Industrial legislation in Australia in 2019

Commonwealth Industrial Relations Review

Acting to dispel the perception of inaction in the aftermath of the election, IR Minister, Porter, proposed legislative intervention in respect to casual employment, unfair dismissal laws, greenfields’ agreements, wage theft and labour hire (Porter, 2019). Among this suite of issues, wage theft was given foremost attention in the government’s policy platform. The Migrant Workers’ Taskforce Report, released in March 2019 (Australian Government, 2019a) recommended enacting criminal sanctions against employers that pay below lawful wages (‘wage theft’ laws). In September 2019, the Minister released a discussion paper on the issue (Australian Government, 2019b) and convened a second inquiry. Key proposals included penalties for wage theft commensurate with those outlined in the Coalition’s ‘Corrupting Benefits’ legislation (enacted against union officials and others in the wake of the TURC); wage theft penalties that match general theft offences (ranging from 5 to 10 years' imprisonment); higher penalties for sham contracting; and penalties for lead firms found to have wage theft within their supply chains (Australian Government, 2019b: 6–10). The Australian Industry Group has opposed the laws, comparing them to the criminalisation of workers for dishonestly taking sick leave (Ai Group, 2018). Meanwhile, ACTU leader, Sally McManus, elicited a luke-warm response, suggesting that, more than criminalisation of their employers for underpaying them, workers require fast and ready access to repayment of stolen wages, as well as for the state to address underlying market drivers of wage theft (McManus, 2019). In the midst of this discussion, supermarket giant Woolworths has revealed underpayments of staff amounting to over $300m, extending back to 2010.

A further priority on the government’s industrial agenda was to extend the statutory term of greenfields’ enterprise agreements from 4 to 5 years. Greenfields’ agreements operate between a union and an employer starting a new business that does not yet have employees. Like all agreements, greenfields’ agreements have the effect of stifling industrial action throughout the duration of their term (FW Act, s413(2)) and suspending the relevant award, enabling employers to negotiate out of particular award provisions (subject to the ‘better off overall test’ (FW Act, s193; FW Act, Part 2-2). There are currently a range of large infrastructure projects set to exceed the current 4-yearly term and the Coalition Government has raised concerns that looming industrial action over wage increases might threaten financing and productivity of these projects (Australian Government, 2019c: 3–4). Similar concerns have been raised by the Australian Productivity Commission (2015: 36). The Coalition also pointed to a declining trend in the making of greenfields’ agreements, showing that such arrangements have declined by around 5% since 2014 and now comprise only 3% of all enterprise agreements (Australian Government, 2019c: 3). These changes were originally proposed by the Australian Chamber of Commerce and Industry (ACCI) in the lead-up to the election (ACCI, 2019) and represent an extension of the bargaining power of employers, vis-a-vis workers and unions, while prolonging the ability of employers to suppress wages.

Greenfields’ agreements have been subject to criticism by the International Labour Organisation (ILO) because they preclude collective bargaining (which is reliant on industrial action) during their creation and term of operation (ILO, 2005: 37–38). If passed, these amendments will reinforce a pattern of legislative reform to greenfields’ agreements since 2015 that have favoured employers by effectively capping the negotiation period for greenfields’ agreements at 6 months (Fair Work Amendment Act 2015; Fair Work (FW) Act 2009 (Cth), s178B). As Stewart et al. (2016) commented on the 2015 reforms, the provisions ‘mark a return to the Work Choices concept of a unilateral “agreement” for greenfields sites’, with the added qualification that they negotiate with a union first (p. 364).

The Coalition has also flagged changes to unfair dismissal laws that seek to punish sacked workers who make unfair dismissal claims but fail to ‘genuinely pursue their matter, without formally withdrawing the claim’ (WE, 2019a). The laws are motivated by administrative frustration voiced by Fair Work Deputy President Alan Colman, who has complained that such claims are ‘not uncommon’ within the tribunal (WE, 2019a). The proposal was roundly condemned by the ACTU as ‘tip[ping] the balance even further towards employers … making jobs less secure’, in turn ‘making it even harder to end the wage crisis’ (ACTU, 2019b).

Sham contracting also became a target of government activity with former IR Minister Kelly O’Dwyer announcing ‘tougher penalties’ prior to the election (WE, 2019b). Such penalties may come to fruition in the form of the wage theft measures, discussed above. In the interim, the FWO was allocated $20m over 4 years to establish a sham contracting unit, investigate underpayment of vulnerable workers and roll-out a National Labour Hire Registration Scheme (WE, 2019b, 2019c).

Bucking the trend towards criminalisation of labour law, entrenched over the past 5 years, the government firmly ruled out implementing industrial manslaughter laws of the kind recently enacted in Queensland and the ACT (and recently contemplated by the South Australian Parliament; WE, 2019d). Nevertheless, the government pressed ahead with its penal agenda against unions in the form of the Ensuring Integrity and Proper Use of Worker Benefits Bills, discussed in detail below.

Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill 2019; Fair Work (Registered Organisations) Amendment (Ensuring Integrity No. 2) Bill 2019; Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2017

The central plank in the Coalition’s industrial agenda for 2019 was the Fair Work (Registered Organisations) Amendment (Ensuring Integrity) Bill. Since being introduced to Parliament by the Turnbull Government in 2017, this beleaguered bill has undergone various iterations and two failed attempts to pass the Senate. The bill suffered yet another humiliating defeat for the government in late 2019 when it was voted down by crossbench Senators Jacquie Lambie and Pauline Hanson together with Labor and the Greens. In the last Parliamentary sitting week for the year, IR Minister Porter reintroduced and passed the bill (as the ‘Ensuring Integrity No. 2’ Bill) through the lower house with minor amendments following consultation with the crossbench. In 2020, the Senate will debate the bill yet again.

The bill seeks to regulate trade union governance through criminal processes and sanctions, implementing Recommendations 36--38 of the Royal Commission into Trade Union Governance and Corruption (TURC). The bill was discussed by the authors in the past two annual issues of this journal (Rawling and Schofield-Georgeson, 2018, 2019). While certain sections of the bill have been renumbered in the latest iteration, its content remains mostly unchanged (subject to amendments discussed below). The mainstay of this bill subjects unions to deregistration and threatens their officials with disqualification. Another part of the bill regulates union amalgamations by democratic ballot.

The Act threatens the survival of some unions and interferes with the freedom of association enshrined within international law (Australian Institute of Employment Rights, 2019). The proposed tighter regulation of union amalgamation would effectively allow the Fair Work Commission to override the result of a democratic ballot overseen by the Australian Electoral Commission. Such a feature is a hallmark of countries experiencing democratic ‘trauma’ ( Peetz, 2019: 16). Indeed, this power over amalgamations, as well as the offences and emphasis on deregistration contained within the bill, are a curious addition to an industrial code at a time of relative industrial peace. The Australian experience of conciliation and arbitration throughout the 20th century suggests that such offences – deregistration, in particular – have traditionally been reserved for periods of intense industrial turmoil and trade union militancy (Isaac and Macintyre, 2004: 38, 43, 344). The addition of these offences and the scope of this regulation have drawn the ire of critics (well beyond the labour movement) as disparate as Senator Bob Katter (Australian Party) and the Queensland Law Society (QLS). The QLS, in particular, criticised strict liability provisions as running ‘contrary’ to the ‘presumption of innocence’ and observed that ‘the scope of behaviour captured by the grounds for disqualification under the bill are wider than that recommended by the Royal Commission report’ (WE, 2019e).

The Fair Work Laws Amendment (Proper Use of Worker Benefits) Bill 2017 has accompanied the passage of the Ensuring Integrity Bill since 2017. Essentially, it requires employees to choose their own superannuation fund, rather than allowing unions to nominate a fund in an agreement or award (proposed s151A FW Act) and has also been discussed by the authors in past issues.

Unions and employers alike criticised the bill for reducing available funding for training and workers' compensation programmes (see Submission to Senate Inquiry from Hutchinson Builders, Electrical Trade Union, Community and Public Sector Union, Incolink). Indeed, since 2006, the Electrical Trade Union of Victoria claims to have distributed $343m from such funds to ‘unemployed electrical workers’ (WE, 2019f).

In mid-2019, both ‘Ensuring Integrity’ and ‘Proper Use of Worker Benefits’ Bills were examined by the Senate Education and Employment Committee in separate inquiries (Australian Government, 2019d, 2019e, 2019f, 2019g). Despite both inquiries receiving extensive submissions predominantly opposing the bills, each recommended passing the bills unamended, primarily on the basis of the Royal Commission findings. The Australian Labor Party (ALP) and the Greens issued separate dissenting findings, with Centre Alliance Senator Rex Patrick recommending that the Ensuring Integrity Bill be passed subject to amendment.

Following the defeat of the Ensuring Integrity Bill in late 2019, some of these suggested amendments, along with those of crossbenchers Lambie and Hanson, were adopted into the bill. They provide for a review of the Act in 2 years from the date of commencement (cl 4(1)). They narrow the grounds for disqualification of union officials, requiring that ‘designated findings’ (including an administrative or ‘record-keeping’ error) must have occurred within the last 10 years and be punishable by at least 180 penalty units ($37,800; cl 223(1)). In permitting parties (including third parties) to apply for disqualification of a union or official, the amendments provide complainants with an option to refer their grievance to the Commissioner of the Registered Organisations Commission (ROC), rather than litigating in person (cl 223 A). In making orders to cancel the registration of industrial organisations, a court would be required to consider the ‘gravity’ of the misconduct (cl 28 L(1A)) – arguably, an exercise that courts intuitively undertake anyway. The amendments also affect the public interest test for union amalgamations: the test would only apply if there had been at least 20 compliance breaches by one or more amalgamating unions within the past 10 years (cl 72A). This is a low threshold. Finally, the amendments impose transparency requirements on the ROC, requiring it to publish decisions and provide reasons (cl 72AA). The amendments only fractionally soften the impact of the substantive legislation.

Religious Discrimination Bill

A first Exposure Draft of this bill was released by the federal Attorney-General in late August 2019, and a second Exposure Draft was released in December 2019. At the time of writing, a version of the bill had not been tabled in Federal Parliament. But in late November 2019, the government announced that it would table a version of the bill in Parliament in 2020.

The release of the first exposure draft followed a high-profile dispute (now settled) between star Rugby Union player Israel Folau and Rugby Australia, after Rugby Australia terminated Folau’s employment allegedly because of Folau’s religious belief and activities. The first Exposure Draft was also preceded by a major inquiry and a report by the Expert Panel on Religious Freedom (Australian Government, 2018).

The first Exposure Draft would have established a National Freedom of Religion Commissioner (Part 6) for the first time and made it unlawful to discriminate ‘on the ground of religious belief or activity’ in key areas of public life including in employment (cl 4; Australian Government, 2019h: 4). Almost all of the Australian states and territories have anti-discrimination legislation protecting against religious discrimination. However, New South Wales (NSW) does not, and in South Australia protection for religious belief or activity is limited to religious dress or appearance (Stewart, 2018: 318–319). There are also relevant protections under s116 of the Australian Constitution. However, there is not any separate federal Act solely dedicated to protecting against religious discrimination (unlike the separate federal Acts protecting against discrimination based on sex, race, age and disability). Moreover, the proposed federal legislation would go further than existing state and territory protections: the bill exempts particular religious statements from discrimination law (MacDermott, 2020; see discussion below).

If enacted, the first exposure draft of the bill would have prohibited both direct discrimination – treating a person less favourably than another person based on religion – and indirect discrimination – where an apparently neutral condition, requirement or practice has the effect of disadvantaging a person due to their religious belief or activity (cl 7, cl 8; Karp, 2019). However, a person would not indirectly discriminate against another person if the condition, requirement or practice were reasonable in all of the relevant circumstances (cl 8; Australian Government, 2019h: 3).

For the purpose of the indirect discrimination test, the initial exposure draft bill would have imposed further requirements on large businesses with an annual turnover of at least $50m. These additional requirements would have regulated internal conduct rules of such businesses regarding ‘standards of dress, appearance or behaviour’ of employees (s5, cl 8; Australian Government, 2019h: 3). If such a conduct rule would have restricted or prevented an employee (or prospective employee) from making a statement of belief in their private capacity, then that rule would not be reasonable (and therefore indirectly discriminatory), unless the business could have proved that employee compliance with the rule was ‘necessary to avoid unjustifiable hardship to the employer’ (cl 8; Australian Government, 2019h: 3). The additional requirement in these provisions would have only applied to employer conduct rules that regulate religious expression outside of work hours, rather than those regulating religious expression at work (Australian Government, 2019i: 17).

Clause 10 of the first exposure draft of the bill provided that a religious body does not discriminate against a person by engaging, in good faith, in conduct that may reasonably be regarded as in accordance with religious beliefs. Clause 10 did not provide a basis for those religious bodies to discriminate against persons on other grounds such as age, sex, disability or race (Australian Government, 2019i: 21).

One of the most controversial provisions in the first exposure draft bill was clause 41, which provided that a statement of belief made in good faith did not constitute discrimination for the purposes of Commonwealth, state and territory anti-discrimination laws (cl 41; Australian Government, 2019i: 49). In addition, a statement of belief would not have constituted adverse action under the FW Act 2009 (Cth; Australian Government, 2019i: 50).

Clause 41 of the first exposure draft bill explicitly provided that the protected types of statements of belief do not contravene subsection 17(1) of the Anti-Discrimination Act 2009 (Tasmania). This Tasmanian subsection prohibits conduct that offends another person on the basis of gender, race, age, sexual orientation, lawful sexual activity, gender identity, intersex variations of sex characteristics, disability, marital or relationship status, breastfeeding, parental status or family responsibilities. Clause 41 targeted this unique Tasmanian provision, not found in other states or territories, ‘given its broad scope and demonstrated ability to affect freedom of religious expression’ (Australian Government, 2019e: 50).

A key argument put (Australian Government, 2019i: 2) in favour of the proposed religious freedom laws is that current protections against religious discrimination under Commonwealth, state and territory laws are ‘piecemeal’, ‘inconsistent’ and ‘have limited application’. However, of the around 6000 submissions received in the inquiry into the first Exposure draft of the bill, most were critical (Macmillan, 2019). Religious leaders' including those from Mr Morrison’s Pentacostal movement, wanted greater freedoms granted to Australians of faith than the first Exposure Draft offered. A number of commentators (Elphick and Taylor, 2019; Martin and Karp, 2019; WE, 2019g) and the ACTU (WE, 2019h) argued that the first exposure draft of the bill went too far in elevating religious rights over all other anti-discrimination rights that apply in the workplace, including those rights which protect LGBTIQ+ people. Labor opposition frontbencher Tanya Plibersek, whilst supportive of both LGBTIQ+ people and religious freedom, said that moves to ‘override’ Tasmanian state laws ‘would be difficult for the opposition to support’ (Martin, 2019). Meanwhile, the Australian Industry Group said that the first exposure draft version of the bill ‘has the potential to increase conflict … in Australian workplaces’ as it may allow the advancement ‘of extremist opinions … in the name of … an undefined religious belief’ (WE, 2019h).

In relation to the Second Exposure Draft of the bill, there have been a number of significant changes although the overall structure, operation and objectives of the first exposure draft have been maintained. The Second Exposure Draft maintains the establishment of a Freedom of Religion commissioner (Part 6) and the separate sections regarding direct (cl 7) and indirect (cl 8) discrimination. The Second Exposure Draft also keeps the additional requirements on large businesses with an annual turnover of at least $50m. In the first exposure draft these large employers could not restrict employee’s statements of belief ‘other than at a time when the employee [was] performing work on behalf of the employer’ (cl 8). This clause was amended in the Second Exposure Draft to use the alternate phrase ‘other than in the course of the employee’s employment’ (cl 8) in order to ensure that the obligation to allow employees’ religious expression in their own time does not impinge on employer obligations under work health and safety and workers' compensation laws about conduct outside work hours (such as on meal breaks and at work social functions; Australian Government, 2019j).

In an additional provision, there is a special protection provided for people wanting to express their religious beliefs in relation to bodies that can confer and revoke an authorisation or qualification that is needed for the practice of a profession, trade or occupation (cl 5). Those qualifying bodies will not be able to impose rules that restrict people from making statements of belief in their personal capacity unless they are an essential requirement of the profession, trade or occupation (cl 8; Australian Government, 2019j).

In another expansion of religious freedom protections, associates of religious individuals are now also protected by the bill (cl 9). For example, if the Second Exposure Draft was enacted, it would be unlawful for an employer to discriminate against an employee on the grounds of religious belief or activity of the employee’s spouse (Note to cl 9; cl 14).

Under clause 10 of the first exposure draft, religious bodies did not discriminate against persons if it was in accordance with religious faith. This clause (now cl 11) has been expanded to further clarify that it is not discriminatory to give preference to persons of the same religion as the religious body (cl 11). The legislation here continues to also clarify that these provisions do not allow religious bodies to discriminate on the basis of sex and other discriminatory grounds.

The controversial clause 41 of the first exposure draft has been maintained in clause 42 of the second exposure draft.

It appears that the majority of the amendments made to the bill in the second exposure draft are designed to appease objections raised by persons of faith and religious lobby groups. At the time of writing, the government had invited stakeholder submissions on the second exposure draft.

Labour hire licensing

The Morrison Coalition Government has stated that it will establish a national labour hire registration scheme (WE, 2019c). Industrial Relations Minister, Porter, has written to his state and territory counterparts to begin consultation over the scheme (WE, 2019i). As reported in 2018 (Rawling and Schofield-Georgeson), state governments in Queensland and South Australia enacted labour hire registration legislative schemes in 2017, with Victoria establishing a scheme in 2018 (Rawling and Schofield-Georgeson, 2019). South Australia’s Marshall Liberal Government has introduced into the South Australian Parliament the Labour Hire Licensing Repeal Bill 2018 (SA) to abolish the South Australian scheme (established by the prior Labor Government). At the time of writing, the repeal bill was under consideration in the South Australian Upper House.

The state schemes are not sector-specific schemes but cover all labour-hire arrangements generally. In a move to narrow the scope of labour-hire registration, federal IR Minister Christian Porter has been reported as saying that a national scheme would only target four high-risk sectors – horticulture, meat processing, cleaning and security (WE, 2019i). Such media comments have led to speculation that the Morrison Government may use federal legislation to oust more robust, broader regimes in the states.

Treasury Laws Amendment (Recovering Unpaid Superannuation) Bill 2019

If enacted, this bill would provide employers with an amnesty against payment of a superannuation guarantee (SG) tax in relation to unpaid superannuation (amending the Income Tax Assessment Act 1997, s60). The amnesty operates by permitting employers to claim a tax deduction for any SG tax paid during the amnesty period (s60). This measure was designed to encourage employers to disclose non-compliance with compulsory superannuation by incentivising compliance (Australian Government, 2019k: 6–7). It was criticised by the ACTU as being able to recover only a small segment ($99m) of the estimated billions of dollars in superannuation unpaid by employers over more than a decade (ACTU, 2019c) – a problem that the ACTU claims would be easily remedied by permitting union inspection of pay records in workplaces (ACTU, 2019c).

Treasury Laws Amendment (Combatting Illegal Phoenixing) Bill 2019

The draft version of this bill was mentioned in last year’s JIR update edition. The bill is currently before the House of Representatives pending significant amendment by the ALP. If passed, it would introduce new offences to the Corporations Act 2001 (Cth) to prohibit disposing of company property in ways that defraud creditors, such as workers, and that defeat tax debts. The bill criminalises company directors who transfer company assets for less than market value, preventing distribution of the assets to creditors (amending the Corporations Act, s9 and s588FDB(i)). Punishments include a fine of 4500 penalty units as well as 10 years' imprisonment for an individual, or 45,000 penalty units or 10% of the annual turnover of the company for a body corporate (new s1317E(3)).

Human Rights Act 2019

This Act implements a range of civil, social and economic rights in the State of Queensland (ss15-37). A number of civil rights enacted by this new legislation concern industrial relations, employment and discrimination law including: recognition and equality before the law (anti-discrimination) (s15); freedom from forced work and compulsory labour (s18); freedom of thought, conscience, religion and belief (s20); freedom of expression (s21); peaceful assembly and freedom of association (s22). The freedom of association expressly includes ‘the right to form and join trade unions’ and to ‘choose between existing organisations and forming new ones’ (Explanatory Notes (EN): 21), a provision that may challenge federal restrictions on union amalgamations.

The Act is enforced by the former Queensland Anti-Discrimination Commission, rebranded by the Act as the Queensland Human Rights Commission (s117). The Commission is empowered to declare ‘unlawful’ any executive act or judicial decision that infringes a human rights provision (s58(1)). This has the effect of nullifying the decision while allowing the aggrieved party to use the finding in a ‘piggy-back’ action for a civil remedy. The Queensland Supreme Court is also empowered to declare ‘incompatible’ any legislative provision that infringes a human rights provision of the Act, in turn requiring a written response or explanation from the relevant State Minister (ss53-56). The Act also contains a general limitations clause (s13) providing that human rights are subject to reasonable limits that can be demonstrably justified in a free and democratic society based on human equality and dignity, as well as the rights of others and significant public policy considerations (EN: 16).

Queensland is now the third Australian jurisdiction to implement a Human Rights Act (together with Victoria and the ACT). This particular legislation came to fruition after a 3-year campaign by various non-government organisations and the support of a recently elected independent MP, Peter Wellington, who holds the balance of power in the Queensland Parliament. The Act was opposed by the Liberal National Party opposition who claimed that the additional protections it provides were unnecessary (Caldwell, 2019).

Review of industrial relations

In September 2017, the Western Australian Minister for Industrial Relations, Bill Johnston, announced a major review of the Western Australian State industrial relations system. The Final Report (Western Australian Government, 2018: 3) makes 85 recommendations (Western Australian Government, 2019: 1). In response, the McGowan Labor government announced a first round of legislative reform focused on increased protection for the estimated 36% of Western Australian employees covered by the Western Australian State system (Western Australian Government, 2019: 1; WE, 2019n). The key proposed reforms include:

empowering the Western Australian Industrial Relations Commission to make orders to stop bullying at work;

At the time of writing, a bill to implement the McGowan Government’s proposed industrial relations reforms had not yet been introduced into the Western Australian Parliament.

Delay of implementation of the Modern Slavery Act

As reported in Australian industrial legislation in 2018 (Rawling and Schofield-Georgeson, 2019), the NSW and Federal Parliaments passed modern slavery legislation in 2018. In July 2019, the NSW Coalition Government announced that it would delay the implementation of its Modern Slavery Act, instead referring it to a NSW Legislative Council committee (WE, 2019o). A government spokesperson said the government had received advice that the legislation in its current form had defects and ‘cannot commence operation as drafted’. The spokesperson said that it would be open to the parliamentary committee ‘to determine whether the Commonwealth’s comparable legislation renders part or possibly all of the NSW Act unnecessary’ (WE, 2019o). The NSW legislation was intended to regulate certain corporate entities that the federal legislation would not (entities with a turnover of $50m – the federal legislation only applies to entities with an annual revenue of $100m). Unlike the federal legislation, the NSW legislation included civil penalties and an anti-slavery commissioner (Rawling and Schofield-Georgeson, 2019).