Transcript of Podcast - Shae McCartney, Ron McCallum, Joellen Riley and Dr Graham Smith
Shae McCartney: SMC
Ron McCallum: RMC
Joellen Riley: JR
Dr Graham Smith: GS
SMC: Hello everyone, I'm Shae McCartney and welcome to our conversation with Industrial Relations heavyweights, Professor Emeritus Ron McCallum AO, Professor Joellen Riley and Dr Graham Smith. I must say I'm slightly intimidated by the Industrial Relations intellect around me but we'll see how we go.
Today we have an excellent session planned and we'll be discussing some pretty big changes coming through in the Industrial Relations and employment space in the form of the Secure Jobs Better Pay Fair Work Act and Amendment Bill. But before we get underway I would like to acknowledge the traditional owners and custodians of the land and waters on which we are gathered and to pay our respects to the elders, past and present and I would also like to extend our respect to all First Nations people who may be listening to us today.
So we have a panel of very experienced Industrial Relations and employment specialists with us today and I’m really excited to hear your thoughts on the new proposed laws and what this means for business in Australia, and also importantly what people or employers might be starting to implement now, and the things they should be thinking about as we go.
First off we have Professor Emeritus Ron McCallum AO. Professor McCallum is one of Australia's most respected Industrial and Discrimination lawyers and a prominent Human Rights advocate with a long and successful career as a legal academic and teacher. In 1993 he became the first totally blind person appointed to a full Professorship at any Australian University where he became a Professor in Industrial Law at the University of Sydney. He served as Dean of the University of Sydney Law School for five years and is now an Emeritus Professor. Ron is a leading light in the disability community working for quality among all Australians. In 2019 Allen & Unwin published his autobiography, “Born at the Right Time” which I'm sure is already a best seller. Welcome Ron.
RMC: It's lovely to be here Shae, thank you so very much.
SMC: Next I have Professor Joellen Riley, who is a leading expert in labour law. She has a particular interest in how working conditions can be improved for people working in new and emerging forms of work such as on-demand work and so called gig economy. Joellen has an extensive track record in doctrinal scholarship in the field of Employment Contract Law and Labour Law more generally. In recent years she has emerged in reform-orientated legal research to better align labour law with society's changing needs.
Joellen was Dean of Sydney University Law School from 2013 to 2018, worked for over a decade as a financial journalist, and has also worked in private practice in commercial law. She is a Fellow of the Australian Academy of Law and is currently the Vice-President academic of the Australian Institute of Employment Rights. Welcome Professor Riley.
JR: Thank you for having me Shae.
SMC: And then we have Clayton Utz’s own beloved Dr Graham Smith. He is recognised as one of Australia's leading practitioners in workplace relations and employment law with over 30 years' experience. Graham is a highly regarded industrial relations and employment law specialist. He has particular experience in advising on industrial relations strategy, employee performance and conduct matters, employment law, workplace health and safety, diversity matters, the development of workplace agreements – I'm not quite sure there's anything that Dr Smith hasn't done. Graham has extensive experience working with the private sector and Government agencies on workplace strategies for enhancing workplace productivity and performance and on the system of Federal Industrial Regulation. Welcome Dr Smith.
GS : Thank you Shae.
SMC: So now you will understand why I feel slightly intimidated with the amazing minds I have around me. But to get started, I took a number of large bets about whether or not the laws would pass this year and I think I'm now going to have to avoid a large number of people in order to not pay up. So we have had the introduction of the Bill and then the Senate Committee which recommended some changes to that Bill, and then some further amendments I think have been proposed over the weekend so we have I think a pretty good understanding now of what the Act is likely to look like when it's passed.
Graham if I might start with you, could tell me in your over 30 years' experience, on the scale of work choices to perhaps tinkering at the edges, where do you see these new laws and how impactful are they likely to be?
GS: That's a very good question thanks Shae.
I think if you work on the basis that WorkChoices was probably 10 out of 10 in terms of the immensity of the changes it made to our system, and take as a reference point the Keating reforms in 1993 which really introduced enterprise bargaining, then I think these new laws are probably about a 7 out of 10. I think the Fair Work Act itself when it was introduced in 2009 was probably about a 9 out of 10 because it was to some extent evolutionary but created very significant changes so I bounce around as to whether it's 7 or 8 out of 10 and I might just explain my reasons as to why I think it's pretty high up on the register.
It's apparently the sheer weight and extent of the changes. There are numerous changes, many of which are very significant I think. We've got for the first time significant restrictions on the use of fixed-term contracts under Australian law, we've got arbitration of flexible work arrangements, and potentially disputes about people wanting to work from home which, post-pandemic, really is a big deal.
We've got very significant changes to the bargaining stream that we'll talk more about and I think underestimated in all of the debates we've been seeing, the arbitration of intractable bargaining disputes by the Fair Work Commission. I think that's going to make some very significant changes. The Commission has really only been able to arbitrate bargaining disputes really since the Keating reforms where there has been industrial action that threatens the health, welfare or safety of part of the population, or where the industrial action really threatens a significant part of the Australian economy. Those circumstances have been relatively rare; you think of the Qantas dispute when they shut the airline down. Now under the amendments that have been agreed between Senator Pocock and the Minister over the weekend, after nine months from the nominal expiry date of the agreement the Fair Work Commission will be able to effectively arbitrate the bargaining dispute if they haven't reached an agreement.
In my experience that's a relatively short time in some sectors so and I think the ability of unions to be able to rope in multiple employers with supposed common interests into a single Enterprise Agreement and to take industrial action collectively across those multiple employers, protected industrial action – these are all pretty significant changes and there are more that I haven't even mentioned.
SM: Ron, you're not convinced, can you give me your thoughts.
RMC: I think that these laws are significant changes but they're probably on the scale of the 1993 enterprise bargaining reforms.
The honest truth is, is whichever Government was in power, something had to be done. Enterprise bargaining is not working, at the moment my understanding is that a number of workers under enterprise agreement is about 12% of the workforce (10 years ago it was 23% of the workforce). The low paid bargaining stream didn't work and that needed to be fixed. The previous Government did not enact the Respect@Work requirement that employers be responsible for harassment occurring at work, these are all much needed changes.
To put it another way, we could not have gone on for much longer without some significant changes to our workplace relations laws to make them more workable in the present play of the labour market and our real issue will be what all these changes are and are all the changes necessary. But we did need change, we do need to fix up a system that, quite frankly, is broken.
SM: Joellen, obviously the workforce has changed, do these laws bring us into a modern industrial environment? What impact do you think that they'll have in that regard?
JR: Well look I'm not sure that they will. If you're thinking in terms of gig economy and those kinds of work, I think we'll be waiting till the next tranche of reforms to see what the Government might be thinking about doing about work that doesn't fall squarely within the employment paradigm.
I think these laws are about employed work.
I can see some of the points Graham has made about the kinds of things Smith that might frighten employers, particularly those employers who are used to playing nicely in the system. I can see Ron's points about there being problems with the system that we've had and it not fulfilling earlier aspirations.
I probably don't think that these laws will in practice have all of those kinds of effects really because, for instance, on the fixed-term contracts issue I can see why some employers might be concerned that “oh no now we're limited to a two year term for fixed-terms unless we've got a good reason for it” but I've already seen that in the higher education sector. It's sort of a really standard clause in higher education enterprise bargains to have limits on fixed-term contracts unless there are certain exceptions or funded positions or genuinely temporary projects and it hasn't caused enormous grief there – and in fact it hasn't stopped there being a high level of casualisation and fixed-term contracts – so I'm not sure that the fears about that will really translate into great deal of inconvenience.
The intractable disputes issue, again, you think “oh well on one view this looks good that the Fair Work Commission can come in and actually resolve an intractable dispute to stop there being disruptive industrial action and perhaps come up with an answer to the dispute”, but I just remember reading about section 170MX awards. Remember those, Ron?
RMC: I do remember those, I do remember those.
JR: There was great hope, the union movement thought “oh great, hope we can actually push to the point that we need to have industrial action stopped so we'll get one of these awards” and what happens? It's a breath above the award. Why? Because the Commission who makes these decisions, they don't look just at the one provision in the Act, they look at the whole Act and all of its overall objectives and framework. They invariably say the system is based on bargaining. Section 228, the Good Faith Bargaining provision in the Act, is still sitting there and it still has subsection (2) that says bargaining doesn't require anyone to make a concession or reach an agreement, and so we've always seen that those kinds of workplace determination decisions have been very minimal.
Even the Qantas one that Graham mentioned, we have to remember it was Qantas who triggered that – it wasn't really the industrial action of the unions that triggered that closedown – and in the end the determination made to conclude that matter was by consent. If you actually look at what the unions got from it, it was really rather small, it was just some extra redundancy entitlements I think. I don't think they got the job security provisions that they'd originally hoped to secure.
SM: We'll come to industrial bargaining a bit later on as well, but the Qantas example I think is a good one. As an outside observer for Qantas, the triggering of those provisions has had ongoing repercussions and I must say one of the things that worries me about the intractable bargaining disputes is the fact that we hand off to someone else the ability to resolve our dispute.
You know, I've always said to clients that once is bargaining, you've got to go back to being in a relationship with your employees and if you can't get through that harmoniously, even though it might be robust, then you know you have a very unhappy situation going forward. Are you worried that if you've got to say we're intractable, have we split up?
JR: There's also a theory that if there is the shadow of arbitration in the background, it can fix people's attention on reaching their own agreement first, there's sort of some literature around that so it may very well be that having that shadow…
SM: Is this like the threat of a nuclear war keeps people from escalating their…?
JR: I doubt that it's a nuclear war, I think it's the fear of the unknown.
SM: Okay, good point.
JR: You don't really know whose side that Commissioner is going to take.
GS: I might jump in there and just keep talking about this because I think it is very interesting.
I think the threat of the arbitration will hasten bargaining. In a lot of industries bargaining goes on for a year, sometimes two years, and I think this will hasten it because both sides will be a bit fearful of what they might or might not get in the arbitration. I do think you're right, it will be sometimes the employers who are rushing to the Fair Work Commission to get the arbitration rather than necessarily the union, and also in some sectors, once the Commission has arbitrated an agreement for a major employer in that sector, you'll start to see all the other agreements in that sector start to line up with that arbitrated outcome.
So perhaps that might not be a good thing because it might lead to less innovation in bargaining, but I think that's what will happen.
SM: And I did want to ask you this – Graham and Ron particularly given your experience – in some ways I know that it's empowering enterprise bargaining more but I almost feel like we're actually sort of stepping towards a centralised wage setting for exactly that reason as you say. Once you have one arbitrated agreement for an industry, on what basis are you really going to set some other standard – you're not going to ever go lower than that are you? The unions won't accept it and you know what you're going to get at least as a minimum from the Commission.
RMC: I think we're a long way away from back into centralised relations.
SM: But are we shifting?
RMC: I think you've got to see the intractable bargaining provisions along with the provisions limiting the nullifying of old agreements that have reached their used-by date which was also usually an employer but perhaps occasionally an employee tactic.
So, I think you've got to see both of those together and both of those changes will focus the minds of employees and employers to bargain and conclude an agreement. But I don't see enterprise bargaining increasing; it's dropping and dropping every year. It's really a phenomenon of the public sector. If you look at who is bargaining enterprise level, it's the public sector, it's the universities, it's the hospitals, it's the teachers, the public servants. In the private sector it's mining and areas of construction, but in great swathes of the private sector there aren't agreements at all, they're simply policies.
SM: But do you think that will change with these changes? I only see one sort of group of clients. Once the decision of Coles came out and you know that one employee could essentially make the whole agreement invalid, well I don't think I'd really done much bargaining since then. It just dropped away, well certainly as a desired strategy. People might have been forced to buy them but was very few clients that then wanted to go forward which I guess some of the changes reduce that uncertainty and create maybe a better environment for bargaining.
GS: I think Ron's right it won't accelerate bargaining outside the areas where there is currently bargaining very much at all because that's a function of low union membership, low union penetration, and low union power.
SMC: And I guess the simplified awards.
GS: So what it's going to do is change how bargaining happens in those sectors that are currently in bargaining and have enterprise agreements, but in the long run bargaining will eventually die I think except in a very few small sectors.
RMC: I think there are two major problems facing this country. One is climate change which is not on today's discussion, and the other is the growing inequality in this country.
We're not like the United States but if we want to hang on to our democracy and we don't want the flourishing of conspiracy theories we have to do something about raising wages which haven't really risen much over the last decade for most workers, while profits have increased.
I'm not against profits increasing but we need some mechanism to bring wages better into line with expectations of society. I'm not sure that this set of proposed laws will do that. I'm not convinced that the multi-employer bargaining stream is likely to do much; hopefully the new low pay stream will do something. I'll put it another way. There have been comments on the radio and the television about are we going back to the 1980s. Well I remember the 1980s when the trade union movement was 46% of the workforce – it's now 14% and a majority of trade unionists are in the public sector or in universities, schools or hospitals. I don't think there's that union movement in the private sector that is going to take significant advantages of multi-employer streams.
JR: And if I might add there's also a great difference from the 1970s and 1980s in the provisions in the Fair Work Act which are not being changed by this Bill that make taking industrial action a much more onerous and orderly sort of process. You have to get your protected action ballot up and ballot people and give all of your notifications. It's very clear that you won't be paid while you're taking industrial action and an employer can't even offer you backpay for the time you were on industrial action if they want to break the strike and get you back to work.
So a lot of those factors are the reasons that we don't see so much industrial action now as well and they're not going to change particularly in what we're now calling the supported bargaining stream rather than the low paid bargaining stream. Those people, they are not well paid. It's a big sacrifice to lose even half a day's pay while you're on strike so the chances of those people being persuaded to give up their salary in industrial action seems remote to me. It seems as if the same reasons we haven't seen high levels of industrial action in those low paid sectors have not changed, so why would there be a sudden emergence of industrial activity?
SMC And Joellen before we leave the things the Bill will and won't fix, we recently did a survey of some of our clients and almost unanimously the response was the biggest problem that they're facing is skill shortage. Coming with that is the changing face of work and what work looks like now, which I think is also another reason why people won't necessarily organise in the same way – because they don't work in the same way. Do you see this Bill addressing any of that?
JR Well in terms of growing the number of people who are skilled it doesn't do anything directly to that. Let's say that one of the things that this Bill achieves – and I think it will only achieve it if employer groups see this as an advantage and decide to take the steps themselves – is if for instance it encouraged employers in sectors where their workers are all basically the same, let's say child care or aged care, to decide “yes, let's get on board and let's settle reasonable working conditions and a more comfortable level of pay for these workers and it will be standard across our organisations”.
Well then they won't be losing staff anymore simply because someone can get another 50 cents an hour down the road at somewhere else so it might take just that sheer competition for an extra dollar out of the system. Then it might mean that to keep your staff it's about innovation, it's about being good employers, it's about culture and that might then encourage more people to not quietly quit and not take a big tree-change and do something completely different.
RMC Can I just come in here and say there's nothing in these proposed laws that is going to increase the skill base of the Australian workforce.
What we need is an appropriate migration program. We made mistakes during COVID by telling particularly temporary workers and students to “go home you're not going to get JobKeeper”. Canada didn't do that. They paid it. So did Britain.
We need to compete for skilled workers. We can get temporary workers from the Pacific but if we're really after skilled workers we need to compete for them and we need to offer them good conditions.
For example we must allow them to have Medicare which they're often not allowed for the first number of years. We have to work hard at attracting migrants. It's no longer the case that migrants will come here as first choice. It's a global market and if we want to get our industries really cranked up we need to invest in that external labour force.
GS: I think that's completely correct Ron and the only thing that this legislation might do is if it is successful in raising wages it might attract a few more migrants because there's a bit more money. It might also get some of those tree-changers back from where they're tree-changing back into the workforce if they in fact can make a bit more money but it's at the margins. We've got to find a way to significantly increase our skilled migration rates I think.
SMC Graham can I take you then to the fixed-term contract provisions and I think that in the second reading of the speech it was identified that:
• the number of workers on fixed-term contracts had increased by 50%;
• more than half of all employees engaged on fixed-term contracts were women; and
• more than 40% of fixed-term employees have been with their employer for two or more years.
So some obviously very good ideological reasons for the limitation and I think the exemptions are intended to try and address the areas where that might be impactful, but those exemptions are quite narrow. Are there industries that will be more impacted and what's the strategy for those organisations?
GS: Yes well I think there are probably three sectors that would be most impacted.
Not the private sector generally. You don't see fixed-term contracts used much in law firms, in insurance companies, in lots of industries – even I suspect Coles and Bunnings and those industries. They have casuals but otherwise people are not on fixed-term contracts so the areas that will be affected are universities, government – governments (generally State and Federal) are quite not very good in this area. They have large numbers of fixed-term contracts and professional team sports where everybody's on a rolling fixed-term contract. One of my current jobs is I work as legal counsel for the Australian Cricketers Association apart from my Clayton Utz hat and very large numbers of professional team sports will be affected. Senator Pocock has drawn attention to that in his minority section of the Senate Report. But Government I think generally will have to change their employment practices and have fewer people on fixed-term contracts.
There are exemptions around it I think assisting universities in the sense that where people are on fixed-term research contracts supported by external Government funding they can be used but only where there's no reasonable prospect that the funding will continue and that's very rare. I mean even a lot of NHMRC medical contracts have no reasonable prospect that the funding will continue beyond the two years. So I think universities are going to have to have a lot fewer fixed-term contracts. There's an exemption where there's a specific categories of fixed-term contract allowed in the modern award but I think the unions will try and have those exemptions removed from the award fairly quickly and they may well be removed. So I think in terms of team sports there are likely to be regulations made to exempt professional team sport because you can't have a permanent member of a cricket team who can't hit runs and can't bowl the ball any longer.
SMC Yes. And there's a lot of people in the margins on those contracts aren't they in sporting like we think about the sort of big names but there are a lot of people who are almost making it a professional living but not quite, so very impacted
GS: Yeah the $162,000 high income threshold. If you're above that you're okay well all the Australian men's cricket team and most AFL footballers earn more than $162,000 but there are all the netballers and junior soccer players and junior cricketers don't earn more than that.
RMC We three have all at some time or another spent some time teaching at universities – some longer than others – but we've all done it. Can I say, it's about time the universities faced up to their responsibilities and lessened the number fixed-term contracts. I see young women and men starting families who are on contract after contract after contract.
Universities have to decide either that they want them or they don't want them. I think universities, particularly the sandstone ones, are quite wealthy and paying very high salaries to their senior people and I don't think it's a good look that they invest so much in short-term contracts. There are lots of other way of dealing with the matter.
JR: Also what is the effect? If the effect is you can't have people on fixed-term contracts of more than two years now unless you do have an award clause that allows that, some industries like your professional sports (if there are underlying awards) might manage to get the Fair Work Commission to put an enabling clause in their award anyway.
But let's say that that's not the case. What's the worst scenario? The worst scenario is you have to manage your staff properly and if they're not performing anymore, the cricketer who can't catch a ball, performance manage "sorry you can't catch a ball anymore, we’re giving you notice and letting you go.”
I wonder why we have this phenomenon of fixed-term contracts in areas where clearly they're rolled over regularly so they're clearly not limited projects. It seems as if it's a strategy to avoid having to answer unfair dismissal complaints and, having read thousands of unfair dismissal cases, anybody who does have a half decent valid reason for getting rid of someone and is reasonably fair in the way they've handled it doesn't get caught with any kind of reinstatement order anyway.
GS:I think that one additional reason why some employers don't like fixed-term contracts is the high redundancy costs built into their enterprise agreements.
In a lot of the private sector they just have to pay what we used to call TCR it's now the NES redundancy which is up to 16 weeks. But if a university wants to retrench someone who's become permanent they have to pay usually pay a minimum 12 months’ redundancy even if they've only been there for one year. So that's a factor in government I think.
JR: I must work for the wrong university. It's nowhere near 52 weeks for us.
SMC: Not for me either.
Re the unfair dismissal provisions, generally employers have maximum term contracts anyway so the unfair dismissal provisions usually apply other than for when they're being terminated at the end.
But I do feel like there is an almost a security blanket aspect to them. Often when I talk to clients and you test what they actually need it for, often they're not quite sure that they'd like to keep a security blanket.
Can we go back to bargaining and in particular the multi-employer bargaining? There's a few different streams to that but Graham if I can start with you, have we seen this before? Isn't this pattern bargaining by another name?
GS: There are three different types of multi-employer bargaining really in this legislation.
There's the support wages system which is really pattern bargaining in the low wage sector. We've had that but I think it’s been enhanced, and I think that's a good thing. Kindergarten teachers people in in the community sector who really can't bargain will benefit from that supported wages bargaining system.
There's what's called the co-operative bargaining system which is very similar I think.
And then we have this multiple employer, single-interest bargaining which is where the real debate has been. We haven't really seen it before. Not since the Keating reforms which introduced bargaining have we had this multi-employer single interest bargaining where unions can (and that's what it's aimed) rope in employers who have what are called common interests and take protected industrial action against each of those employers at the same time for really what is one agreement, and then get one of them up and vary the agreement to bring all the other employers in. We haven't seen it before but whether it will make a big change or not I don't know.
RMC: But we have had single interest bargaining since the Fair Work Act and it's been working in the public sector particularly in private schools; with nurses in Victoria I think it’s 50,000 employees.
So the real issue is I think not so much the single interest bargaining stream. It's allowing more employers to become involved and I guess it gives a lever to the trade union movement. The question is how wide will that end up being. I'm not sure that the unions have enough person power to increase it greatly.
I see that any business that has fewer than 20 people cannot be involved, and any business that has less than 50 people there has to be reasons why it must be involved. For every business that might be roped in you have to have a separate vote (as I understand it) of the employees agreeing to be roped in. So I think there's been a lot of airwaves about it from commentators but I'm not sure that the union movement has the power to actually rachet this up. It will be interesting to see.
JR: I agree Ron and I think people seem to be forgetting that the first step is to get that single interest authorisation from the Fair Work Commission and demonstrating that you've got that clearly identifiable common interest.
As the Act stands, you know it's only used for things like franchisees of a common franchisor and it also requires the employers to want to do it.
The different with this is that now an employee organisation, a union, can be the party to initiate the application for the authorisation. But it will still have to get that authorisation and, as you say, will still have to persuade a majority of the workers in each of the enterprises that they want to include in it to bargain. And I suspect that the fear that this will mean that every corner shop there will be industry-wide sector wide bargaining in a whole sector is optimistic on the union movement’s behalf in the extreme.
I still think it will probably only be something in areas where there is in fact a common economic enterprise, but the employer has decided to fragment its enterprise up into a little network of companies. Now instead of having one employer we have a separate subsidiary that employs the cleaners and a separate subsidiary that employs the security guards and a separate company that employees some other workers. This fragmenting of what might once have been one economic enterprise has in fact made single enterprise bargaining very difficult. Maybe this is one way of trying to bring that economic enterprise back together again for the purposes of bargaining. But whether it works or not will depend on very much on whether the Fair Work Commission is willing to give those authorisations in the first place.
GS: I think that is right. There is enormous responsibility placed in the hands of the Fair Work Commission as to how this is all going to work and I don’t think I am disagreeing with you at all Ron. Shae's question was “have we had this before”. I don’t think we have but whether or not I don’t think it happening will make a big impact. I agree with you Ron.
RMC: We haven't had this exactly before.
GRAHAM SMITH No.
RMC If I were an employer or organisation, I think what the real concern is, and they are not articulating, “is this is the thin end of the wedge?”.
We have seen the Government giving way on this and that to get this multi-employer bargaining together, but it would seem to me that this Government is likely to be in power for two terms given the way that politics is operating in our country, at the moment. One can never say that is always going to be the case, but it is the probable that it will be two terms.
It has also been made clear by the Government that this is the first tranche and so I can see why employers are saying “hang on, what’s next? Are they going to broaden multi-employer bargaining?”. Because the honest truth is we are not going to get wages increased in this country unless we are broadening bargaining in some way and I am not sure what the appropriately way is to broaden it. I have very great concerns for small businesses of under 20 employees.
They say if you increase bargaining coverage by 1% you will increase wage rates by 1%. But we are trying to work out some way as a society of how we can increase bargaining and increase wage rates and keep the cohesiveness of the country together and for employers and employees, it is hard task.
SMC: And I am not going to let you off that hard task because my final question to the panel is going to be is if these reforms don’t go far enough, what is the next reforms likely to be, and what should they be?
I am going to give you some time to think about that but don’t think you are going to get off lightly. It is not often that you get three such brains where you get to plan out the future of Australia.
Graham, can I come back to you and the comment that you made before around the responsibility or the role of the Fair Work Commission. If we add the additional jurisdictions it seems to me that the Fair Work Commission has a very considerable role, not just settling of disputes but also wage growth and really setting almost industrial policy. Firstly, do they have enough people and secondly how do you think that is likely to play out?
GS: I think they are going to have to appoint many more members of the Fair Work Commission to deal with the various new or expanded jurisdictions – it might well just be conciliations and only a few arbitrations of flexible work arrangements.
I think they will come to the Commission because there are employers who are trying to get people back into the office or back to work and there are employers who quite like being at home and there will be disputes about that and they will go to conciliation, potentially arbitration.
We have this new sexual harassment jurisdiction and I think there will be people who will use that Fair Work Commission jurisdiction rather than the State Anti-discrimination Tribunals, because the Fair Work Commission is a more flexible, efficient, and faster place for that sort of resolution of disputes.
SM: And they are a well-known commodity. Lawyers tend to know what they are going to get.
GS: They do, they do.
There will be many arbitrations of intractable bargaining disputes. I was talking to one head of the industrial division of a national union at a conference three of us were at recently, and he said he thought he was going to have to employ about another 20 industrial officers just to deal with all of the intractable bargaining disputes in his industry, which I thought was an interesting comment coming from a union official.
There may not be many applications for single interest authorisations for multi-employer bargaining. It's a bit of a mouthful, isn't it? There will have to be hearings about all these things and determinations made not just to issue the authorisations but then to vary the agreements to add the employers where, again, another hearing is involved. I've probably missed some of the new jurisdictions that are being opened up but there'll be a lot of work.
RMC: I agree with all you've said, Graham. Can I turn to a new jurisdiction on the Commission? I think it's going to be very difficult to find people of calibre to sit there and do it. They're few and far between.
I think there has always been a provision in the Fair Work Act to prevent discrimination. Section 351 is one of the adverse action provisions. It hasn't been used much, partly because discrimination isn't properly defined. There's argument as to whether the term “discrimination” in the Fair Work Act covers what we might call implied discrimination but one reason why it might be used more is because of the reverse onus of proof in section 361.
In the State Anti-Discrimination Tribunals, and even federally in the Federal Court, the applicant must prove their case on a balance of probabilities. In the Fair Work Act’s adverse action provisions, the applicant must show that they've been discriminated against and put up a case. Then it will be up to the employer to give evidence and to argue on a balance of probabilities that the reason for the conduct was not an impugned discriminatory reason. I think we're likely to see that increase, particularly when you have sexual harassment being brought into that area, but it's been an under-used area, I think.
SM: Graham? Joellen? Do you have any thoughts on that?
JR: I think I agree with you, Ron.
I think the Fair Work Commission jurisdiction in this area would be likely to expand very much for the reasons that Graham has outlined. I think some of it is because the poor old Australian Human Rights Commission has been under the pump. I don't speak from direct experience but anecdotally I hear that sometimes it can take 9 to 12 months to get a sexual harassment type complaint even looked at there.
We know that the Respect@Work changes have been passed now so that gives the Human Rights Commission an even bigger jurisdiction. It'll be looking at all these hostile work environment problems now.
So unless they are really staffed up to cope with an avalanche of claims, I can see very much that people might think that the claim that you lodge with the Fair Work Commission will be dealt with within a short period of time.
I suppose they've got actually 24 months under this from the last time you were sexually harassed to bring a claim but then the Fair Work Commission will need to deal with it promptly. You will have the opportunity for compulsory conferences and if the parties agree they could go to arbitration rather than court proceedings. So that kind of more informal, quicker resolution option may very well be attractive rather than sitting around waiting nine months or 12 months for the Human Rights Commission to deal with it.
Of course, there doesn't appear to be a cap. You Victorians and Queenslanders don't have the disadvantage as an applicant in this field of a cap on compensation. My understanding is that the New South Wales jurisdiction tends to be limited because of that.
GS: The other small but significant change in the legislation is increasing the compensation threshold of the small claims jurisdiction from $20,000 to $100,000. A lot of people will be able to bring an adverse action type discrimination complaint as a small claim in the Federal Circuit Court and without having to deal with all the legalities of the normal court system that could be quite a sleeper in this legislation.
RMC: That's a good point. That's a very good point because the $20,000 has been relatively low, and I think we'll see an increase in that jurisdiction. I agree with you completely.
SM: Graham, before we leave bargaining entirely, I did just have one more question for you which is: are there opportunities for employers with these changes? Are there things that clients should be looking at now and saying there are some great opportunities for me to address? We've said maybe it's not going to address the skills shortage but are there things that are optimistic and opportune for clients?
GS: I think the intractable bargaining disputes arbitration system will be attractive for some employers who are faced with what they consider to be completely unrealistic or impossible demands from unions. I think it's going to be nine months with the Pocock agreed amendments, so nine months after the normal expiry date they'll be queuing up to the Commission to say, “Can you please arbitrate this dispute? We're not going to get anywhere in bargaining.”
There may be some employers who might see opportunities in terms of limiting competition with the single interest multiple employer bargaining stream. In some sectors where I've worked, you've got people who contract to a local council to maintain the parks and gardens and you get one employer who just completely undercuts everybody else by paying really low wages. I can see some employers trying to encourage the unions to rope in that other low wage employer into a single interest multiple employer bargaining thing. Now, the competition regulator might not like this but it might actually even up the competition where people tender for work, and people tender for work for a lot of things – cleaning, contract cleaning, contract catering. In all of those areas, there'll be opportunities, I think.
RMC: Graham, can I put the other side of the coin to you and ask your view? Where an employer does not want to get involved in multi-employer arrangements, it's open to the employer to make an enterprise bargaining agreement with the employers and employees. Do you think some employers will go down that route of “I'd rather just have my agreement”?
GS: That's a very good point, Ron. They may well do that, rather than be roped into what they might call the union stream of bargaining.
RMC: My understanding is if you go down the enterprise bargaining track like that you can't be roped in.
GS: That's correct.
SM: Which is going to be my other question for you, Graham. Not to give all your strategies away, but there's obviously a lot of industrial strategy for people who are in these industries who are likely to be bargaining. For example, should you end up in a workplace determination, the arbitration is only on the matters that are the subject of the dispute, so obviously what's left in dispute becomes very, very critical. Are there things employers should be thinking about now in planning their strategies?
GS: I think a typical strategy is to say on the first day of bargaining, nothing is agreed until everything is agreed, because bear in mind the agreed matters then go into the new agreement. But that's not new. A lot of employers have been saying that for a long time but it will be more and more documented, I think.
SM: More and more critical now to get the strategy right early?
RMC: Can I put another matter up? It seems to me that what we're all requiring is trust in the Fair Work Commission for this to work, and I would hope that we might be thinking along the lines, rather than having Coalition or Labour Governments putting in their own people but we need to start thinking about some sort of appointments council which would make the appointment process public, bringing transparency so that we might have a more trustworthy Commission. I think the Commission is going to be engaged in a lot of close hand to hand work with employers and employees, and I think trust and transparency are important. So I'm surprised the government didn't look at that, or do they just want to appoint their own?
SM: Ron, are you using that as your solution to the future that I'm going to ask you, or do I still get to ask you?
RMC: No, you still get to ask me. I take Graham's point, and he's quite right, and Joellen as well, this is increasing the workload of the Commission, therefore it's important that employers and employees and organisations trust the Commission. All I'm simply saying is for future appointments we need some sort of more open transparent process so that everybody knows.
SM: It's a very good point.
So can I get us to start looking towards the future, and Joellen, I might start with you, I think the Fair Work Ombudsman reported that there was something like $532m in unpaid wages and entitlements for more than 384,000 workers that they recovered last year. The next tranche is to include the criminalisation of underpayments, but that's obviously still to come –or is that proposed in the next tranche?
JR: That's very interesting because that was actually in the Morrison Government's Omnibus Bill but it got dumped out of the Bill when they weren't able to secure some of the other things they wanted. It's interesting that it wasn't in this Bill either. I'm wondering whether it's the classic bargaining chip.
It's the thing that no one will say that they don't want because it seems utterly churlish to say that you reserve an entitlement to fail to pay workers their wages, particularly when we know it's very often the lowest paid and most vulnerable workers who are victim to this.
I wonder whether it is still considered to be a bargaining chip, something that helps a Government that has some unpalatable things on its agenda to persuade those people on the cross-bench to let things through. It hasn't work so far though, has it? It didn't really work for the previous Government and this Government has been forced to engage in some proper negotiations with those people on the cross-bench in both the House of Reps and at the Senate. So I don't know when that particular element will appear or whether it's going to be continually saved up for when they want to get something more unpalatable through. Do you have a view, Ron?
RMC: Can I suggest that there are two separate issues in relation to wages, wage underpayment. The first is migrant workers in restaurants etc. and there's a recent book by the Age journalist, Ben Schneiders, “Hard Labour”. which documents very graphically the huge numbers of low wages particularly of migrant workers and casual employees. And we all know the 7-Eleven debacle. Now that's one area where it seems to me for many in that trade there are systematic underpayments which to me have a criminal element or could have a criminal element.
But the other phenomenon about Australian wages is the large employers who applied themselves having to pay backpay. The Ombudsman's report on the 37 public universities is that 18 have been paying backpay in terms of millions of dollars like the University of Melbourne. So I'm wondering what's really going wrong. I don't know whether you call them mistakes or is it people trying to save money or is it the complications of casual employment? None of it looks complicated to me. So I don’t understand, I can see the reason to criminalise the restaurants, the sweatshops but I do not understand what's happening with Coles, universities and other large employers. Why aren't they getting their acts together? What's happening? I don't know.
SMC: I wanted to ask you exactly that question in that there seems to be a very small minority who perhaps deliberately don't pay their staff and then not anything like the scale of underpayments that we've seen. Is criminalisation the solution and obviously probably only a solution perhaps for those who deliberately did it. But maybe it’s not even a solution for them because one might say that they're probably already know it's unlawful and are quite prepared to do it anyway. So what is the solution for?
GS: I don’t have any difficulty, just to correct the record, with wage theft when there is in fact wage theft, if you know what I mean. But if an employer knowingly, deliberately underpays its wage earners, employees’ wages and steals their money that's wage theft.
Then there's the middle ground where it might be that people just haven't paid enough attention to what their award or agreement says.
SMC: It's almost negligence.
GS: And they're negligent or just had not been careful enough and then there's genuine grey areas and I think Ron I'm at the pointy end of some of these university underpayment things and there are some quite historical language issues which in the past the words have meant what people thought it meant, but when you really take a hard look at it probably doesn’t mean that, but people have just continued with the past practices.
It's possibly not even an underpayment because in some cases it’s quite debatable what the words really mean. The way forward is clarity: clear, simple industrial instruments that mean one thing and that are not ambiguous. Now that's very hard, particularly with bargaining because I've been at the bargaining table many times over the years and you often compromise in getting agreement. You can't agree on the word so you agree on something that nobody really quite understands what it means but it does the deal.
SMC: Or you roll over some words that we know that everyone has a different view on but we're not going to have that argument today.
GS:Exactly. So it's quite hard with bargaining but with the award system it ought to be the case that the Fair Work Commission can actually draft and make awards that are not ambiguous and that are not complex and that are very clear. That to me is a major part of the solution. I think you were also wanting us to speculate about what other changes are next. I would have thought that the Government would be looking at the gig economy and perhaps defining what it is or is not an independent contractor. There's room to do some legislative, imaginative legislation in that area, but that might be something Joellen is better placed to talk about than me.
JR: I don't know that I can anticipate what the Government will do. I can make some comments on the kinds of things that I think are worth doing.
One of the things that I think is a problem with some of the on-demand work is that some of it is not, in my view, well suited to being squeezed into our current award system.
I know a lot of people say that Uber drivers, Uber eats delivery people really should be treated as employees but I'm becoming more and more persuaded that if they're called employees and then they fall within the existing award system for the awards for people who do deliveries as employees usually of the person who owns the goods that is sending them off to a customer, there are all sorts of things like minimum shift allowances and rostering restraints that don't well suit an industry where the cyclist doing the work might in fact have a couple of different apps open at the one time and be able to have this kind of portfolio of tasks that they manage. They might be Uber driving as well as doing some parcel delivering and they're not really able to fragment their time up into the numbers of minutes that they've worked casually for one platform or another.
That kind of work probably does look like they are more like independent contractors but they are still being paid at very low rates of pay and by falling outside the employment system they also fall outside the other kinds of protections that we've attached to employee status.
A very key thing is worker's compensation and safety. We obviously need that problem addressed. But I also think that it's interesting that most of the cases that we're familiar with, with those kinds of on-demand workers being brought forward, they've brought forward unfair dismissal cases and they’ve been knocked out at the threshold because the Fair Work Commission first of all decides are you an employee or not. “Ah, you're not, then we don't hear your matter.” There's never any interrogation of whether they were in fact blocked from the app and lost their job capriciously or not.
SMC: In fact I think in one of the cases they said that they thought it was very unfair but they said that they felt that they had no jurisdiction.
JR: That they had no jurisdiction. That's right. One of the things I would like to see – though I don't know that the Government will go this far – is to expand the ability for the Fair Work Commission to make a determination that a contract termination was capricious and without a valid reason, without first of all having to decide whether the worker did fall within the classic employment definition or not, because those workers who are earning very low rates of pay for their work are as dependent upon the continuity of their job as anyone else.
It seems unreasonable that if they have in fact lost their job for a very completely unfair reason through no fault of their own, for instance because some nasty client decided to bomb them with bad ratings or some completely capricious reason. It seems unreasonable that they have no avenue to challenge that.
So I would like to see some of the more fundamental protections for economically dependent workers regardless of whether they meet an employment definition or not.
RMC: Are you suggesting that perhaps we go down the British route and some other European countries where you have employees, contractors and in the middle, workers who are given some of the rights of employees but not all – a bit like the dependent contractors in some Canadian provinces. Is that the sort of way you're going?
JR: Well sort of, though I'm constantly challenged by some of our other colleagues in the labour law area who don't think there should be a third category because if that were the case all of the wicked employers would turn everyone who's an employee into just a worker to minimise the benefits we all have. I think again that's a completely unrealistic fear to have but I can see why people might be afraid that a new definition would also become very narrow and easy to escape.
So the better thing would be to just say in some of these jurisdictions, such as unfair termination of a work contract, the Fair Work Commission could use its own discretion to decide whether the particular worker coming forward was in fact a person whose dependence on that particular contract was such that it was reasonable to exercise their usual power to hold a compulsory conference to see whether there was in fact a valid reason and some fair processes to fix it.
RMC: But that gets rid of unfair dismissal but I mean if you want to solve the problem of low pay.
GS: Have a minimum, the minimum hourly rate applied at dependent workers as well. That would raise wages.
JR: And that's right.
SMC: The Queensland Government has just introduced a new jurisdiction for contractor workers of couriers. Is this a place for the States to step in and if they do, does that mean we then either end up with different rules again in every State?
JR: Well look in the transport industry. Queensland is really adopting and improving on Chapter 6 of the Industrial Relations Act NSW which deals with transport workers, contractors, and employees. Everyone is covered by Chapter 6 and the Industrial Relations Commission in New South Wales can make contractor terminations for taxi drivers and couriers and other people. One of the problems with that particular jurisdiction at the moment is that there's actually an exclusion for food delivery drivers dating back decades, probably because they didn't want to capture voluntary meals on wheels workers.
RMC: Joellen, you mention our colleagues who say look, you can't dilute the notion of employee which is like a winner takes all – if you're an employee you get everything. Can I suggest that the new technologies have changed the whole nature of work? I didn't know that I would end up teaching law school from my music room at home, and we can talk about homework later. Or that we get food delivered. I think we need to think about different categorisations of work and be innovative if we want to try and capture the full spectrum, and I think just to leave it at employers and employees and contractors is not very helpful. We need new tools.
GS: The other thing that the Government might think about is these reforms don't raise wages. How do you lift the award wage rate? That seems to me to be the quickest way increase wages in Australia if bargaining fails and there are still significant numbers of the food work force who only get award wages. If you can start jacking up award wages you are going to raise wage rates. The Reserve Bank might not like it but that's something that could be thought about by the Government I think.
RMC: Are we going to go back to awards? Fine by me but…
GS: I'm not advocating it Ron
RMC: Awards used to be and we are all old enough
SMC: I told you we were heading back towards a centralised wage system and you're not believing me Graham but this is, this is where we're heading.
RMC: We're all old enough to remember, except you, that awards were settlements
SMC: For the record he was pointing to me.
RMC: Awards were settlements of industrial disputes between employers and employees even in the State system, between unions and employer associations. Awards are no longer that. They're executive orders by the Fair Work Commission. It would take a significant change to alter what is now in the Fair Work Act, which is awards are minimum to increase wages and to have work value cases. I think there has been much more debate over that than over the extended multi-employer bargaining I would suggest.
JR: We see some examples in the Gender Pay Equity Act.
GS: We may.
JR: Because with this new panel that's appointed, and a widening again of the ability to make what we might have called a work value case, it will be interesting to see if there are any decisions and, if there are, how they unfold.
GS: Especially the doing away of the having to find a male comparator for equal pay cases.
SMC: And I must say I am, to make your point before about the kindergarten worker, having looked after a five year old a couple of weeks ago I'm all for paying them as much as required so that I never have to do that again.
RMC: Well the issue will also be a financial one for State Governments who will then want to lean upon the Federal Government because of the way finances operate in this country. I have no problem about changing awards but I think that would be a huge battle and I'm not sure what the outcome would be.
SMC: So we haven't solved everything here today and I am slightly nervous to ask this question because I did ask it of a session I did before. My question is “if you had the magic wand and you could change one law in Australia what would that law be?” The person said I would make cats illegal and I felt like I was somewhere where I really didn't want to go.
But at the risk of not getting a similar answer maybe we'll finish on that question and I'll ask each of my amazing minds if you had one law what would you change? And I'll start with you Graham because that's fair.
GS: I would do away with the reverse onus on proof that's creeping into the Fair Work Act because I think it's just tipping the balance too far in the sense of when you get into litigation in this area it's often just impossible to win. Now that's probably not a very popular choice…
SMC: Well I don’t think it would be popular with many employers.
GS: Well, yeah.
SMC: Ron, can I ask you the same question?
RMC: Well I first of all I would say I would probably disagree with Graham but leaving that aside I think if I were to change one law it would be to increase transparency for the Fair Work Commission because I think the Fair Work Commission is the linchpin and if it's no longer functional or trustworthy the whole system comes down. So that would be my change in law – transparency and appointment.
SMC: Thank you. And Joellen?
JR: Oh look it's an impossible question for me because I think that most of the problems we have in this area is because we expect law to deal with it all. The Act is just getting absolutely bloated, people are constantly arguing for more and more detailed provisions to narrow the discretions available to the Fair Work Commission because they don't trust anyone to exercise discretion and I think that in itself is making our system complex, and easy to make mistakes with. So I suppose the only thing I'd say is a much more simplified system that was in fact based on some kind of good faith willingness to co-operate in the best interests of all of us and to have reliable and trustworthy institutions that we will in fact defer appropriate discretions to, to deal with problems as they arise. That would be a much saner system but I'm completely aware that that's an entirely utopian vision that we’re not going to see in this country any time soon.
SMC: So can I thank our esteemed panel. In lieu of a gift today donations are being make to the Australian Institute of Human Rights on behalf of Ron and Joellen.
I must say I really enjoyed this discussion. My head slightly hurts from trying to keep up with it but I really enjoyed it. So thank you so much.
JR: Thank you Shae.
GS: Thank you.
RMC: Thank you