The Association of Industrial Relations Academics of Australia and New Zealand

Dispute Resolution In The Last Decade Of The Twentieth Century

Justice Giudice, President

Australian Industrial Relations Commission

6 February 2003

[1] The last decade of the twentieth century was an extraordinary period in Australia's labour relations history. Some would say the single most important development was the change in the way in which wage rates and conditions of employment are fixed. In substance that change involved the abandonment of a central, predominantly arbitral process and adoption of a decentralised, predominantly consensual process. Our labour relations system moved from one in which centrally derived increases were the principal source of improvements in wages, and to a large extent conditions as well, to one in which improvements in wages and conditions, for most members of the workforce, were generated at the level of the enterprise. Whether this change from the so-called centralised system to enterprise bargaining was a good or a bad thing is for others to judge. I would prefer to leave such assessment to those with a broader perspective and the opportunity to consider all of the issues, perhaps in the light of events yet to occur.

[2] Prior to 1975 the Commission's awards influenced wage levels throughout the economy through the application of the doctrine of comparative wage justice and the statutory obligation to ensure uniformity in wages and conditions in each industry. The centralised system operated almost continuously as a formal system from April 1975 until the early part of the 1990's. National Wage decisions flowed throughout the workforce and increases from other sources were, to say the least, discouraged. Of the many statutory changes designed to provide greater freedom to bargain at the enterprise level the two most significant were the Industrial Relations Reform Act 1993 and the Workplace Relations and Other Legislation Amendment Act 1996. For those interested in events before the Industrial Relations Reform Act 1993 there is a useful summary set out in the Commission's 1993 review of wage fixing principles.1 It is hard to overstate the magnitude of the change in the wage setting process which followed this legislation. There is now a continuous flow of agreements brought to the Commission for certification numbering many thousands each year. It has been estimated that by the end of the twentieth century less than 25 per cent of the workforce were dependent on the Commission's Safety Net Review decisions.

[3] Another distinguishing feature of the 1990's was that it was an unprecedented period of industrial peace, as measured by the strike statistics. Furthermore the latter part of the decade was a period of sustained significant real wage growth. Perhaps not surprisingly, these positive developments in the field of labour relations were accompanied by benign economic conditions generally. After the recession of the early 1990's, there was strong employment growth, low to moderate inflation and strong economic growth, despite regional crises and other international influences which might have been expected to have a far greater negative effect on the domestic economy. Although many might say we could still have done better, it seems to me that the overall economic performance is as I have described it. I do not suggest that the changes in our industrial relations system led to these economic conditions. On that question it may be significant that many of the labour relations conditions experienced here in the last five years of the 20th century were also experienced in most of the developed economies at about the same time. We may have to wait for a major change in the level of economic growth in Australia, should that occur, for a better opportunity to evaluate the effectiveness of the system which developed here during the 1990's.

[4] While all this was occurring, what was happening at the Commission? If one were making value judgements, depending on one's point of view, the answer might be "not enough" or "too much". Perhaps surprisingly to some, the facts are that lodgements increased as the decade went on. Lodgements more than quadrupled.

CHART 1

[5] The great bulk of the increase in lodgements between 1991 and 2000 arose from statutory provisions introduced during the 90's such as applications for relief in relation to termination of employment, applications to certify agreements and bargaining notices.2 Leaving those lodgements aside, the number of lodgements in 2000 was no less than the number 10 years before.

[6] During the decade the number of days lost due to industrial disputes halved, the reduction gaining momentum after 1993.

CHART 2

It was in that year incidentally that legislation was passed providing for the right to strike in certain circumstances. There does not appear to be a particularly strong correlation during this period between industrial disputes and total lodgements. This is probably because of the significant changes brought about by the amendments in 1993 and again in 1996 and in particular the introduction of a number of new provisions.

[7] While these statistics give an indication of the overall position, some disaggregation may give a better appreciation of the manner in which industrial relations was being conducted at the end of the decade, and the changing demands made on the national dispute-settling tribunal.

[8] First, dispute notifications reduced. The traditional method of access to the Commission, the dispute notification, declined over the decade, reducing in volume by around 25 per cent.

CHART 3

[9] Applications to vary awards also reduced significantly over the decade.

CHART 4

There is nothing surprising about these figures. It was to be expected that with a system in which enterprise bargaining is encouraged in the context of an award safety net, applications to vary awards would not be as numerous as before.

[10] However a number of new statutory provisions became available to parties seeking assistance in resolving disputes. First, in 1996 the bans clause procedure was supplemented by the creation of a statutory right to seek orders that industrial action cease or that threatened industrial action not occur. That right is in s.127 of the Workplace Relations Act 1996 (the Act). Section 127 does not have any operation in relation to industrial action which is "protected action".3 Growth in s.127 applications was considerable.

CHART 5

The Commission is under an obligation to deal with applications made pursuant to s.127 as quickly as practicable.4 Eighty five per cent of applications are listed for hearing within four days of being made and they are usually determined very quickly. There are complaints from time to time about the speed with which these applications are listed. Predictably those at risk of an order being made against them sometimes think the process is too quick and those seeking an order sometimes think the process is too slow. The fact is that the Commission will list the application speedily in accordance with the statutory requirement unless the circumstances of the application make some delay desirable or other urgent applications must take priority. Section 127 applications not infrequently lead to settlement of the underlying dispute through conciliation or otherwise. In those cases the application is either withdrawn or adjourned indefinitely and no final decision is sought. It is generally accepted that applications of this kind have taken over the function of s.99 notifications in many cases.

[11] Second, many applications are made pursuant to dispute settlement provisions of various kinds, in particular dispute settlement provisions in certified agreements. With the increase in the number of certified agreements, and the requirement that each agreement provide for the settlement of disputes over the application of the agreement, applications increased at a significant rate.

CHART 6

[12] Notification under these provisions is in the mainstream of the Commission's traditional dispute settlement role although the legal context is different. In carrying out functions pursuant to dispute settlement provisions the Commission is exercising a power of private arbitration.5

[13] A number of other applications were made available. For example, if a party intends to institute common law proceedings in relation to action taken in an industrial dispute, there is a requirement, introduced in 1993, to seek a certificate from the Commission beforehand and an application must be made in that regard.6 Also, the bargaining arrangements introduced in 1993 and consolidated in 1996 permit the Commission to terminate a bargaining period in certain circumstances. Each year a number of applications are made to the Commission to exercise that power. In total the number of applications made in the year 2000 under these four new statutory provisions was around 1000.

[14] I have mentioned the significance of the shift to bargaining at the enterprise level. The change did not of course just happen. It was a reflection of changes in a number of other areas. The most important changes were statutory in nature, but they were obviously accompanied by changes in organisation. Decentralised bargaining increased the demands upon unions to support local bargaining with information, advice and representation. There were pressures for standard outcomes in relation to employee benefits. Employers and their organisations faced similar challenges in providing the resources to bargain effectively at the local level. Many of the industry industrial relations coordinating bodies either changed their nature or simply disappeared. One could give as examples the industry industrial relations committees which used to operate in the oil industry, banking, finance, insurance, airlines and so on. Unions and employer organisations have developed new structures and services to meet the needs of their members in enterprise negotiations. The Commission too has been required to change its operations. It has a specific duty to facilitate the making and certification of agreements.7 Commission members facilitate agreements by assisting the parties to reach agreement through conciliation and other means. In the certification process the Commission is required to ensure the agreement passes the no-disadvantage test, primarily by reference to the award safety net, and to apply various other statutory tests, including those designed to ensure the agreement is genuinely made. There has been significant growth in the number of applications for certification of agreements. The Commission had traditionally made consent awards but usually on a multi-employer or industry basis. The number of consent awards was nowhere near the number of agreements which are now certified.

CHART 7

[15] The forms of agreement extend beyond the traditional one of an agreement reached in settlement or part settlement of an industrial dispute. Agreements may be made without the necessity for an antecedent industrial dispute. Such agreements are possible pursuant to provisions which have as their constitutional basis the power of the Commonwealth Parliament to make laws with respect to corporations. And while at the start of the decade the industrial system only recognised agreements made between employers or their organizations and registered organisations of employees, during the 90's the Commission acquired the power to certify agreements between employers and groups of their employees. Agreements with individuals are also given force by industrial law - Australian Workplace Agreements (AWAs). For the most part AWAs are not within the Commission's ordinary jurisdiction. By the end of the decade the number of agreements made in reliance on the corporations power8 far outnumbered agreements made in settlement of industrial disputes.9 Of the total of more than five and a half thousand agreement applications in the year 2000 less than one thousand, or 20 per cent, were in relation to agreements made in settlement of industrial disputes.

[16] The picture would not be complete without noting the number of collective agreements made directly with employees.10 Agreements of that kind were not recognised by our industrial law prior to 1994. In the last two years of the decade roughly 800 applications were made for certification of such agreements each year.

CHART 8

[17] The characteristic of these agreements is that they are made by employers directly with their employees. Unions authorised by a member or members to do so are entitled to meet and confer with the employer about the agreement11 and, subject to various conditions, become bound by the agreement.12 Before moving on, I should mention that the agreement data do not distinguish between first, second, third or fourth generation agreements. To state the obvious, it is not possible simply to add up the applications over the decade to arrive at a total number of agreements. Material produced by the Commonwealth Department of Employment and Workplace Relations suggests that 43,000 agreements were certified between 1991 and 2001 and that there were a little over 13,000 current certified agreements at the end of 2001.13

[18] As most here know, the criteria which the Commission is required to apply in considering whether to certify an agreement are not the same criteria which it is required to apply in carrying out award-making functions. Generally speaking the Commission has no discretion to refuse to certify an agreement if the application meets the prescribed conditions and the other statutory requirements have been complied with. If wage increases granted by one employer are likely to lead to unsustainable claims against other employers that is not a legitimate basis upon which to refuse certification. The Commission cannot reject an agreement because it might reduce employment or add to inflation - matters that are to be taken into account in exercising the power to make an award. Furthermore the scheme of the Act, as I have already mentioned, permits industrial action to be taken with impunity in the circumstances specified in the Act. It follows that the application of economic power through the use of industrial action is a legitimate part of the negotiator's armoury. The fact that an employer or a union has been forced through the use of protected industrial action to concede unreasonable demands is not a matter which the Commission can take into account. This is not understood by some commentators, who seem to think that the Commission is assisting in the extraction of unfair bargains.

[19] It is a feature of the certification process that there is rarely an appearance from a party opposing the certification. The Commission is therefore faced with a situation in which it is asserted by the parties to the agreement that the agreement should be certified. In the majority of cases the most important issue is the application of the no-disadvantage test. When it can be easily ascertained that the agreement passes the test in most cases the procedure is fairly simple. Some years ago the Commission's rules were amended to require those seeking the certification of an agreement to file a statutory declaration dealing with the requirements for certification. Not all of the requirements dealt with in the prescribed statutory declaration are relevant to every application. Deficiencies in statutory declarations are usually not treated as serious unless the deficiencies are important in the particular case and further inquiry fails to elicit a satisfactory explanation. In addition, the statutory declarations are creations of the Commission's rules and in that sense they are requirements of a procedural rather than a substantive nature. Deficiencies in declarations might lead the uninformed to conclude that agreements are sometimes certified when they should not be. While it is of course possible for that to occur, in all but the exceptional case an informed assessment would reveal that the agreement met the statutory requirements.

[20] In addition to dealing with applications related to industrial disputes and agreements the Commission acquired a new jurisdiction in relation to termination of employment during the decade. The jurisdiction is based predominantly, although not entirely, on individual rights. In cases requiring arbitration the question to be decided is whether, having regard to certain specified matters, the termination of the applicant's employment was harsh, unjust or unreasonable. A jurisdiction of this kind had been available in the context of industrial disputes since the High Court's decision in Ranger14 in 1987. In 1994 the present jurisdiction was directly conferred by legislation enacted pursuant to the power of the Commonwealth Parliament to make laws in relation to external affairs. In 1996 the legislation was re-enacted pursuant to the power of the Parliament to make laws with respect to corporations. Between 1994 and 1996 the Commission's power was limited to conciliation. In 1996 its powers were extended to include compulsory arbitration of claims for relief in relation to termination of employment. The growth in the number of applications was very substantial.

CHART 9

[21] By the end of the decade the number of applications was running at around 8,000 per year. By that time more than 70 per cent of the applications were being resolved in conciliation with only a relatively small number of valid claims requiring a full arbitration. The demand for conciliation skills to deal with the volume of applications has been met in large part by engaging former industrial tribunal members as contractors. Conciliation functions are also carried out by Deputy Registrars.

[22] Arbitration of disputes related to termination of employment requires the application of statutory criteria to the circumstances of the case. That process involves decision-making of various kinds such as: deciding on the validity of the application and whether the Commission has jurisdiction, the resolution of issues of fact and law, often quite complex ones, value judgements about conduct and, if necessary, consideration of the appropriate remedy. This work has increased the decision-writing load substantially and in some respects places greater demands on members of the Commission than industrial dispute work. Most industrial disputes do not require findings of fact on contested issues nor a particularly rigorous application of the principles by which findings are made. For the parties involved in disputes about termination of employment, having one's version of events accepted by the Commission in preference to anyone else's, and approved of, are often of paramount importance. While similar emotions can be experienced by parties to industrial disputes, the need for findings about past conduct is not often critical and may even be undesirable.

[23] The introduction and development of the jurisdiction to deal with disputes in relation to termination of employment was by no means revolutionary. A similar jurisdiction had been exercised by most of the State industrial relations tribunals for many years. And the Commission itself had of course exercised a wide informal jurisdiction. Perhaps surprisingly, however, the exercise of the formal jurisdiction has turned out to be less like the exercise of arbitral powers and more like a curial proceeding or an ordinary piece of civil litigation.

[24] In one sense, and in an important one, the Commission deals with individual disputes in relation to termination of employment in the same way as it has always dealt with collective industrial disputes. In both cases conciliation is the primary method of resolving the dispute and arbitration is only available when it is clear that conciliation has failed. In relation to industrial disputes, however, by the end of the century the Commission's power to settle disputes by the exercise of compulsory arbitral powers had been materially reduced. Generally speaking, as is well understood, the Commission's arbitral powers are limited to the fixation of minimum rates and the conditions comprehended by the allowable award matters specified in s.89A. Additional arbitration powers are still available in certain circumstances, in particular where enterprise bargaining has failed and industrial action is threatening the personal safety or health, or the welfare, of the population or a part of it or to cause significant economic damage.15 Those powers have been used regularly although not extensively since their introduction in 1993.

[25] In concluding this brief account of developments in dispute settlement during the 1990's, I would like to make a few general observations.

[26] Viewed in historical terms the level of industrial disputation had never been lower than it was in the 1990's. In 1970 around 550 working days were lost per 1000 employees and in 1980 around 650. During the decade from 1991 to 2000 the highest annual total by far was 240 working days lost in 1991 and in the year 2000 there were just 83 working days lost per thousand employees. The additions to the Commission's jurisdiction which occurred during that last decade occurred during a period when strikes were relatively infrequent. Should strikes ever revert to the level of the 70's and 80's, the pressures on the Commission's services are likely to be significant. Frequent users of the Commission receive a standard of service in relation to industrial disputes which is probably not rivalled for speed of response by any other major court or tribunal system in the country. Most urgent matters now receive a priority listing within days, sometimes less than a day. If there were even a doubling of the number of strikes, which would still be a low number in historical terms, maintenance of that response rate would be impossible. This is a matter which is probably of less significance to students of the system than to practitioners and to those responsible for administering the Commission. But it also illustrates how things have changed in relation to dispute settlement in the Federal system.

[27] The end of the 20th century saw what I earlier described as an extraordinary period in Australia's labour relations history. In some respects the reduction in the Commission's formal arbitral function might be seen as a return to the role the Court of Conciliation and Arbitration played in economic and industrial affairs in the early part of the century. But the development of enterprise bargaining within a formal set of rules which gave enterprise agreements legal enforceability through the industrial relations system was something quite new. Because of the significant growth in real wages which accompanied the spread of enterprise agreements, and the productivity gains at the macro level, the change will be adjudged a success by many in the sense that the implementation of the policy was apparently effective. As I said earlier the judgement on that issue may have to await an assessment made in less benign economic conditions.

1 Re Review of Wage Fixing Principles - October 1993 (1993) 50 IR 285

2 Total 22,876

3 Section 170ML

4 Section 127(3)

5 CFMEU v AIRC (2001) 75 ALJR 670

6 Section 166A

7 Section 170L

8 Agreements under ss.170LJ, LK and LL

9 Agreements under s.170LS

10 Workplace Relations Act - s.170LK, Industrial Relations Act - s.170NA

11 Section 170LK(4) and (5)

12 Section 170M(3)

13 Agreement making in Australia under the Workplace Relations Act 2000 and 2001; Department of Employment and Workplace Relations, 2002 Chapter 3.2

14 Re Ranger Uranium Mine Pty Ltd; Ex Parte Federated Miscellaneous Workers' Union of Australia (1987) 163 CLR 656

15 Section 170MW, in particular s170MW(3)