Testing Fair Work: Australian Industrial Relations in 2011

This article presents an overview of major industrial relations events in Australia in 2011. While the ‘bedding down’ period of the Fair Work Act 2009 continued in the first half of the year; the second half of the year was far more dramatic. This included the grounding of the Qantas fleet and a lockout of the airline’s workforce in the context of a protracted enterprise bargaining dispute. During the year, the Australian Services Union’s (ASU’s) application for an Equal Remuneration Order for the community services sector, lodged in 2010, was heard and decided, although the size of pay increases had not been determined at the time of writing. Another major case, United Voice’s application for access to the Fair Work Act’s low-paid bargaining stream, was also decided in 2011. The (then) Minister for Employment and Workplace Relations, Senator Chris Evans, announced that the anticipated review of the operation of the Act would be undertaken in 2012. In December, after a cabinet reshuffle, Senator Evans was replaced by ex-Australian Workers Union (AWU) National Secretary Bill Shorten who, in the week of his appointment, announced the terms of reference for the review. As business became more critical of the Act, it was unclear what the policy of the alternative government was. While the leader of the opposition, Tony Abbott, maintained his insistence that the Coalition had rejected a Work Choices-style industrial relations policy (see Cooper, 2011), there was plenty of disagreement within his own party about this position. Senior Liberals, including a former Howard government Workplace Relations Minister, disagreed and urged Abbott to adopt a ‘harder line’. After discussing these events, this article introduces the other articles contained in this special review edition.

On 29 October 2011, Qantas CEO, Alan Joyce, announced the grounding of the fleet of aircraft and gave notice that the company was locking employees out from 31 October (Qantas, 2011a). While the organization had been engaged in a protracted and, at times, acrimonious enterprise bargaining dispute with unions representing pilots, licensed aircraft engineers and ground staff, it is an understatement to say that this announcement surprised both the unions and industrial relations observers.

Bargaining between Qantas and many of these unions had commenced over a year prior to the announcement. While there were a number of differences in the bargaining agenda of unions representing various employee groups, there was one common aspect to their bargaining demands. All of the unions sought to use enterprise bargaining to ensure security of employment for members and to oppose the ‘offshoring’ of aspects of the airline’s business and workforce. Disputation, claim and counterclaim about Qantas moving aspects of its operations into Asia had been ongoing for at least a decade (e.g. Australian Manufacturing Workers Union (AMWU), 2008; AWU, 2002), but had been argued over vociferously by the parties throughout 2011. This was especially so after the Chief Executive Officer, Joyce, made several announcements as to the repositioning of the business in Asia (see Joyce, 2011a, 2011b). Throughout 2011, the unions concerned – the Transport Workers Union (TWU), the Australian and International Pilots Association (AIPA) and the Australian Licensed Aircraft Engineers Association (ALAEA) – had taken various forms of protected industrial action, ranging from the more traditional, such as strikes and bans, through to more novel approaches, such as pilots making onboard announcements about the employment of Australians in the cockpits of Qantas aircraft and the production of viral videos released online (TWU, 2011a). Qantas claimed that the industrial action, and threats of industrial action, had caused significant disruption and harm to the business, and submitted in the subsequent Fair Work Australia (FWA) Full Bench hearing that the union’s action in 2011 had cost the business some $70m (Singer et al., 2011).

All the while, Qantas management opposed union attempts to use enterprise bargaining as a means to encroach on managerial prerogative. For example, on 13 October, in a speech typical of the tone of the Qantas public relations campaign throughout 2011, Joyce characterized the unions’ actions this way:

Effectively they are trying to dictate how we run Qantas – whether it’s the pilots’ union demanding the right to dictate pilot pay rates in Jetstar, the licensed engineers demanding a veto on the modernisation of work practices, or the TWU wanting to limit our use of contractors. (Joyce, 2011c: 3)

Meanwhile, unions argued that the Qantas management’s strategy in 2011 was an attempt to ‘Asianise’ the airline (Australian Broadcasting Corporation (ABC), 2011), constituted ‘bad faith’ behaviour (Massola, 2011) and attempted to equate the approach of Qantas management with employer strategy under the Howard government’s Work Choices framework (TWU, 2011b).

After Joyce’s announcement – which stranded up to 70,000 Qantas customers internationally, including a number of heads of state attending the Commonwealth Head of Government meeting in Perth – the Minister for Workplace Relations, Senator Chris Evans, applied to Fair Work Australia under s424(1) of the Fair Work Act for a suspension or termination of the protected industrial action at Qantas. This section of the Act gives the Minister the capacity to make such an application on the basis of the threat protected industrial action poses to the working of the national economy (see Catanzariti and Kane, 2012). A Full Bench, consisting of President Guidice, Senior Deputy President Watson and Commissioner Roe, was convened to hear this application. After sitting over the weekend and through the night, the Full Bench decided to terminate the protected industrial action in relation to the negotiation of the enterprise agreements ([2011] FWAFB 74444). The effect of this decision was to make industrial action unlawful and to begin a 21-day period of negotiation between the parties, after which, in the absence of an agreed outcome, a workplace determination, or an arbitrated outcome, would result. The Full Bench noted in their decision that they decided upon ‘termination’ of the bargaining period, rather than ‘suspension’, on the grounds that a mere suspension would likely result in further industrial action.

During the subsequent 21 days, amid union suggestions that the Qantas lockout had been ‘premeditated’ (ABC AM, 2011; AIPA, 2011a), a challenge to the Full Bench’s decision in the Federal Court (AIPA, 2011b), and as calls for a judicial inquiry into the events leading up to the Qantas grounding were heard (Australian Associated Press (AAP), 2011), attempts were made to broker an agreement between Qantas and the unions. Ultimately, no agreement was reached and on 21 November it became clear that Fair Work Australia would resolve the matter through arbitration (McCallum, 2011; Qantas, 2011b). At the time of writing (December 2011), it was not apparent when the case would be heard nor when the workplace determination would be handed down.

This significant dispute had numerous implications, especially in relation to the test it has posed for the Fair Work Act and the mechanisms established by it to regulate bargaining and industrial action. It raises the contested issue of the extent to which arbitration should feature in our national system broadly and in settling industrial disputes in particular. ¹ For example, Forsyth (2011) has argued that the Qantas dispute, among others, has shown that some of the requirements to access arbitration may need reworking so as to avoid the situation where significant harm to another party or to the economy must be proved. In the wake of the dispute, the Australian Council of Trade Unions (ACTU) has argued for easier access to arbitration in cases where an employer is engaging in ‘surface bargaining’ with the workforce (Schneiders, 2011). This proposal has been met with significant disquiet from employer groups. For instance, in late November, Heather Ridout argued that the Australian Industry Group (Ai Group) was:

vehemently opposed to reintroducing arbitration in bargaining between employers and unions of course in the old days, the unions would rock up with an ambit claim. They’d pull on industrial action. We’d have a big stoush. Then we’d end up in arbitration and they’d get half of too much, and then that would flow on to the rest of the economy. So it is much better that employers and employees can work out their own agreements. (Ridout, 2011)

Such issues will undoubtedly re-emerge in 2012 in the context of the review of the Fair Work Act, the terms of reference for which were released by the new Minister for Employment, Education and Workplace Relations, Bill Shorten, in the week leading up to Christmas. It was to be an ‘evidence-based assessment’ of the operation of the Fair Work legislation in a range of areas, including: bargaining processes and outcomes; ‘fairness and representation at work’; and, among other things, the resolution of grievances and disputes. Members of the panel, which is to report to the Minister by 31 May 2012, include Professor Ron McCallum AO, John Edwards and Michael Moore (Shorten, 2011).

The review of the Act will undoubtedly keep industrial relations on the front page of many national newspapers and give critics of the Fair Work Act room to voice their concerns about government policy. While this may prove vexing for the government, it is likely to be equally annoying to the Coalition parties. In 2011, the leader of the opposition, Tony Abbott, maintained the Coalition’s stated opposition to a move back to Work Choices-style policy arrangements. Yet this was not the unanimous view of Coalition leaders. In the context of his (unsuccessful) campaign to become the President of the Liberal Party, Peter Reith, Howard government Workplace Relations Minister from 1996 to 2000, weighed into the debate about industrial relations again. Reith’s most celebrated moment in industrial relations was undoubtedly his involvement in and handling of the 1998 waterfront dispute (Ellem, 1999). In 2011, he expended considerable energy criticizing the policies of Tony Abbott and the opposition. He argued that the Coalition parties needed to be more responsive to calls for change from business and, throughout the year, criticized the opposition leader’s rejection of aspects of the Howard government’s industrial relations policies, including statutory individual contracts (ABC Lateline, 2011; ABC Mornings, 2011; Van Onselen, 2011). Reith reportedly has a number of supporters among federal Coalition parliamentarians and we might expect the argument over industrial relations to continue not only across the benches of the federal parliament, but also within the Coalition party rooms in 2012.

Meanwhile, two major cases – the ASU’s equal pay case and United Voice’s low-paid case – were decided, though not finalized, in 2011. United Voice lodged their application for a Low Paid Bargaining Authorisation in early 2010 (see Cooper, 2011). The case was heard throughout late 2010 and early 2011. On 11 May 2011, a Full Bench of Fair Work Australia handed down their decision to grant an Authorisation. In their decision, the Full Bench agreed with union submissions that the employees concerned, aged care employees in certain states, were, among other things, low paid and that they faced significant barriers to engaging freely in bargaining (FBFWA 2633). However, the Full Bench did not agree with union arguments as to the inclusion of workplaces covered by current enterprise agreements. The union had argued that while some of the employees they sought to cover in the low-paid bargaining agreement were already covered by operational agreements, these workers remained low paid and, thus, should be able to be included in the application and Authorisation (Workplace Express, 2011). The Full Bench excluded those employers with agreement coverage, much to the disappointment of the union (United Voice, 2011), and thus, a group of 183 employers were noted in the final Authorisation, handed down by Deputy President Watson on 29 July. Negotiations between United Voice and the relevant employers were undertaken, at times with the involvement of federal government departments, throughout late 2011. At the time of writing, no agreement had been made.

The second major case decided in 2011 was the ASU’s application for an Equal Remuneration Order for community sector workers. In this case, which was begun in 2010, the ASU argued that work performed by employees in the community services sector, relative to the skills of employees and in comparison to the situation in state and local government, had been traditionally undervalued for reasons related to gender. In May 2011, a Full Bench of Fair Work Australia handed down its interim decision, accepting the ASU’s argument that workers in community services did not receive equal remuneration for their work (FWA, 2011a). The Bench recognized that gender was an important determinant of this, but they called for further submissions as to the extent of the influence of gender upon pay inequality. This decision is noteworthy for a number of reasons. It will have a significant financial impact on the sector concerned, it has possible ‘flow on’ effects for other feminized sectors of employment and it may provide a welcome, albeit modest, remedy to the enduring social and economic problem of unequal pay and undervalued women’s work.

The articles presented in this issue examine, in detail, particular aspects of industrial relations during 2011. The contributors, leading practitioners and scholars, submitted their articles to the journal in late 2011.

McChrystal and Orchiston (The University of Sydney Law School) analyse industrial legislation in 2011. Their review suggests that in 2011, compared to the previous three years, there was minimal legislative change federally. They anticipate considerable activity in 2012. This is likely to include any changes arising from the review of the Fair Work Act, action in relation to long service leave in the National Employment Standards (NES) and in relation to employee entitlements in the event of the liquidation of a company.

Catanzariti and Kane (Clayton Utz) characterize 2011 as a ‘landmark year’ for Fair Work Australia in their review of major tribunal cases. After analysing the Qantas dispute, they point to its many implications for the future handling of industrial disputes. While noting the exceptionalism of this case, they argue that it demonstrates the ‘range of measures FWA has in its arsenal to resolve certain disputes’. They go on to review major tests of ‘good faith’ in bargaining in 2011 and identify themes in relation to protected action ballots and bargaining, the provision of ‘relevant information’ in bargaining, and the treatment of individual bargaining representatives. They conclude with a discussion of developments in relation to both general protections and adverse action.

Patricia Todd (University of Western Australia) analyses the lobbying efforts of employer associations in the context of the foreshadowed review of the Fair Work Act. She summarizes the employer ‘wish list’ as including the following: a diminution of unions’ capacity to engage in collective bargaining; a reduction in the checks on managerial prerogative in the workplace; and increases in productivity. She analyses the Qantas dispute and what it means for understanding employer strategy in 2011. She concludes with a discussion of the inconsistencies and contradictions in the employer agenda, sounding a cautious tone for those wishing to benchmark ‘good industrial relations’ on the Work Choices framework.

Cathy Brigden (RMIT University) explores trade unionism and collective bargaining in 2011. She argues that the issue of job security and challenges to managerial prerogative were at the heart of many union campaigns and industrial disputes in 2011. This, she argues, was exemplified by the Qantas dispute. She notes the emergence of and employer advocacy for access to arbitration, something which is out of step with the agenda of most employer groups’ demands in the lead-up to and implementation of the Fair Work Act. She notes that despite increases in collective bargaining coverage, trade union density declined in 2011.

Therese Jefferson and Alison Preston (Curtin Business School) investigate labour markets and wages in 2011. They argue that despite relatively strong performance compared to other countries, Australian labour market outcomes were incredibly diverse. They make this argument with reference to employment patterns, labour utilization and earnings both within and across industries. They show a strong difference in outcomes in line with gender. They go on to analyse the labour market position of young workers and find high levels of unemployment and underutilization.

Marian Baird, Sue Williamson and Alexandra Heron (The University of Sydney Business School) argue that compared to the significant policy change in relation to women’s work during the previous three years, 2011 was a year of policy consolidation. They argue, however, that this did not signal an end to gender inequity in the workplace and admit to significant concerns in relation to gender and leadership, gender segregation in the labour market, unequal pay, and the ongoing struggle of Australian women to combine their work with family care. They address a number of other key issues in 2011, including major sexual harassment cases and the ASU’s pay equity case.

A case that warrants significant, and discrete, discussion is the ASU’s Equal Remuneration Order Application. We have included an article by Natasha Cortis (University of New South Wales) and Gabrielle Meagher (University of Sydney) examining the case. They argue that despite many years of advocacy to promote equal pay, the gender wage gap is remarkably persistent in Australia. They argue that historical undervaluation has suppressed wages in highly feminized occupations and industries, and this is typified by work in the community services sector. Meagher and Cortis analyse what they see as the key aspects of the ASU case and detail the arguments of the parties in the case, which had not been concluded at the time of writing.

This edition includes two international review articles. The first is contributed by Richard Freeman and Eunice Han (Harvard) who investigate the ‘war’ on public sector unionism and collective bargaining waged by conservative legislatures in a number of US states. They investigate the motivations for these activities and argue, among other things, that they had an unexpected outcome of galvanizing unprecedented support for unions. They draw a line between events in states such as Ohio and the ‘Occupy’ protests, which developed later and gave a high priority to exposing and combating inequality in the US.

Alan Bogg (Oxford) analyses the striking phenomenon in the UK of very low, and declining, applications for union statutory recognition. He argues that the established statutory recognition procedure is ‘dying – not with a bang, but with a whimper’. Bogg explores the historical context to that decline and questions whether new forms of regulation might revive British collective bargaining. In so doing, Bogg challenges the normative basis for the Anglo-American conception of representational legitimacy and argues that it needs fundamental reworking.

The most dramatic event in Australian industrial relations in 2011 was the grounding of Qantas aircraft in the context of an enterprise bargaining dispute. This dispute will have reverberations in industrial relations in the coming years, especially in the context of rising employer demands for changes to the Gillard government’s industrial relations framework. A key issue to monitor in this context will be the positioning of parties in relation to their capacity to access arbitration in bargaining disputes. However, there were a number of other landmark events in industrial relations in 2011, including decisions in two major cases using the Fair Work Act to address the low and unequal pay in two feminized sectors, aged care and community services. As we look towards 2012, the review of the Fair Work Act – which should be completed by mid-2012 – will see industrial relations once again take centre stage as a contested policy issue. This will have its challenges not only for the government, but also for the opposition too.