The Industrial Relations Society of Victoria: A Unitary IR System?

Justice Giudice

President

Australian Industrial Relations Commission

18 October 2002

The theme of this first part of the Convention, "A Unitary System?", is a topical and interesting one. All of us who have worked in industrial relations and labour law have grappled, at some time or another, with the interaction between State and Commonwealth laws, the relationship between the various tribunals and courts and the awards, orders and decisions they make.

The topic invites a consideration of the operation of our labour laws and whether improvements can be made.

Our industrial relations system is comprised of a Federal system and five State systems. In Victoria the situation is something of a hybrid. In the two Territories, the ACT and the NT, there is only one system and many federal awards operate as a common rule in the industry or occupation to which they apply.

Enforcement of the industrial laws and of awards and orders made by the tribunals is the province of the courts. Federal awards and laws are usually enforced in the Federal Court. There are specialist courts in most of the States. And in most States senior members of the industrial tribunal hold a dual appointment as members of the specialist court. I shall not attempt to deal with those arrangements today, nor with the operation of tribunals dealing with equal opportunity and discrimination which operate at both State and Federal level, or the specialist tribunals dealing with the treatment of government employees.

In relation to what might be termed the mainstream of the industrial systems, the State and Federal Commissions, it is clear that there are differences in the operation of laws dealing with the same subject matter, that access to tribunals is subject to different conditions and that the scope and nature of the powers of the tribunals also differ. Those features of our labour relations systems are well known although as to the detail of the differences, not particularly well documented. Of course there is a significant degree of overlap between the systems at the industry and the enterprise level and a number of awards, both federal and state, may apply to the one enterprise.

Victoria, if I may say so, does not seem to be the most propitious location for a discussion of the pros and cons of a unitary system. All of the States except Victoria have their own industrial system. They thus have two industrial relations systems operating side by side. In those States it is normal to discuss the advantages and disadvantages of having two systems operating concurrently and perhaps the advantages and disadvantages of the systems by comparison one with the other. While it is possible to have a similar discussion here, Victoria has the unique situation of two different systems but only one industrial tribunal.

The Australian Commission exercises jurisdiction throughout Victoria in relation to industrial disputes between registered organisations, unions, and identified employers and fixes minimum terms and conditions of employment. As you know, however, the Commission does not have the power to make a common rule. Persons who are not employed by an employer respondent to an award are generally covered by minimum wage orders as to basic rates of pay and by a number of legislated minimum terms of employment. For those employees the Australian Commission plays a role in the fixation of the minimum wage orders, but has no statutory powers in relation to other conditions of employment. The Australian Commission also exercises jurisdiction throughout Victoria in relation to applications for a remedy arising out of termination of employment.

You will pardon me I am sure for not venturing a view on the proposals currently before the Victorian Parliament. It is sufficient to observe that in a number of respects Victoria has a unitary system and that the current debate is largely about whether some features of the operation of that system should be altered. It must also be said that there are a number of proponents of a resurrection of a state industrial tribunal.

Let me turn to States other than Victoria and to the position which operates more generally. There are a number of matters which have recently come before the industrial tribunals of the States and the Commonwealth and which provide some insight into the variety of ways in which the operation of the Federal and State systems can impact upon each other.

The safety net of award conditions applying to Federal award employees, in States other than Victoria, operates in conjunction with awards of State tribunals. In the ACT and the Northern Territory common rule awards of the Australian Commission constitute a safety net for employees of employers who are not respondent to Federal awards. In Victoria, as I have just mentioned, non-award employees are covered by a combination of minimum wage orders and some basic conditions of employment prescribed by statute.

The Australian Commission's most recent Safety Net Review decision was made in May 2002. The adjustment provided for in the decision has been adopted by all of the State tribunals. As you know the Australian Commission's safety net review decisions have been occurring annually since the middle of the last decade. Those decisions are the most recent form of the national cases which have been conducted for many decades at more or less regular intervals to consider increases in Federal award rates generally. Increases awarded in those cases, subject to applications being made by the relevant award respondents, flow into minimum rates throughout the Federal award system. After the decision is handed down applications are normally dealt with in each of the State Commissions directed at securing an increase in the rates contained in State awards. Usually the increase sought is of the same order as the adjustment awarded federally, although sometimes a greater amount is sought. The industrial tribunals of most States are required to take the decision of the Australian Commission into account in deciding the applications and, whether required to do so or not, all of the State tribunals invariably do take the Australian Commission's decision into account. As a rule, the increases awarded are the same. The decisions of the State tribunals usually apply to all awards operating in that State and of course the awards operate on a common rule basis.

There has been a very high degree of consistency between the various tribunals in dealing with these applications. This is an indication that where justified on the material before them the tribunals are more than ready to adopt an approach to wage fixation which preserves their independence but at the same time maintains a stable minimum wage system throughout all of the jurisdictions of the Commonwealth. This approach has been extremely important to the national economy, particularly during periods of high inflation and unemployment.

Although the level of minimum wages is possibly the most familiar area of interaction between the industrial tribunals, there are other aspects of award-making which are just as important and which can also give rise to issues from time to time. Equal remuneration or equal pay is one such area, termination of employment and redundancy is another.

In 2000 the Industrial Relations Commission of New South Wales1 formulated and adopted a principle of wage fixation known as the Equal Remuneration Principle. That principle was applied in 2002 to the determination of a claim made in the New South Wales Commission by library and related workers.2 The decision in that case resulted in significant increases for the workers concerned. The case is being put forward to support a claim being pursued in the Australian Commission for increased remuneration for some childcare workers employed under the Victorian Local Authorities Award 2001.

That case has been programmed for hearing in June of 2003. It is likely to involve a consideration of a significant volume of evidence and an examination of the Commission's wage fixing principles and relevant decisions including decisions of the NSW Commission and possibly those of other State Commissions on the issue of equal pay.

There are presently concurrent applications in the Queensland Commission and the Australian Commission seeking improvements in the generally applicable award conditions relating to termination of employment and redundancy. The proceedings in the Queensland Commission commenced some time ago, the hearings have concluded and the Commission's decision has been reserved. The hearings in the Australian Commission are of recent origin and the hearing is not likely to commence before May of next year.

Some employers made an application to the Queensland Commission that it not hand down its decision until the proceedings in the Australian Commission have been finalised. The application was rejected by the Queensland Commission.3 Those who opposed the adjournment argued, among other things that the claim was supported by various decisions of the New South Wales Commission. The claim before the Australian Commission, as I understand, is also based in part upon decisions of the New South Wales Commission. When the Australian Commission comes to consider the claim it will more than likely be required to consider arguments based on the desirability of uniformity of terms and conditions as between the States and the Commonwealth.

Moving to another aspect of the award-making function, a recent case in New South Wales dealt with a potential clash between provisions of the Workplace Relations Act 1996 and the jurisdiction of the New South Wales Commission. When certain unions invoked the award-making functions of the State Commission, the employers sought to take advantage of provisions in the Federal sphere designed to facilitate enterprise bargaining. While the facts were somewhat complicated and there were a number of hearings and decisions, in basic outline what occurred was that certain employers in Broken Hill who were covered by State awards took steps to secure an agreement with their employer in accordance with s.170LK of the Federal Act. This occurred at the time when unions were seeking to vary the rates of pay in the relevant State awards. The New South Wales Commission was asked to make orders restraining the employers from proceeding with this proposal. The Commission made orders to that effect although they were of an interim rather than a final nature.4

These few examples give some idea of the range of issues which the operation of our Federal system can throw up. Each of the cases relates to clashes or potential clashes in the operation of the systems and have implications for the level of industrial disputation.

As has been noted there are significant differences in the systems. This is particularly so in relation to the termination of employment jurisdictions. There are also differences in the breadth of the award-making powers of the different Commissions. In that respect the limitation of the Australian Commission's arbitral powers to the 20 allowable award matters, other than in exceptional case, is a singular characteristic.

It is for others to judge whether and if so what action might be taken to introduce greater consistency between the systems. It is worth noting, however that the question has been in the public domain for a long time. Concern about the interaction between state and federal awards in the early 1920's lead in 1926 to a referendum on the question of whether the Commonwealth Parliament should be given powers to legislate for the prevention and settlement of all industrial disputes, not just those extending beyond the limits of any one State. The referendum had support from all parties in the Federal Parliament, but secured majority support in two States only - one of which was NSW. In 1929 the coalition National/Country Party Government went to the polls on a policy which the Prime Minister said in his policy speech was the only issue of the election - the future of industrial arbitration. The Government proposed that federal arbitration be confined to the maritime industries and the rest of the Commonwealth's powers be handed back to the States. This was the same government which two years earlier had put forward the referendum for the extension of the Commonwealth's arbitration power. The common objective underlying the 1927 referendum and the 1929 election policy was the reduction of disputation and other problems caused by the overlapping operation of and the interaction between state and federal awards. As we all know, the Government lost the election. This event has, to say the least, had a discouraging effect on proposals to alter the balance of the Federal and State system ever since.

It should be emphasised, however, that a great deal has been done in the last two decades to create an environment in which the problems arising from the existence of a number of different systems operating in the one federation can be minimised or eliminated. I shall mention some of them.

The first is the existence and use of provisions in the federal legislation permitting the Commission to decline to exercise jurisdiction when it is more appropriate that the matter be dealt with by a State industrial authority. Since 1996, there has also been a provision requiring the Commission to decline to exercise jurisdiction where state coverage applies to the relevant employees, unless persuaded to the contrary. The practical effect of that provision is that there have been very few extensions of federal coverage since 1996.

For many years there have been regular conferences between the heads of the industrial tribunals. Although the conferences now have legislative backing, they first arose informally out of a need perceived by the heads to liase on matters of common interest. The meetings are usually held every 6 months. There is of course a deal of informal contact between meetings as circumstances require.

The Australian Commission has power to issue an order restraining a State industrial authority from dealing with a matter which is within the Federal jurisdiction. Since 1989 there have been 28 such applications, four of which were granted. In the last five years, there has only been one application and it was unsuccessful. These figures are only one indicator; but they might support a conclusion that the interaction between the Federal and State systems has been less marked since the Workplace Relations Act 1996 commenced to operate.

There are also a number of procedures provided for to overcome the inconvenience which can arise when a particular dispute or matter straddles two jurisdictions. These procedures may be invoked by the heads of the relevant tribunals. There is provision, rarely used, for joint sittings of the Federal and State Commission. At a more practical level, many members of State tribunals are cross-appointed as members of the Australian Commission. In some States, notably South Australia and Queensland, the position is reciprocated. It is not at all uncommon for members of State Commissions to sit in the Federal Commission, either as members of a Full Bench or alone, and exercise Federal jurisdiction. This is a regular occurrence in South Australia, and fairly frequent in Queensland, Newcastle and Western Australia.

Against the background that I have very briefly sketched, I would like to suggest a number of objectives which are worthy of pursuit when considering changes that might be made to the framework and detail of our industrial systems.

The first is that there should be provision for a consistent award safety net in relation to wages and major conditions of employment. This does not mean that uniformity should dictate the outcome of matters falling for arbitration, but it does mean that the design of our industrial laws should place emphasis on the elimination of unjustifiable differences in the minimum entitlements in relation to wages, leave, hours of work and so on. I should emphasise that I am talking here about the minimum conditions which should be afforded to employees by their employer and not about bargained rates. Through the processes of award simplification and the minimum rates adjustment this objective is well on the way to achievement in the awards of the Australian Commission. There is a consistency between the minimum rates structure in awards and major conditions of employment are broadly consistent at least. Just over one thousand awards have been simplified. As well the number of awards which have been set aside, through consolidation or otherwise, is over 1400.

This is an important matter of equity as between employees in the various systems. It is also relevant to the costs of employment.

The second objective is that access to the industrial tribunals and remedies should so far as practicable be governed by the same considerations regardless of the State of Australia in which the application is made and whether the tribunal is Federal or State. Of course this is difficult to achieve since all legislatures, quite understandably and justifiably, put great value on their prerogative to specify the rights they wish to protect and the remedies which shall be available when those rights are breached. This is not to suggest that progress has not been made. To the contrary, a lot has already been done to bring some consistency to the laws relating to termination of employment, particularly in relation to remedies. Significant differences remain. And there are legislative proposals currently in the public domain which would increase rather than tend to eliminate the differences between industrial systems in this regard.

Thirdly, it should be an aim of policy to reduce or eliminate the costs to individual litigants arising from jurisdictional disputes. I am here principally concerned with jurisdictional issues concerning the correct tribunal in which to bring the action. Litigation of any kind is very expensive for individual citizens unless they have considerable financial resources. The potential for preliminary jurisdictional issues to arise, particularly in applications by or on behalf of individuals, is ever present. And when an application is delayed for months because of a jurisdictional issue the ordinary citizen's ability to maintain the action through to the hearing on the merits is likely to be severely compromised.

There are many points of view from which the issue of a unitary system may be approached. My perspective is of course that of a member of the Federal Commission. I cannot speak for employees, employers, registered organisations, members of State tribunals or Governments. The views of each group need to be considered and within each group there is a range of views related to the circumstances of particular members of the group. It is important, however, that there be more discussion about the operation of our industrial systems and that means of improving the cohesion between them are identified and examined For that reason the organisers are to be congratulated on giving the issue prominence on the agenda for this conference.

As many of you know, the Hancock Committee had quite a lot to say about the operation of our industrial systems. In its 1985 report, the Committee identified a number of problems and proposed a range of options for reform. The recommended option, adopted on grounds of practicality and expediency, was to increase the cooperation between the Federal and State systems. That is the course which has been followed ever since, although the cooperation has been greater in some jurisdictions than in others. It seems to me to be sensible to ask whether this strategy has been effective and whether the issues are still the same.

Circumstances have altered considerably since 1985. Let me mention just a few changes in the last fifteen years: the deregulation of the banking and financial systems, including the currency markets; reductions in tariffs and other forms of industry protection; the increasing globalisation of many industries; the devolution of industrial relations to the enterprise level and the reduction in union membership.

Data supplied by the Commonwealth to the last Safety Net Review indicates that safety net adjustments directly affect the wages of less than 25% of the workforce. During the 1980's, national wage case increases were passed on to more than two thirds of the workforce.

There has been an increase in the flexibility of award arrangements in areas such as types of employment and hours of work.

There has been a very significant reduction in the incidence of industrial action, with days lost through industrial disputes at record lows.

According to DEWR figures, there were just over 13,000 current enterprise bargaining agreements at 31 December 2001. Those agreements covered some 1.5 million employees. There were virtually no enterprise agreements prior to the 1990's.

There is a completely new Federal jurisdiction in relation to termination of employment, an area which was almost exclusively the province of the State systems prior to 1993.

The conclusions reached by the Hancock Committee may need to be revised in light of these developments. A fresh appraisal is required to gauge the extent to which the problems identified in the Report have been overcome or have reduced in significance and to see what other important issues have arisen. Without such an appraisal it seems to me that policy formulation will be based on inadequate data and be less effective.

1 The Equal Remuneration Principle (2000) 97 IR 179

2 Re: Crown Librarians, Library Officers and Archivists Award Proceedings [2002] NSW IR Com 55

3 Re: Queensland Council of Unions and the AWU, Linnane VP, Bloomfield and Blades CC, 20 September 2002.

4 Re: Barrier Industrial Council Dispute [2002] NSWIRC 232