The Role of the Australian Industrial Relations Commission

National PIR Group Conference
Canberra, 15 May 2006

Justice Giudice, President
Australian Industrial Relations Commission

All of us involved in industrial relations – workplace relations – are in the midst of the most significant changes in the Australian system in our lifetime, perhaps in the lifetime of the Commonwealth. The changes affect the manner in which disputes can be resolved, the type of industrial agreements, both individual and collective, which can be made, the award system, the conditions under which industrial action can be taken and access to remedies in relation to termination of employment. And the new system is applied to all corporations (and other employees of employers within the constitutional reach of the Commonwealth Government, including employees in the Australian public service and employees in Commonwealth territories) to the exclusion of most state industrial laws including those concerned with individual disputes, termination of employment and unfair contracts. These changes leave the State Industrial Commissions with jurisdiction which is, for the most part, confined to the state public service and unincorporated employers. Significant changes indeed.

This morning I want to outline some of the Australian Industrial Relations Commission’s functions and powers under the new legislative regime and at the same time indicate how the AIRC fits into the scheme overall.

Can I indicate some of the functions which the AIRC will no longer perform? First, the safety net for bargaining in the new federal system will not be the relevant award. The safety net for individual and collective agreements will be the Australian Fair Pay and Conditions Standard. That is comprised of the pay and classification scales, derived from awards but now the province of the Australian Fair Pay Commission (AFPC), and some conditions set by direct legislation. The AFPC will adjust minimum rates and classification scales for all employees and the amended Workplace Relations Act provides for minimum standards in relation to maximum ordinary hours of work, annual leave, personal leave and parental leave. There is also a default casual loading of 20%. These conditions form the minimum standard no-disadvantage test for workplace agreements – whether individual or collective.

Looking then at awards in particular: the content of awards will be reduced to 15 allowable award matters and the opportunity to vary their substantive terms, other than in accordance with AFPC determinations, will be very limited.

The Commission will no longer be responsible for the certification of collective agreements. That will be a function of the Office of the Employment Advocate. On lodgement of the agreement and certification that the agreement complies with the Act, the agreement comes into operation.

There is no need for a certificate from the Commission before initiating civil action – there is no equivalent of s.166A of the unamended Workplace Relations Act.

The Commission’s principal functions are concerned with dispute resolution, industrial action, applications for a remedy in relation to termination of employment, and varying, rationalising and simplifying awards. There are other functions as well such as right of entry matters. I shall focus on three of these: dispute resolution, industrial action and awards. Termination of employment is really a topic in itself and should be left for another time.

Dispute resolution can be divided into five areas: disputes under the model dispute resolution process, collective bargaining disputes, disputes under workplace agreements, disputes under “old” certified agreements (including those certified after 27 March 2006 pursuant to the transitional provisions) and disputes involving transitional employers. The first three areas represent the core of the new approach to dispute resolution. These three are dealt with in Part 13 of the amended Act.

The object of Part 13 emphasises and encourages resolution of problems at the workplace level and freedom for the parties in choosing the method of dispute resolution which best suits them.

There are some other themes in Part 13 which affect each of the types of disputes it deals with. The first of these is that the application of any dispute resolution process does not affect the right of a party to the dispute to take court action to resolve it. That is set out in s.693.

This provision is a very significant indicator of the policy of the Act. In a nutshell, in the resolution of industrial disputes the legal rights of the parties as determined by the courts are given precedence. The idea of a specialist independent body exercising compulsory powers of conciliation and arbitration in the interests of the parties and in the public interest has been abandoned. The new province for law and order, at least at the federal level, has, in a practical sense, ceased to exist. In its place there are voluntary processes for dispute resolution in a context in which there is a regulated right to take industrial action and the subject matter for bargaining and agreement-making is prescribed.

The next issue concerns the nature of the Commission's dispute resolution functions and the nature of dispute resolution proceedings.

The Commission is required to act quickly, to avoid technicalities and to observe any agreement between the parties as to procedure or otherwise. The Commission does not have power to compel anyone to do anything, or to make binding orders. The Commission may arbitrate or make recommendations by consent. Parties may confer powers and functions on the Commission in their workplace agreement. So it is clear that the Commission has no inherent powers in carrying out dispute resolution functions, but only the powers given to it by the consent of the parties either at the time the dispute is being dealt with or in advance. The proceedings are private and confined to the parties and the Commission and any material or evidence used in the process is confidential. This means that the dispute resolution proceedings are similar in many respects to conciliation proceedings under the unamended Act. Because dispute resolution proceedings are private they will not appear in the Commission’s public law lists in newspapers or on the website. There will be lists in the Registry premises in each State. The files themselves will be confidential files and it will not be possible for members of the public to have access to them. All arbitrated decisions will also be subject to the confidentiality provisions.

Dealing specifically with disputes under the model dispute resolution process, the first of the three areas of dispute resolution under Part 13, the model dispute resolution process is in some respects the successor, in a quite different legislative context to the dispute notification pursuant to s.99 of the unamended Act. Some of the matters that can be dealt with are referred to in a note to s.694

There are a couple of preconditions to the process. The first is that the parties must genuinely attempt to resolve the dispute at the workplace level first (s.695). The second is that while the dispute is being resolved an employee who is a party to the dispute must continue to work in accordance with his or her contract of employment, subject to reasonable concern about an imminent risk to his or her health or safety and in addition must comply with any reasonable direction to perform other work (s.697).

If the dispute remains unresolved, parties to the dispute may utilise an “alternative dispute resolution process” (ADR) to resolve the dispute (s.698). While the Act distinguishes between the model dispute resolution process and an alternative dispute resolution process, the two processes overlap to a considerable degree. The only independent component of the model process is the requirement to attempt to resolve the matter at the workplace level first. Where parties are unable to resolve the dispute at the workplace level, it seems that any agreed step taken thereafter involving a third party is part of the ADR process. An alternative dispute resolution process is defined by reference to what it includes (s.698).

ADR may be provided by the AIRC or by a private provider. If parties agree that it will be one or the other, then that is fine. If they cannot agree on who should provide the ADR process, there is a procedure for notifying the Industrial Registrar who then will provide information to both parties concerning ADR in the Commission or provided privately.

If, after 14 days, there is still no agreement the AIRC is the default provider and may call the parties together and endeavour to assist in resolution.

The second type of dispute coming within Part 13 is collective bargaining disputes. That is a dispute arising in the course of bargaining for a proposed collective agreement. The Commission’s involvement is based on the consent of all parties and subject to the same procedural limitations I mentioned earlier.

The Commission has only the powers the parties agree it should exercise and so on. The Commission’s role in the disputes is obviously to assist the parties, in whatever way is appropriate to reach agreement.

The third type of dispute under Part 13 is disputes arising pursuant to dispute resolution procedures under workplace agreements.

Moving on then from what I have described as the core of the Commission’s dispute resolution functions under the amended Act, there are two other dispute resolution areas, both of which have their roots in the unamended Act. The first area concerns disputes under ‘old’ certified agreements.

The second area is disputes with transitional employees. There are disputes arising with employees which were bound by Federal awards but which are either non-constitutional corporations or unincorporated and therefore not part of the new Federal system.

The Commission has produced some material in relation to the drafting of dispute resolution procedures in certified agreements. This is available on the website and also on CD-ROM. The material draws attention to a range of matters which might need consideration in drafting dispute resolution procedures in certified agreements and proposes some sample methods of dealing with those issues. The important thing, once again, is that the Commission does not have any inherent powers when dealing with disputes referred to it. In particular, it has no powers to impose a particular procedure or directions as to how the process should be conducted. Therefore the careful drafting of dispute resolution procedures is likely to be very useful in reducing problems at the time a dispute occurs. It is likely to be more difficult to get agreement on the powers and functions to be exercised by the Commission after the dispute has reached the Commission stage than at the time the workplace agreement is being made.

There are extensive new provisions regulating the right of parties to engage in protected industrial action. The definition of industrial action is broad in the case of employees; but, in the case of employers is limited to a lockout. In the case of employees there is exclusion in relation to health and safety.

Protected action can only be taken during a bargaining period. There are several prohibitions and exclusions in relation to industrial action. First the prohibitions:

The exclusions are numerous.

Applications for protected action ballot orders are dealt with at some length. In outline: in order to be protected, industrial action by a union or employees must have been approved by a secret ballot conducted pursuant to an order made by the Commission. When application is made to the Commission for a secret ballot order the Commission should determine the application within two days and have regard to the desirability of the ballot results being available within 10 days of the order being made.

For the ballot to succeed, 50% of those on the roll must record a vote and a simple majority of those voting must be in favour.

Employees or a union can apply for a secret ballot order. The regulation of the conduct of the ballot including the appointment of a ballot agent, the creation of the roll, the voting procedure and other matters are all dealt with in the legislation in a considerable level of detail.

Suspension and termination of bargaining periods are beyond the scope of this paper. But the provisions are quite extensive and would repay careful reading for those potentially affected by them.

Before leaving industrial action I might briefly refer to s.496 of the amended Act: the successor provision to s.127. There are several important changes in the scope and operation of the section, as it is no longer based predominantly on the industrial dispute power. It now extends to federal system employees and federal system employers. Even where the employees engaging in the action are not federal system employees an order may be made for the benefit of federal system employers who are being affected by the action.

Note in particular the requirement on the Commission to make an order if the pre-conditions are met and to make an interim order within 48 hours unless it would be contrary to the public interest to do so.

As I mentioned, orders may also be made in relation to action by employees who are not part of the federal system if the action is or has the potential to adversely affect a constitutional corporation.

I am aware that I am covering a lot of fairly dry statutory material and so I do not want to continue for too long. Before concluding, however, I should say something about awards. The first thing to note is that while awards will continue, for the most part the substantive provisions will not be varied, and some will become void or unenforceable and some will be reduced in their application. Let me try to explain. Firstly, a fundamental change is that, except in relation to transitional employees, that is those covered by the federal awards prior to Work Choices but who are not constitutional corporations, awards will now be based on the corporations’ power rather than the industrial dispute power. That means that there will be no need for an underlying industrial dispute or roping-in logs, and awards will be capable of operating on a common rule basis.

Some of the other important matters in relation to awards are that they will provide minimum safety net entitlements, they can apply to all federal system employees and that they will be subject to rationalisation and simplification but that otherwise, the scope for variation is limited.

All awards are taken to include the model dispute resolution process I referred to earlier and no other dispute resolution process is allowable.

The number of allowable award matters has been reduced and a number of significant matters are now not allowable. These include matters which will be within the jurisdiction of the AFPC – wages and classifications, casual loadings, and legislated entitlements – maximum hours of work and various types of leave. There are other matters such as conversion of casual employment to permanent and restrictions on the engagement of independent contractors which are also not allowable. You should refer to the Act on the specifics of allowable award matters.

Operating in parallel are what are referred to as preserved award terms.

While preserved award terms cannot be varied and are not allowable, they are to remain for the benefit of those who are entitled to them.

Could I turn then to award rationalisation? The process envisaged by the Act is that the Commission will receive a request from the Minister in relation to award rationalisation and a Full Bench will be convened to consider the request.

We know something about the terms of rationalised awards.

Finally, either in conjunction with rationalisation or separately, the Commission is to simplify awards so that they only contain terms permitted by the Act.