Employer and employer association matters in Australia in 2019

Abstract

The May federal election appeared particularly important to employers’ views of their industrial relations’ interests. Employers and their associations had long steeled themselves against an unwelcome Labor victory, fearing Labor’s promises of substantial changes to industrial relations’ structures, processes and outcomes as well as taxation. Associations appeared busier than ever, representing employers through politics-related public relations, lobbying and media. With enterprise bargaining withering and most wages stagnant, Labor’s defeat encouraged associations and the re-elected government to engage in another, for-now stalled, attack on what remains of unions’ capacity to collectively protect employees. They have also focused on emergent (individual) employment law challenges for employers but have mainly deflected on widespread evidence of wage underpayment. While the political context again strongly favours employers and their associations, they face substantial challenges from rising media and public criticisms over employers’ widespread abuses of their social licence to operate.

Keywords

Association bargaining employer legislation politics social licence

Introduction

Employers and their associations in Australia, having seemingly won most of their industrial relations’ (IR) demands in recent decades, now face new challenges, some of which appear to be unintended consequences of the ways in which their victories have reshaped not just IR, but the broader political economy. One aspect is growing public awareness of socio-economic inequality and other negative effects of some aspects of ‘business as usual’. As 2019 began, employers and their associations were staring at an inevitable Labor federal election victory that threatened many of their IR preferences (Stanford, 2019; Wright, 2019). Furthermore, Labor had pledged a series of tax and other economic measures that prioritised the less well-off at the expense of (some of) the most affluent at a time when the reputation of business, in particular big business, was rapidly sinking under the weight of scandals. These matters, combined with public disquiet over Australian companies’ contribution to climate change, heightened challenges to the ‘social licence’ of business already evident during 2018 (Bartholomeusz, 2019; Thornthwaite and Sheldon, 2019).

For employer associations (henceforth ‘associations’), this posed particular challenges. With the continuing decline of their representative collective bargaining functions, the main associations – the Australian Industry Group (Ai Group), and the Australian Chamber of Commerce and Industry (ACCI) and its main affiliates, like the New South Wales Business Chamber (NSWBC) – have expanded their public relations and lobbying activities well beyond IR (Barry and Wilkinson, 2011; Sheldon et al., 2018). Together with the Business Council of Australia (BCA), representing big business, they face dealing with social licence fall-out from those scandals while pushing their ongoing demands for legislative and policy change – in IR and beyond. Nonetheless, associations – using ‘trickle-down economics’ – strongly support reducing tax rates for large corporations and upper-income individuals at a time when Australia’s employees/workers, with ever less market power, endure wages stagnation and chronically high levels of job and income insecurity (Bornstein, 2019; Chesters and Cuervo, 2019; Goods et al., 2019; Kaine and Josserand, 2019).

Arguing that what is good for business is necessarily good for all Australians or even the Australian economy has become increasingly difficult for associations to sustain. Indeed, one business commentator argued, ‘Quite simply, the key business lobby groups have little credibility. They claimed reducing penalty rates would increase employment – it didn’t. They claimed cutting company tax would increase wages: It hasn’t and it won’t’ (Pascoe, 2019). Another challenge, perhaps particularly for the BCA, was the resurgence of small businesses complaints of maltreatment by big companies, and these include IR implications (Bornstein, 2019). As economics commentator Ross Gittins (2019) argued, ‘who could doubt that big businesses use their superior power … to unreasonably impose their will on smaller businesses’, …

Calls for legislative measures threaten to divide the association world. Indeed, early in the year, the Australian Association of Franchisees was actively organising by promising ‘Union-style protection for franchisees’ (Sydney Morning Herald (SMH), 15 February 2019: 21, Advertisement), including through collective bargaining with big business. In November, and after seeking submissions from interested parties, the federal government made collective bargaining more available to small companies by strengthening exemptions under competition law (Australian Government – Business, 2019).

The next section examines NSW and federal elections and the formal politics of IR during 2019. Politics also particularly imbued many of the other main IR and broader association themes. Subsequent sections survey, in turn, the association-Coalition push for (more) anti-union legislation; the open running sore of wage underpayment; the enterprise bargaining (EB) system’s continuing decline; regulatory contestation over definitions of casual employment; the issue of social licence for business; and problems in skills and vocational education and training (VET).

For primary sources, we have largely relied on associations’ submissions to inquiries and tribunals, their policy documents, reports and media releases; interviews with a leading official from a major association and the head of a legal practice closely aligned to another – to both of whom we offer our thanks; the specialist IR online newsletter, Workplace Express; and newspaper reporting – particularly from the Sydney Morning Herald. We have also consulted relevant scholarly literature. We would like to particularly express our gratitude to Mr Dick Grozier who retired earlier in 2019 after a long, distinguished IR career at NSWBC and ACCI. Dick always made himself available whenever we sought an interview, was always candid and helpful in those interviews, provided feedback on our draft articles and did all this with great good humour, thoughtfulness and generosity of spirit.

State and federal elections, and the politics of IR

Associations were highly active, in diverse ways, during campaigns for the NSW (23 March) and federal (19 May) elections. NSW premier Gladys Berejiklian led her Liberal-National Party Coalition back into government. The NSWBC was sufficiently concerned to mount a ‘non-political’ campaign on behalf of its small-business constituency and clearly favouring the Coalition. This continued, albeit in more subdued, lower cost ways, previous campaigns ahead of NSW and federal elections (Sheldon et al., 2018). NSWBC full-page advertisements argued ‘now is not the time for complacency’, using slogans such as ‘NSW has come a long way’ and ‘vote to keep NSW Number 1’ (SMH, 2019a, 2019b). Its online campaign stressed four elements: skill development with a focus on youth employment; cutting energy – and particularly electricity – costs; major infrastructure delivery; and protections from natural disasters. With most IR legislation now within the federal jurisdiction, the first, third and fourth had clear labour market implications. That the Labor opposition did not respond to an invitation to address those policy issues suggests it viewed the campaign as partisan (NSW Business Chamber, 2019c).

In the federal election, Prime Minister Scott Morrison led his Coalition government to a hugely surprising if narrow victory. While some Labor policy may have met business preferences – for example on skills and even energy, Labor’s IR policies provoked substantial employer anxiety (Hatch, 2019; Smith, 2019; Ward, 2019). Labor’s leader, Bill Shorten, a former senior union official, dedicated his campaign policy and rhetoric to significantly reducing inequality, by levelling up (and also somewhat down), both in workplaces and more broadly. Here, his policies linked with those of the Australian Council of Trade Unions (ACTU), itself with a leadership now more committed to mobilising and campaigning (Bray et al., 2019).

Convinced Labor would win, those atop large companies, apparently fearing subsequent retribution, largely refrained from direct, open campaigning against Labor. Some were also aware of business’ plummeting public reputation in the wake of financial sector scandals and widespread wages underpayment – coincident with revelations of massive executive salaries. Therefore, they largely provided off-the-record briefings to journalists and delegated political campaigning to their associations; some willingly took up their cudgels, despite some claiming non-partisanship (Knight, 2019: 4). The BCA, through its advocacy subsidiary, Centre Ground, initiated and funded (though contributions from its members) a diffused campaign – ‘For the Common Good’ – that included ‘advertising, paying for appearances on Sky News [television] and hosting town hall meetings in the suburbs of capital cities’ and elsewhere in the country. In this, the BCA explicitly attempted to nullify the campaigning effects of unions and GetUp, a left-wing, issues-based movement. However, the organisation faltered and closed in March 2019, perhaps expecting the Coalition to lose (CBD, 2019; Knight, 2019; Loussikian and Hutchinson, 2019). Associations were also briefing members to take the initiative early and lock in new enterprise agreements ahead of the election and Labor’s proposed changes to the Fair Work Act 2009 (FW Act). As a result, a number of large firms locked in agreements amid perceptions that ‘Labor would swing the pendulum – Labor would do a Labor version of WorkChoices’ (Ward, 2019).

One concern was Labor’s plan for a living wage; this would substantially raise minimum wage levels (which, in its May annual review decision, the Fair Work Commission (FWC) increased by only some 3%). Association chief executives, for example Ai Group’s Innes Willox and ACCI’s James Pearson, warned that this would price out employment at the bottom of the labour market and reduce incentives for people to invest in learning formal trade skills. On the other hand, the BCA’s Jennifer Westacott was more supportive (as the BCA has been about increasing unemployment benefits; Ai Group, 2019e; McCauley, 2019b; Patty, 2019a).

Associations were very concerned about Labor’s plans to re-write the FW Act. One change would stop employers unilaterally terminating enterprise agreements. The ACCI’s Workplace Relations Director, Scott Barklamb, argued that removing employers’ ability to terminate enterprise agreements would only increase employer reticence to enter them, and make wage increases even more difficult (Hannan, 2019). Another mooted change would have made it easier for unions and workforces to lift the bargaining level beyond the enterprise (Bonyhady, 2019). Again associations were opposed, although there is evidence that many employers – particularly those confronting only local competition – would be happier returning to industry bargaining and/or a stronger arbitration system if it helped take wages out of competition (Ward, 2019). As well, associations strongly baulked at Labor’s promise to legislate, for casual workers, the right to apply to their employers for conversion to continuing employment even if employers would have the right to refuse on ‘reasonable business grounds’ (McCauley, 2019c). This matter meshed with employer concerns in the wake of the Skene case on casual employment (see later).

Employers, associations and the legislative thrust: Ensuring Integrity Bill

Post-election, Morrison decided to take quick advantage of widespread demoralisation within Labor and the union movement. A prime legislative (and hence judicial) target was the union movement. When Morrison chose his Attorney-General, Christian Porter, to also be Minister of Industrial Relations, associations like the Master Builders’ Association and the Australian Mines and Metals Association (AMMA) gleefully predicted greater use of criminal law against militant unions (Workplace Express, 27 May 2019).

The government reintroduced to Parliament the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill in early July 2019, through which it proposed to shackle registered organisations – formally both trade unions and employer associations – with new provisions to disqualify officials, cancel registration of organisations, brand organisations as dysfunctional and appoint auditors to manage them; it also reintroduced a public interest test for proposed amalgamations. In reality, it was the Coalition’s latest anti-union initiative. Associations strongly supported the bill -- AMMA, for instance, saying it would ‘restore regulatory balance and regenerate public confidence’ in trade unions (AMMA, 2019c; Gray and Crowe, 2019), again a telling comment given declining ‘public confidence’ in big business and employers more widely. It also seemed to reverse the caution, since WorkChoices, tempering the most radical demands within the Coalition and associations for anti-union legislation (Barry and You, 2018). The bill’s marketing also overlapped with much media attention on the widespread systematic underpayment of wages (see below).

Moreover, it overlapped with more (and admitted) allegations of bank senior management malfeasance and the billions of dollars in remediation costs the big four banks face for previous misbehaviours. Indeed, Morrison repeatedly declined to formally confront Westpac’s ‘23 million breaches of anti-money laundering and counter-terrorism financing laws’ which had, inter alia, facilitated commerce in the sexual abuse of children (Ferguson, 2019). It was left to institutional and public clamour – not an (unimaginable) integrity bill aimed at boards and chief executive officers (CEOs) – to force the resignations of Westpac’s CEO and chairman (Yeates, 2019). Again telling, ACCI’s Pearson justified the Integrity Bill ahead of Parliament voting, by pointing to banking employer malfeasance: ‘Just as we must not turn a blind eye to the unacceptable behaviour that has come to light in parts of the banking industry, we must not do the same with our registered organisations’ (Hannan and Lewis, 2019).

The Bill sought to catch up any union, and often for the most banal administrative oversights. Yet in marketing the Bill, the government particularly targeted building and construction unions as repeat miscreants against industry-specific legislation and its enforcement body – the Australian Building and Construction Commission (ABCC). The design of both that legislation and its enforcer aimed to make it particularly difficult for unions to legally protect their members’ interests and unionism. Yet the ABCC appears more shy in its statutory responsibilities against employer malfeasance: for example, widespread sham contracting, unpaid wages – relative to the scale of the problem (ABCC, 2019), and illegal ‘phoenixing’ or pre-planned liquidations of single-project companies at project completion, thereby avoiding payments due to sub-contractors and employees, taxation, and product liabilities to owners for the previous one. Those behind the liquidated company then start a new one for the next project (Australian Securities and Investments Commission, 2019).

Public witch-hunting of building unions ahead of Parliament voting also coincided with rapidly emerging public awareness that developers, builders and building services companies – those workers’ employers – had been taking advantage of ‘light-touch’ and ‘private’ regulation to produce widespread shoddy apartment construction (as well as dangerous working conditions; Black, 2019, Legislative Council of NSW, Public Accountability Committee, 2019). Unexpectedly, the Integrity Bill failed to pass the Senate in late November, brought down, in part, by One Nation’s right-wing populist senators who had benefited electorally from the votes of unionised Queensland coal-industry workers. Association leaders, such as Ai Group’s Willox and BCA’s Westacott, expressed disappointment in hyperbolic terms (McCauley and Crowe, 2019).

Wage underpayment – or theft?

Scandals concerning pervasive employer underpayment of wages, sometimes called ‘wage theft’, have become increasingly evident in recent years (Barry and You, 2018; Thornthwaite and Sheldon, 2019) and continued during 2019. Wage underpayment affects very diverse sectors of the economy but appears most concentrated upon the most vulnerable workforce groups. Extensive scholarly research has highlighted particular labour market vulnerabilities of migrant workers, especially temporary ones and those residing here on tourist and student visas, particularly where these work in agriculture (Boucher, 2019; Clibborn and Wright, 2018; Farenblum and Berg, 2019; Rosewarne, 2019).

Associations continue to argue that so many large and small employers’ failures to pay workers their legal entitlements result from administrative mistakes caused by an overly complex wage system, rather than deliberate breaches of law (e.g. ACCI, 2019d; Ai Group, 2019e). Some of these errors perhaps flow from dependence on outsourced payroll system providers with little understanding of how awards work (Smith, 2019). This underpins associations’ contention that wage underpayments do not represent ‘theft’, and hence should not constitute criminal conduct such as to warrant criminal penalties. Moreover, using Fair Work Ombudsman (FWO) data, ACCI disclaims any crisis, insisting that Australia’s levels of wage underpayment have been stable over the past decade. Nonetheless, systematic ‘underpayment’ of wages appears now to be approaching the norm in several industries and among several labour market groups (such as migrant and student workers), whether through wilful non-compliance or competitive isomorphism. As Ferguson and Schneiders (2019) recently reported, ‘in some sectors of the economy, it is not a fringe activity but a business model.’

One industry in which employer purloining of wages received heaviest attention in 2019 was the food and hospitality sector. Here, not only did the FWO secure underpayment penalties against a variety of fast food franchises, but some of Australia’s most famous celebrity chefs (and the private equity firms with which they are associated) were caught altering employees’ timesheets to legitimate wage underpayments (Valent, 2019). The Woolworths supermarket behemoth was also found to have deprived almost 6000 salaried workers of at least AU$300 million in total wage entitlements since 2010 (Patty, 2019b; Powell and Sakkal, 2019).

In October, the federal Attorney-General’s Discussion Paper on Improving Protections to Employees’ Wages and Entitlements sought stakeholder opinions on raising fines, alternative remedies and criminal sanctions for underpayment of wages and entitlements. Associations opposed increased civil penalties in general, and any criminalisation of wage ‘theft’ in particular. They instead favoured increased FWO resourcing to investigate underpayments. For some associations, including ACCI, NSWBC and Ai Group, increased FWO funding and the 10-fold increase in penalties for serious contraventions of industrial law, under the 2017 Protecting Vulnerable Workers Act, provide an ample – even if unproven – deterrence effect (ACCI, 2019d; Ai Group, 2019e; NSW Business Chamber, 2019d). Ai Group also pointed to the substantial increase in the number of underpayments self-reported to the FWO and remedied by employers as evidence that ‘compliance and enforcement activities are creating the desired effect’ (Ai Group, 2019e: 3).

In its submission, ACCI said it could ‘not believe there are any circumstances in which the underpayment of wages should attract criminal penalties, incarceration or the imposition of a criminal record’ (ACCI, 2019d: 26), yet also conceded on the use of existing criminal law (pertaining to theft) to prosecute employers where wage underpayment forms a systematic pattern of conduct, dishonesty and clear intent (ACCI, 2019d: ii). For ACCI, the solutions lay rather in educational campaigns, tackling complexity in wage laws, increased numbers of inspectors, and empowering consumers to boycott miscreants through voluntary accreditation schemes (ACCI, 2019d: i). Ai Group argues against criminal penalties on the basis that they would inhibit entrepreneurship and business growth, discourage employer self-disclosures of mistakes, and disadvantage workers by delaying remedies for underpayment pending completion of criminal proceedings (Ai Group, 2019e).

The wage scandal plaguing Australian IR has also reminded employers of the value their representative organisations can provide. Many long-standing and new members are contacting their associations’ (free) helplines for advice about applicable wage rates. Associations have also been busy providing, on a fee-for-service basis, compliance audits of employers’ remuneration systems, particularly for large and often sophisticated employers that might have many classifications and awards (Smith, 2019; Ward, 2019).

Addressing the decline in enterprise bargaining

The EB reform agenda

While research mounts that private sector collective bargaining in Australia is declining (Bray et al., 2019; Pennington, 2019), associations largely blame the trend on the ‘poor performance’ of the FW Act. ACCI, for instance, claims it is now ‘too hard for employers and employees to negotiate arrangements that suit them’ (ACCI, 2019b: 7), as, ‘in too many cases, it is too time-consuming, expensive and ultimately unsuccessful to attempt bargaining’.

During 2019, various other industry and peak associations, including the Australian Retailers’ Association (ARA), Ai Group and AMMA, shared ACCI’s views on many of the chief ‘flaws’ of the IR system. They criticised the complexity and slowness of FWC approval processes for agreements, exacerbated by its application of the better-off overall test (BOOT), and the ‘genuine agreement’ provisions for agreement certification. They also complained about the large number of matters regulated in awards, a lack of flexibility in the application of safety net standards, the overlywide ‘permitted content’ of enterprise agreements, and the requirement to provide the one-page Fair Work Information Statement to employees (ACCI, 2019b; Ai Group, 2019c; AMMA, 2019b; ARA, 2019). Like the Skene¹ decision in 2018, the Federal Court’s 2019 Mondelez² decision that personal/carers’ leave should be calculated on the real daily hours of work associated with rosters, rather than the national standard hours of work, heightened concern among employers and their associations about the legal system’s capacity to surprise employers with unanticipated interpretations of the law. Mondelez, supported by Ai Group, had commenced proceedings in the Federal Court seeking to clarify the leave entitlements of two employees. Following the decision, the federal government and the company involved in the Mondelez decision have sought leave to appeal it in the High Court. Nonetheless, since August 2019, it remains the law (Sandeman and O’Brien, 2019).

Employers’ dissatisfaction with how the FWC applies the BOOT dates back to its 2016 Coles decision³ that it had to be satisfied, in each case, that each award-covered employee or prospective employee would be better off overall if the agreement applied rather than the relevant modern award. According to some association officials, dissatisfaction with this approach to the BOOT, as with the FWC’s approach to establishing whether there has been ‘genuine’ employee agreement to the terms of agreement, have cemented a widespread view, among employers, that pursuing enterprise agreements through the FWC is a complicated ‘minefield’ (Smith, 2019; Ward, 2019), to be avoided unless as a last resort to gain crucial terms of agreement.

Eight years ago, Thornthwaite and Sheldon (2012: 268–269) already noted there was ‘a substantial weakening in the apparent consensus among employers in favour of structuring Australian industrial relations through an EB system … [with] many employers shifting back to award-only arrangements’. Now, some associations more openly express a desire to return to the old WorkChoices system. AMMA, for instance, proposes replacing the BOOT with the Howard-era ‘no disadvantage test’, increasing the list of prohibited content in enterprise agreements to include all content proscribed under the Workplace Relations Act 1996, and abolition of the award system altogether (AMMA, 2019b). ACCI also urges greater opportunities for unilateral (sic) ‘agreement’, with expanded options for non-union bargaining and individual agreements (ACCI, 2019b).

Life of project agreements

AMMA is also a key association supporting introduction of ‘project life agreements’ that the Productivity Commission’s 2015 review of Australia’s IR system recommended. In AMMA’s August 2019 ‘Pathway to Productivity’ proposals to the newly re-elected federal government, AMMA raises this again as a major objective of the resources and energy industry. Its principal stated aim is to shield major projects from the possibility of protected industrial action. Ai Group, ACCI and AMMA strongly supported Minister Porter’s September 2019 discussion paper on ‘project life greenfield agreements’ (ACCI, 2019d; Ai Group and Australian Constructors’ Association (ACA), 2019; AMMA, 2019d).

Currently, this largely concerns the construction phase of projects; typically 3 to 7 years’ duration. The subsequent production phase can last decades. Currently, under the FW Act, enterprise agreements have a maximum 4-year term which, employers argue, allows for renegotiations during the project, as well as associated risks of disruptive protected industrial action delays and escalations in project completion costs. AMMA, for example, argues that, for infrastructure, resources and energy sector projects, project life agreements, by enabling employers to lock in labour costs, provide cost and time frame certainties until project completion (AMMA, 2019b, 2019d).

Associations also argue that any new provisions for ‘life project’ agreements should apply to both greenfield and non-greenfield sites (AMMA, 2019; Ai Group and ACA, 2019). While AMMA has suggested that project life agreements should allow parties to negotiate annual wage increases during the life of an agreement, workers would have no right to take industrial action in support of claims. AMMA concedes this could lead to substantial real wage reductions on large resources and energy sector projects, but argues that, as these workers typically earn vastly above award wages, their real wages could drop substantially before employers would be guilty of breaching award wage conditions (AMMA, 2019d). Thus, a long-term reduction in these sectors’ relative wage levels is a foreseeable goal. However, perhaps reflecting different IR objectives, the Minerals’ Council of Australia has recommended that parties to a greenfields agreement be required to agree to a schedule of wage increases, to ‘avoid both cost blowouts for the proponent and negative real wages growth for workers’ (Minerals Council of Australia, 2019).

Another core employer concern involves the requirement for union involvement in negotiations for greenfields agreements. The FW Act currently provides for a six-month notified negotiation period with relevant unions, before the FWC can approve a greenfields agreement without union agreement. During this time, head contractors have been awarded the work, but cannot commence the construction phase. Associations claim this tight time frame gives unions ‘substantial leverage to demand excessive terms and conditions, and to exert significant control over employment relations’, raising costs and reducing the profitability of projects (Ai Group and ACA, 2019: 5). In their submissions, they seek to reduce this time frame, to enable employers to form either non-union greenfields agreements or agreements with a union of their choice, after only 3 months' mandated negotiation with ‘relevant’ unions (Ai Group and ACA, 2019; ACCI, 2019e; AMMA, 2019d). These changes would further restrict union involvement in sectors such as construction, mining and energy, while also facilitating a shift to more docile unions or non-union ‘bargaining’.

Other regulatory issues of concern

Associations continued to campaign strongly to remove new uncertainties in employer liability for casual employees’ redundancy and back-paid entitlements in the shadow the FWC’s 2018 Skene decision (Landau and Allen, 2019; Thornthwaite and Sheldon, 2019). As well, associations are concerned by the rising tide of class actions by legal firms, often backed by overseas litigation funders, to claw back claims for ‘unpaid’ entitlements – and on issues like definitions of employee versus independent contractors (Smith, 2019).

Despite a consensus favouring legislative change, associations’ positions varied on the solution. Ai Group and ARA sought a formal definition of ‘casual work’ in the FW Act, to reflect the common definition in awards, that is, ‘an employee engaged and paid as such’ (Ai Group, 2019; ARA, 2019). Similarly, AMMA (2019) argued that, while the Fair Work Amendment (Casual Loading Offset) Regulation, 2018 partially addressed employer concerns, it preferred a more permanent legislative solution. Taking a different path, the NSWBC launched its application to vary the community services industry award by inserting an intermediate ‘permaflexi’ category of worker between permanent and casual (McCauley, 2019a; Thornthwaite and Sheldon, 2019). NSWBC subsequently withdrew its application.

However, with growing litigation occurring over the legal status of new labour-market groups, including gig economy workers, associations paid substantial attention to settling legal uncertainty concerning the independent contractor/employee distinction. Here again, a common theme was to reduce reliance on common law principles through statutory intervention (Ai Group, 2019; ARA, 2019).

Another employer theme concerned the FW Act’s general protections provisions, particularly as they operated in relation to unfair dismissal claims. Both ACCI (2019b) and AMMA (2019b) lobbied for stronger regulation to prevent the prevalence of ‘vexatious’ and ‘speculative’ applications by workers, which the associations argued resulted from the high chance of monetary settlement. On behalf of small businesses, ACCI also argued for change to the FW Act small business provisions, so that unfair dismissal claims could not succeed on grounds of procedural error alone. Meanwhile, Employsure and the Small Business Association of Australia formed a partnership to advocate for pro-small business reforms to the FW Act’s unfair dismissal provisions. This focused on two elements, arguing that they enabled and encouraged unmeritorious claims: the ‘small’ filing fee; and the requirement to commence FWC dispute resolution processes with conciliation (InsideSmallBusiness, 2019).

There was also significant activity on other regulatory fronts. For example, both Ai Group and ACCI made submissions to the Sex Discrimination Commissioner’s (SDC’s) National Inquiry into Sexual Harassment. They argued for more research and education on sexual harassment in the community, and for toughening FW Act unfair dismissal provisions when applied to sexual harassers. Indeed, Ai Group argued for these changes to ‘ensure that workplaces and victims of sexual harassment are better protected’, acknowledging that ‘current unfair dismissal provisions unduly favour procedural technicalities over the welfare of victims and safe workplaces’ (Ai Group, 2019b: 2). Significantly, these calls for stronger unfair dismissal law to ensure that perpetrators of sexual harassment cannot successfully challenge employer termination decisions match employers’ more general calls, discussed above, that the unfair dismissal regime overly restricts their right to fire.

According to ACCI, regulation against sexual harassment also required provisions to facilitate effective small business responses to harassment incidents. For AMMA, Ai Group and ACCI, an overall streamlining and simplification of the legal systems pertaining to sexual harassment was also necessary, including provision of a ‘one stop shop’ (ACCI, 2019a; Ai Group, 2019b; AMMA, 2019a). However, both Ai Group and ACCI also argued against proposals from some academics and legal professionals to align sexual harassment law with the workplace health and safety regulatory model. This would explicitly include sexual harassment as a workplace risk that employers and the regulator have an obligation, or duty of care, to prevent and manage. Their stance reflected their traditional, overall position arguing against imposing further regulation on employers as unnecessarily complicating and confusing for employers for little benefit (ACCI, 2019a: 57).

Employers, associations and social licence to operate

Social licence of business issues maintained high prominence during 2019. There has been little interpenetration between climate change policy and mainstream IR (Markey and McIvor, 2019) so companies and associations face few direct IR-related pressures on their notably diverse policy decisions. For example, Ai Group’s Willox, although representing many energy-intensive companies, (again) argued for bipartisan acceptance of the need for market mechanisms to push for ambitious emissions reductions (Crowe, 2019), while the mining industry associations embrace continuing laissez faire positions. Many other associations largely ignore the issue, by embedding it in concerns regarding energy costs facing business.

Yet shareholder activists, including major Australian and overseas pension and superannuation funds, continue to pressure both employers and associations to change their policies; this extended to urging large employers to leave those associations refusing to change. Targeted companies included BHP, Rio Tinto and Origin; targeted associations included the Minerals Council of Australia (MCA), Coal21 and the BCA (Toscano and Yeates, 2019). The BCA has faced particular criticism for rhetorically accepting the need to address climate change while, on policy, preferring that Australia does little or nothing to change. Here, the BCA perhaps reflects a noisy climate change-denying sector of its membership. Other members take an opposing stance. For example, Telstra, criticised the BCA’s do-little approach, arguing ‘We believe industry associations should refrain from advocacy in areas where no broad industry consensus exists – in these areas individual members are best placed to advocate their views independently’ (cited in Kruger, 2019). Westpac also publicly differed from the BCA over climate change policies, but preferred to engage privately with association leaders rather than exit the association (Yeates and Kruger, 2019).

In recent years, BHP has publicly and unequivocally accepted the science on anthropogenic climate change, and pushed its representative associations to also change direction and governments to act. So too has Qantas, another intensive emitter. While BHP had already exited at least one association on this issue, when contested by institutional shareholders and proxy advisory groups in relation to its BCA membership, BHP Chair, Ken McKenzie, argued that membership provided the company ‘with the ability to lead, influence and strengthen industry standards on issues such as safety, environmental protection and indigenous rights’ (Toscano, 2019b). BHP has also taken action to embed emission reductions throughout its operations, including through investment in innovation, and to client product users. Rio Tinto has sold out of thermal coal entirely and BHP has signalled it will too (Gray, 2019; Toscano, 2019a).

Social licence pressures on the major banks widened beyond the severe reputational and financial damage flowing from and after the 2018 Hayne Royal Commission into the finance industry (Davis, 2019). And yet, banking executive salaries were again rising amid their plans to slash thousands of jobs (Danckert, 2019). They now also face pressures over their funding, directly or indirectly, of companies involved – mostly overseas – in environmental degradation, child labour violations, and exploitation of indigenous peoples (Estcourt, 2019). Banking boards and executives are also facing shareholder activism encouraging them to review their memberships of certain targeted associations over climate change.

In late 2019, another royal commission examined alarming patterns of resident ill-treatment in the for-profit aged care sector (Ireland, 2019). This has both social licence and more traditional IR implications. For-profit aged-care is a highly profitable sector receiving substantial government subsidies. Given population aging combined with regulatory requirements, it also has a rapidly growing workforce. The corporations at its head mostly appear to prefer cost-minimisation strategies reliant on widespread understaffing – in numerical as well as qualitative terms – producing negative effects for residents and workers alike. Further, their business models seem to rely upon casualised, low-paid (and increasingly migrant) workforces (Wells et al., 2019). As in the finance industry, these corporations and those who head them are much less likely to face punitive Coalition government action than Australia’s unions.

Deep, extensive corporate wrongdoing is neither new nor particularly Australian, as the global financial crisis showed. Nevertheless, it appears to be growing here, underpinned by structural and attitudinal aspects requiring close consideration (Davis, 2019; Schnatterly et al., 2018).

Skills and vocational education and training

Almost all IR and related parties agree that Australia has a skills crisis. This has led (partially) to a flurry of inquiries on skills gaps affecting regional areas (ACCI, 2019c; Australian Local Government Association, 2018; NSW Business Chamber, 2019b) and is likely to affect labour markets generally as the nature of work changes (Ai Group, 2019a). The NSW Business Chamber (2019a) released a major study pointing to both the depth and breadth of the problem – high levels of youth unemployment coexisting in NSW with employers being able to hire skilled employees. The association offered practical responses – including doubling school-based apprenticeships and greater utilisation of technical and further education (TAFE) facilities to improve training outcomes – which the study’s findings supported through greater employer willingness to hire and train.

NSWBC followed this up with a submission (NSW Business Chamber, 2019c) to a NSW parliamentary inquiry on outcome-based funding for NSW schools. A brief submission, it is also more holistic in its approach to the purpose and direction of schooling than has sometimes been the case from associations. As has been usual for associations over the last 20 years (Sheldon and Thornthwaite, 2005), it strongly argued for high school funding to ensure better resourcing for VET programmes in high schools, for all students to develop core transferable skills, and for there to be better-structured liaison between schools and industry.

In recent decades, under slogans like ‘choice’ and ‘contestability’, federal and state governments of both major political parties have fostered privatisation of the VET sector. First, they have allowed or promoted the financial, organisational and programmatic withering of Australia’s previously imposing state-based, public VET systems. Federal governments have also funnelled enormous public funding to private, profit-seeking (and sometimes fraudulent) VET providers. Associations have long supported this broad policy shift and have themselves taken productive roles within it, for example through subsidiary units acting as group training organisations (National Centre for Vocational Education Research (NCVER), 2019b; Sheldon and Thornthwaite, 2005). Yet overall, these funding and activity policy directions have, in many ways, been a disastrous waste of public funds and of opportunities for trainees, employers and the Australian labour market (Gekara and Snell, 2018; Tomazin, 2019).

To redress VET-sector malaise and research showing declines in both VET enrolments and completions (NCVER, 2019a), associations like ACCI and Ai Group have called for the federal government to take over the VET sector from state-based control and for greater public funding to flow (Hunter, 2019). Yet NCVER (2019c) statistics on recent employer use of and attitudes to VET seem to paint very mixed pictures: declining patterns of use but depending on type of training accessed (or not), employer motivations for that training type, firm characteristics (e.g. size) and cross-state experiences. If the downturn is related to employer use and attitudes, then factors other than level of government funding may be at work. Further, while a federal takeover would enable streamlining, it ignores that federal governments have been responsible for the worst errors in VET funding policy and oversight in recent decades.

Conclusion

For some 30 years, large employers and their associations have driven the remaking of Australian IR in ways that reduce most employees’ labour market power and hence their job and income security, and have deprived many workers of the benefits of being employees. One target has been unionism, another is the tribunal system and a third is individual legal protections of employees. However, de-collectivisation has been the core desire; indeed, governments never appear to provide employers with enough IR regulatory protection and/or laissez-faire succour. Yet associations’ successes create unintended if predictable contradictions. Remove union presence and protections and employers increasingly abuse their greater market power, including through forms of deliberate wages underpayment. When this becomes an important public policy problem, associations – faithful to their core policy drive – can only call for greater government intervention to provide employees with legal protections. However, if public perceptions demand it, even a neo-liberal, anti-union government will regulate employer behaviour beyond what associations prefer. There can be no revival of union protections or discipline on employers. Furthermore, to resuscitate EB, associations’ only solution appears to be weakening unions’ bargaining power, and for some associations, non-bargained ‘agreements’ (sic) remain the nirvana. Within the larger sphere, other employer choices – unconstrained by effective regulation – have deeply damaged the reputation of many businesses and the overall sense of business’ social licence to operate.

Footnotes

Declaration of conflicting interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship and/or publication of this article.

Ethical approval

This article forms part of a wider project carried out under University of New South Wales Ethics Approval No. HC 16867.

Funding

The author(s) received no financial support for the research, authorship and/or publication of this article.

ORCID iDs

Peter Sheldon

Louise Thornthwaite

Notes

Biographical notes

Peter Sheldon is a Professor in the School of Management and Director of the Industrial Relations Research Centre, UNSW Business School, Sydney. He has published widely on employer strategies and employer associations, focusing on Australia, Italy, Sweden, China, South Korea and Singapore. He also publishes on comparative industrial relations, industrial relations history, negotiation teaching and, most recently, on Just Transitions for coal-power workers and communities.

Louise Thornthwaite is a Professor in the Department of Management, and Deputy Director, Centre for Workforce Futures, Macquarie University, Sydney. Louise’s research spans employer association organisation and strategy, public policy analysis, social media and privacy at work, and the regulation of work health and safety in road transport and logistics supply chains.

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