity of the system. Complaints are made about the bargaining system having too many rules and the BOOT test being too stringent.
The failure of our laws to deliver wage growth is widely accepted by economists as the key impediment to economic growth.
Court and tribunal decisions regularly complain about the complexity of the law.
We have rampant wage theft. Household names such as 7–eleven, Dominos and Caltex have all been caught engaging in wage theft.
Insecure work continues to rise. Amazon has opened recently and hired all of their workers on labour hire.
Protections for workers are failing.
Hard won conditions of employment are under attack. The industrial tribunal is taking penalty rates away from low paid hospitality and retail workers and the parliament will doing nothing about it.
Enterprise bargaining is dying a horrible death. Mineworkers in central Queensland have been locked out for 210 days. Murdoch University in Perth has terminated its enterprise agreement, as has a mining company in Collie (?)putting thousands of workers back to the sub-standard award and costing its workers thousands in lost entitlements.
It has become increasingly difficult to have workplace grievances resolved.
Enforcement of rights at work is costly and slow.
Employers have too much power.
Workers not enough.
Since the Fair Work Act was introduced we have had the global financial crisis which has seen a growth in inequality. With that comes a growth in the relative power of employers over employees. This power needs to be re-balanced.
The regulation of work has always moved on the premise that there is an imbalance in the power relationship between worker and employer. It was once widely accepted that laws were needed to protect workers to provide balance in the workplace.
The premise holds true. Nothing has changed. Employers have the power in the employment relationship. Workers need meaningful rights to balance the relationship. They need those rights to be protected.
But they don't get those things from the Fair Work Act.
In essence, industrial laws should create rights for workers and make those rights enforceable.
Superficially, the Fair Work Act does this: The Act creates rights in three ways; There are legislated rights in the NES, arbitrated rights in Awards and bargained rights in Enterprise Agreements; Those rights are protected through the Courts.
But the Fair Work Act is broken. Workers’ rights in the workplace are declining. The ability to enforce them is illusory.
The NES sets a bare minimum. It is a good foundation for building rights, but it is too easily avoided. It only applies to employees and the full suite of rights only applies to permanent employees. The increasing number of insecure workers are not caught by the full benefits provided by the NES.
There is no definition of casual. An employer just has to call you a casual and pffft there goes your rights to paid leave.
Other workers are called independent contractors, making it easier to avoid employment protections. Work in the gig economy is no different to the rest of the economy. Yet our laws say that that work is not employment, so the usual rights and protections don't apply.
The contrast between the approach in the UK and here to Uber drivers is telling. In tribunal decisions here observations have been made that the distinction between independent contractors and employees in the modern economy has reduced relevance. In the UK Uber drivers are considered employees but the definition our courts apply is less flexible.
The use by corporations of complex arrangements to avoid having their workers defined as employees is to ensure that the NES and other legislated protections don't apply to workers in the gig economy.
Another problem with the NES is that standards don’t improve. Because they are enshrined in legislation, the conditions under the NES can only change if politicians change them.
We have already seen with our attempts last year to protect penalty rates for low paid workers that the legislative process is not fit for purpose in responding to the needs of workers.
When the NES only applies to some. When It’s too hard to change. Then the prospects for improving wages and conditions for all workers are slim.
That’s one of the reasons the law is broken.
The Award system is a joke.
According to the ABS statistics on Employee Earnings and Hours, released in January last year, in May 2016, there were 2.3 million employees paid at the award rate, that’s 23% of all employees.The proportion of employees paid according to an award has risen in recent years, after falling during the previous decade, based on the same data.
In 2000, it was also around 23% of employees who were award-reliant, that fell during the naughties, to a low of 15% in 2010. Award reliance rose again to 19 % of employees in May 2014, and then to 23% in May 2016 returning to the 2000 figure. These figures demonstrate the decline in bargaining and to a return to the relevance of awards. And remember the awards of 2018 are not the more comprehensive awards of 2000.
More recent stats about the decline in enterprise agreements are more alarming, and suggest that increasingly more workers are award reliant. More on that shortly.
At the same time rates of pay in awards have not kept pace with rising costs in housing, electricity, health insurance and many other key parts of Australian’s living standards.
Our award system was once unique, fair and transparent. It provided for fair wages and conditions for workers. It set a level playing field for employers.
Awards allowed improvements in terms and conditions of employment to flow through the economy in a measured and sustainable way. Think of the 38 hour week, skills based classifications structures, redundancy entitlements and most importantly wage movements.
But over the last 25 years our awards have been simplified, rationalised, modernised and reviewed to within an inch of their lives. They are a shadow of their former selves.
Some conditions have found their way into the NES but the industry specific aspects of these entitlements have been lost. The lowest common denominator has applied.
Many entitlements have disappeared altogether.
The rights provided by awards only supplement the NES. There may be a few conditions here and there that provide for greater benefits such as allowing workers some guaranteed time off by regulating working hours. Or, there may be some industry specific terms on matters such as the method of payment or proof required for sick leave. By and large though awards provide few benefits for workers. Those that remain are under attack from further reviews.
Now the working hours of office workers in our capital cities are regulated in the same way as deep sea divers on the North West shelf.. There is very little room to meet the needs of workers in specific industries. This one size fits all approach is a significant departure from out previous system of award regulation.
Awards move under the modern award four yearly review process. A process no one likes.
A process in which our industrial tribunal no longer acts as an independent umpire. It must apply the modern award objectives - a checklist to determine outcomes based on failed neo liberal economic theories like the trickle down effect of corporate success.
Special applications to move conditions are constrained in the same way. The domestic violence leave case last year is a good example of how this doesn't work. The ACTU’s case was successful. The tribunal found that there was merit in providing a right to domestic violence leave. It found that employers could afford it. But, it didn't award it. It was stopped by the constraints of the Fair Work Act which said it must also find that it was necessary. If this case was decided on its merits then today we would have paid domestic violence leave In every award.
Instead of improving workers’ rights arbitration has been systematically taking them away.
Look at the penalty rates decision. Vulnerable women in our community are not getting paid domestic violence leave from the Fair Work Commission, instead many are getting a cut in take home pay delivered via cuts to their penalty rates.
And now the door has been slammed shut on equal pay for women and men in feminised industries. The break through case that the Fair Work Act enabled for social and community workers would now fail. Early childhood workers have been left out in the cold and we have left the rules that have failed working women since the 1980s.
The laws surrounding arbitration aren’t protecting workers, too often they are facilitating reduced protection for workers. Those laws are broken too.
The third way the legislation creates rights is through enterprise bargaining.
Enterprise bargaining is in such a mess it’s difficult to know where to start.
Our laws on enterprise bargaining are just so complex. Bargaining is difficult. There are rules about content, rules about process, rules about representation, rules about industrial action.
Complex cases are run in the tribunal on majority support determinations, scope orders, good faith bargaining, protected action ballots, serious breach determinations, whether industrial action should happen or continue and whether the requirements for approval have been met.
Issues such as whether bargaining representatives are genuinely seeking agreement, whether claims are being made for unlawful terms, whether other claims are permitted content or pertain to the employment relationship are argued at length.
The rules seem to change every 6 months based on the latest decisions. For example, it was difficult to know what the BOOT meant. Even our largest and best resourced employers like Coles and Woolworths, with all of their lawyers and internal HR people regularly got it wrong.
Cases seeking to terminate agreements are becoming more common. This is a real problem.
These cases take time. They cause delay. They hold up the bargaining process. Delay does not benefit workers. The complex process of bargaining too often stops workers getting access to improved wages and conditions.
The process is just ridiculous.
Enterprise bargaining was introduced in legislation in 1993. Those provisions were quite simple.
At first it was sold as a means of unlocking productivity. Employers would have the capacity to press for changes in award conditions at their workplaces. The trade off was workers were to have access to protected industrial action to press their claims.
But 25 years later there is little left to trade off. Too many workers are now required to do whatever they are asked to do, virtually whenever they are asked to do it.
Taking industrial action is too difficult and seems to becoming even more difficult. Access to protected industrial action for workers has become too technical and too risky. The system gives employers greater access to lock outs. And they are using it to press for reductions in pay and conditions. No trade offs, just reductions.
Employers have learnt to game the system.
The practice of just saying no to claims for pay rises is becoming the norm. Instead agreements are rolled over with token increases, below inflation, or worse - and increasingly common - a demand that workers receive less pay and give up conditions.
To press such claims employers can threaten, or actually, terminate existing agreements and put their workers back to the award. This can be a 40% pay cut because award wages are so low.
In extreme cases, the prevalence of which is again increasing, employers lock workers out to press their claims. Global mining Giant Glencore has locked out its workforce at the Oaky North mine for more than 210 days.
One hundred and eighty families. Our system has no way of resolving it, or balancing Glencore’s power. And of course the Turnbull Government does nothing for these Australian families in regional Queensland. And it is a disgrace that the Fair Work Ombudsman is pursuing many of those locked out workings, effectively supporting Glencore against working Australians.
The Commonwealth Government’s own bargaining policy has resulted in no pay rise for customs and Immigration workers for 4 ½ years. The lengthy arbitration associated with that dispute will mean that there has been a 5 year wage freeze. In submissions made to the tribunal the Government has asked that some workers have their wages frozen for another 3 years. That’s an 8 year wage freeze.
Large employers are also driving down wages and conditions by replacing permanent workers who have agreements with labour hire workers who don't.
Others are awarding labour hire firms contracts on the basis that their agreements are cheaper than site rates. The labour hire firms compete by using the enterprise bargaining system to do dodgy deals with small groups of workers that will later cover entire workforces so that they can undercut existing pay and conditions. The permanent workers are then made redundant and forced to take the same jobs only with the labour hire company for lower wages. This tactic was at the core of the CUB dispute.
These sham agreements have become another means of avoiding fair wages and conditions. In these cases enterprise bargaining is being used to drive down terms and conditions.
In other areas there is no incentive for employers to have agreements at all. Employers can get the flexibility they desire and pay less and afford fewer conditions by simply terminating their agreements and going back to the substandard awards.
And that’s what they are doing.
Enterprise bargaining under the current system has run its course. It is dying a natural death.
The rules around bargaining are broken.
Unions role in creating rights
I’m about halfway through this speech and I haven’t mentioned the word union yet.
Because our workplace laws have tried to side line unions.
Unions only get a role in the process of creating rights by being bargaining representatives for enterprise agreements. That’s a peripheral role in a declining part of the system.
Unions can make submissions on award reviews, and they do. Unions can make submissions to the Minimum Wage Review, and they do. But those roles are marginal.
Once Enterprise Agreements are made unions can ask to be made party. Award reviews and wage reviews are administrative exercises. Unions are not parties to awards.
Of course, the Act recognises unions and we maintain our status as representative bodies, but we have a reduced role in the creation of rights and because of this, fewer workers’ rights are created.
This wasn’t always the case. For over 100 years workers’ wages and conditions were regulated by strong relevant awards. Those awards arose directly from the activity of workers acting collectively through their unions. Unions made claims for improved wages and conditions. We negotiated, often at industry level, to press those claims. We raised disputes on behalf of our members and those disputes were conciliated and arbitrated by industrial tribunals.
Collective activity by workers together in their unions was at the centre of the creation of rights for workers. And unions ensured that workers’ wages and conditions were fair. Together, workers ensured that the benefits of economic growth was shared more equitably through improved pay and conditions. It was unions that guaranteed that there was a level playing field by roping in new entrants. and Competition in the economy was about training, investment and innovation rather than who could get away with paying the lowest wages.
The work of unions in creating and enforcing workers’ rights is acknowledged as a public good the world over. However, In Australia the unions role has diminished and with it the capacity of workers to improve wages and conditions has declined. There is little support for union activity in the Fair Work Act.
The rules that do apply to unions are designed to stifle collective activity among workers rather than promote it. The new Registered Organisations Commission is designed to suck up union resources by drowning us in red tape.
The rules surrounding bargaining, the one area that unions have a direct role are so complex and so inadequate that they now act as an impediment to achieving improved wages and conditions. Union resources are tied up in the myriad of cases about process and technicalities. Bargaining goes on and on. When an employer refuses to bargain the union is forced into a labyrinth of regulation that too often leads nowhere.
If workers organise industrial action they are faced with complex legal proceedings and threats of damages and other orders designed to protect the interests of employers.
Australian workers right to strike is under heavy attack.
There are also harsh restrictions on union access to workplaces making it difficult to organise workers around improving their terms and conditions. There is also protection for those who refuse to join a union, the free riders who benefit from the higher pay and better job security in EAs without any obligation to contribute toward them. Unions in Australia are in effect required by law to provide their key services for free to a large part of the workforce – placing an enormous burden on those remaining workers who choose to join and make a voluntary contribution for the greater good. If any company was subject to the same rules it would go broke.
Of course, these restrictions on organising and on the right to strike have been criticised by the ILO many times for being contrary to our international obligations. All to no avail. The law hasn’t changed.
A big part of the problem with our current laws is the way unions are treated. It’s hard for workers to have a say because it’s hard for their unions to have a say.
It is now unbelievably difficult to get a grievance or dispute resolved at work. Unless you have an arbitration clause in your agreement, and these are becoming less and less common, you rely almost entirely on the good will of the boss to “do the right thing” to get a dispute resolved.
The Fair Work Commission can't help. Its power to arbitrate has been taken away.
It’s bizarre. Few workers believe that if they have a dispute at work it can be resolved. A worker who has a dispute with her landlord can go to a tenancy tribunal but if she has a dispute with her boss there’s no tribunal that can clear it up.
If you are underpaid or are being mistreated and you can’t rely on the boss to “do the right thing”, you have to go to Court. Along the way you will be isolated and almost inevitably destroy your relationship with the boss. Its your rights or your job.
Court processes are expensive, they take a long time and there is little guarantee of success.
Industrial claims are being heard in the general court system. The specialised knowledge of the industrial tribunal is not available. In other areas of law there are specialist courts. Family law and environment law are examples. But there is no specialist court for employment law.
A typical case to recover wages can take two to three years to be heard and, because it’s a cost jurisdiction, it can cost more to recover the wages in legal costs than the lost wages themselves.
No doubt when employers take a calculated risk to pay below minimum wage they do so knowing that the chances of being caught are slim.
Investigating suspected underpayments has also been made more difficult. Restrictive right of entry provisions mean unions cannot properly investigate contraventions of the law.
Employers are getting away with wage theft because they can.
The decline in union membership means there are fewer workplaces where workers have any say or can enforce their rights.
Our enforcement agencies have been politicised.
We have the FWO, ABCC and the ROC. Specialised agencies to deal with industrial laws.
The ABCC sees its role as prosecuting the CFMEU. Enormous resources are being spent on court cases seeking fines against that union for carrying out union business. It enforces a building code designed to cut workers terms and conditions. It prosecutes for right of entry breaches and pursues relentlessly union officials who support workers to exercise their right to strike. This week it was revealed that displaying the Eureka flag on construction sites is being banned by the ABCC.
You won’t often hear me quoting Warren Buffet but I think there is something in what he said about charges laid by a regulator against JP Morgan Chase. He said:
“If a cop follows you for 500 miles, you’re going to get a ticket. You’ve had a lot of cops that have been following for a long time and they’re going to write some tickets”.
By contrast, and as a consequence of the allocation of resources by union hating governments, Australian employers aren’t being followed and they aren’t getting many tickets.
The politicisation of our institutions is a matter of grave concern. Two federal police raids on the CFMEU in 2016, in Canberra and Brisbane, both led to a lot of publicity to fuel the Governments anti-union fervour but both led to no charges.
The ROC started operating late last year and announced itself with a police raid on the AWU offices. The blatant political nature of the raid has now been exposed. The raid was nothing more than a publicity stunt. The ROC is working hard on making sure every union official crosses every t and dots every I under the new oppressive rules that apply to unions. The laws are clearly overreach and unnecessary but they are backed up by an expensive agency to enforce them.
The FWO doesn’t escape criticism here either. The FWO has the job of recovering wages but one of its officers was involved in the blatant publicity driven raid on the AWU.
It also has form suing unions for going about union business. It is currently suing the MUA to seek compensation on behalf of global companies. The Hutchison dispute involved workers being sacked by text message in the middle of the night. The workers went on strike and the dispute was resolved. The FWO is seeking compensation on behalf of the company by suing the union for organising the strike . In a similar case it sued the MUA last year on behalf of a shipping company that retired an Australian ship to allow foreign low paid crews to work domestic shipping routes.
The rules are broken and the institutions enforcing them are letting workers down.
Change the Rules
We need to change the rules.
The ACTU has begun a campaign to do just that.
We have consulted widely within the union movement. We have asked workers what they think.
The messages are clear. We need a new system that
- reduces inequality;
- raises living standards;
- supports secure jobs.
To do that we need to build a system that gives workers a say in their terms and conditions.
We need laws that:
- extend rights to all workers whether traditional employees or not.
- Promote secure jobs.
- provide a living wage for all,
- Ensure a strong and fair independent umpire
- support a level playing field for collective bargaining
- allow unions to secure new rights, and
- make enforcement of rights less complex and more accessible.
In coming months we will be setting out the unions proposal for how the rules should change.
Jiang Shen Cai trading as French Accent v Michael Anthony Do Rozario FWAFB 8307
 Aslam and others v Uber B.V. and others  IRLR 4
 ABS Employee Earnings and Hours, Australia May 2016 - Cat 6306,
 Dept Jobs and small Businesses – Trends in Enterprise Bargaining September Quarter 2017
This speech was given to the 32nd Annual AIRAANZ Conference in Adelaide on 9 February 2018