Report in which the committee requests to be kept informed of development - Report No 357, June 2010

1. 165. The complaint is set out in a communication of 20 February 2009 from the Communications, Electrical, Electronic, Energy, Information, Postal, Plumbing and Allied Services Union of Australia (CEPU). The complainant submitted additional information in support of its complaint in communications of 16 and 28 April 2009.
2. 166. The Government submitted its observations in a communication of 15 January 2010.
3. 167. Australia has ratified the Freedom of Association and Protection of the Right to Organise Convention, 1948 (No. 87), and the Right to Organise and Collective Bargaining Convention, 1949 (No. 98).

A. The complainant’s allegations

1. 168. In its communications of 20 February and 28 April 2009, the complainant states that, in November 2008, the Fair Work Bill 2008 was introduced into Parliament, subsequently debated upon, and passed with amendments by both houses of Parliament. The Bill – now the Fair Work Act (FWA), 2009, received Royal Assent.
2. 169. The complainant states that, since 1999, the ILO Committee of Experts on the Application of Conventions and Recommendations (CEACR) had, in its comments, identified several provisions of the previous legislation – the Workplace Relations Act (WRA) of 1996, since repealed – that were not in conformity with Conventions Nos 87 and 98. The FWA replicates many of the contraventions contained in the WRA and introduces two potential new breaches of freedom of association principles. In particular, the FWA remains in violation of freedom of association by: (1) giving primacy to enterprise-level agreements and restricting the level at which bargaining can occur; (2) limiting the content of agreements; (3) providing insufficient protection to unionized workers who take industrial action in support of their rights under the Conventions; (4) limiting the right to organize; (5) restricting the right to strike beyond the limits permitted by the Conventions and lifting the protection of several types of industrial action, including sympathy strikes and those in support of multiple business agreements, “pattern bargaining”, matters that are not “permitted”, and strike pay; (6) prohibiting industrial action in situations of “economic harm” and danger to the economy, including through the introduction of compulsory arbitration at the initiative of the Minister; and (7) imposing penalties for engaging in “unprotected” industrial action and introducing secret ballot provisions. The complainant further maintains that the Bill’s structure requires employers to bypass unions and make and reach agreements directly with employees, even where a union exists at the workplace.
   • Enterprise agreements
3. 170. With regards to enterprise agreements, the complainant states that the FWA raises three particular concerns. First, agreements are no longer made with employee organizations, that is, unions. Whereas the WRA envisaged agreements being made between employers and unions – agreements which would then be subsequently voted on by employees – the FWA envisages no such arrangements. Instead, single enterprise agreements are made when the employer puts them out to a vote by employees and the employees approve the agreement (section 182(1)). This intention is confirmed by section 183 of the FWA. The involvement of the workers’ organization is not necessary to the concluding of a successful agreement, nor is it required before an agreement is put out to a vote of employees. According to the complainant, this conception of the role of workers’ organizations is directly contrary to the letter and spirit of Article 4 of Convention No. 98, which clearly envisages encouraging unions making and concluding agreements, while discouraging employers from negotiating directly with employees collectively when a union is present. Additionally, the Bill removes worker organizations as parties to any agreement reached, another radical departure from industrial history and from legislation prior to the previous Government.
4. 171. The complainant states that the impermissible downgrading of the role of workers’ organizations was reflected in the objects of the WRA. However, whereas prior to the previous Government the WRA had as one of its objects “to encourage the organization of representative bodies of employers and employees and their registration under this Act”, the FWA makes no mention of organizations in its new objects. Thus, whereas the WRA impermissibly enshrined union and non-union agreements as being of equal status, the FWA enshrines no role at all for organizations in the making and approving of agreements. In order to comply with Convention No. 98, significant amendments are required to reflect the fact that agreements are, and ought to be, struck between representative organizations and employers, and that organizations have a legitimate role in the framework of the agreement-making structure of the FWA.
5. 172. The complainant indicates that the FWA’s new bargaining provisions (Part 2-4, Divisions 3 and 8), whilst welcome, do not, in fact, require agreement with the union, where there is one, but rather will permit the employer to negotiate non-union agreements even where a trade union exists in a workplace.
6. 173. Additionally, “take it or leave it” individual arrangements are not precluded by the legislation. The FWA envisages individual arrangements whereby an employer can negotiate directly with an employee, or prospective employee, for conditions which vary from the relevant award (section 144) or enterprise agreement (section 202). The complainant adds that it is indeed compulsory to include a term in each enterprise agreement allowing for individual variation (section 202). The FWA, moreover, does not prohibit such individual arrangements being offered before employment starts, but does prohibit third party (i.e. union) agreement before entering into any such arrangement (sections 144(5) and 203(5)). Section 203(4) of the FWA imposes a “better off overall” test for any such agreement, but this test is not assessed by any third party before the agreement is entered into, nor is there any requirement to submit any such executed agreement to a third party for checking. Further, the “better off overall” test by definition involves the trading off of the benefit of some clauses (e.g. penalty rates) for a different benefit (e.g. a higher hourly rate), meaning that each individual term of an award ceases to be a firm legislative floor, but instead something that can be traded off.
7. 174. The complainant states that, especially in environments not regulated by union agreements, an employer could, therefore, continue to use its disproportionate bargaining power to strike individual arrangements with employees that differ from the legislated minimum standard; further, there is no prohibition on these “flexibility arrangements” being offered as a condition of employment. Although Australian Workplace Agreements (AWAs) are no longer available, the FWA provides employers with a range of measures to offer prospective employees “take it or leave it” individual contracts that differ from the legislated minimum. Even if any such arrangement is contrary to the award or agreement because it fails the “better off overall” test, given the private nature of the transaction, there is no guarantee that such breach will ever be discovered; unless the “take it or leave it” approach is prohibited, collective bargaining will not be encouraged, contrary to Convention No. 98, and minimum wages will be able to be traded off.
   • Provisions which give primacy to enterprise-level agreements and restrict the level at which bargaining can occur
8. 175. The complainant indicates that one of the objects of the FWA, as laid down in section 3(f), is the achievement of “productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action”. Section 171 similarly privileges collective bargaining at the enterprise level; the FWA thus establishes a clear preference for enterprise-level bargaining over negotiations at other levels, in contravention of Convention No. 98. The privileging of enterprise-level bargaining is also reflected in the fact that, under section 413 of the FWA, industrial action in support of multi-enterprise agreements is not protected. Additionally, since section 413 does not protect industrial action in support of multi-enterprise agreements, the approval of multi-enterprise agreements may potentially be refused under section 186(2)(b), which provides that Fair Work Australia, the agency mandated with the administering of the FWA, may refuse to approve agreements unless it is fully satisfied that no person coerced, or threatened to coerce, any of the employers to make the agreement. The complainant indicates that, under section 229 of the FWA, applications for bargaining orders from Fair Work Australia are prohibited in respect of multi-employer agreements unless a low-paid authorization is in operation in relation to the agreement.
9. 176. As regards pattern bargaining, the complainant indicates that sections 408 and 409 of the FWA exclude industrial action in support of pattern bargaining from the sphere of protected action; furthermore, under section 422 of the FWA, injunctions against action in support of pattern bargaining may be sought from either the Federal Court or Federal Magistrates Court.
   • Provisions which limit the content of agreements
10. 177. The complainant indicates that the FWA imposes restrictions on the content of collective agreements, in violation of Convention No. 98. Section 172 provides that collective agreements may include “permitted matters”, and adopts a “matters pertaining to the relationship between the employer or employers, and the employee organization or employee organizations” test as the cornerstone for determining whether a matter is permissible. The complainant maintains that such a test will not render permissible “nonunion matters” over which workers may legitimately wish to bargain, and will most likely exclude the following: terms concerning an employer’s environmental practices; programmes that regulate the composition of a workforce so as to increase the number of women; clauses prescribing a minimum number of apprentices, or that a certain number of apprentices should be drawn from among indigenous Australians; and restrictions on the proportion of contractors used at an enterprise.
11. 178. The complainant indicates that section 194 lays down several terms of an agreement deemed “unlawful”, and which constitute grounds for denying approval of an agreement by Fair Work Australia under section 186. Section 194 further prohibits terms concerning bargaining fees from collective agreements, while section 470 prohibits the matter of strike pay as a subject for negotiation; these provisions additionally prohibit the negotiation of “better than legislative minimum” standards in the following areas: (1) right of entry; (2) industrial action; and (3) unfair dismissal – in so far as probationary periods are concerned. The complainant adds that bargaining over non-permitted matters is not protected by law, is subject to orders from Fair Work Australia, and ultimately orders and penalties from courts, and that the FWA’s anti-discrimination provisions do not extend to someone who is dismissed or otherwise prejudiced for taking industrial action in support of non-permitted matters.
    • Provisions imposing limits on unions’ right to access workplaces
12. 179. According to the complainant, sections 512 and 513 of the FWA restrict trade union representatives’ right of access to workplaces through the imposition of a permit system administered by Fair Work Australia, under which permits are issued on the basis of a “fit and proper person” test. Under section 513, furthermore, trade union representatives face the prospect of lifetime bans from workplaces for breaches of industrial laws.
    • Provisions restricting the right to strike
13. 180. The complainant maintains that the right to strike is restricted in several ways under the FWA. Industrial action in support of multiple-employer agreements and pattern bargaining is unprotected, as are secondary boycotts and sympathy strikes generally. Also, industrial action in support of negotiations concerning content deemed prohibited under the FWA is itself prohibited.
14. 181. According to the complainant, sections 424 and 426 of the FWA empowers Fair Work Australia to suspend or terminate protected industrial action in support of a proposed enterprise agreement if it is satisfied that the said action has threatened, is threatening, or would threaten, significant damage to the economy or an important part of it, or significant harm to a third party, respectively. Furthermore, under section 423, Fair Work Australia may suspend or terminate protected industrial action taken in support of a proposed collective agreement, where there is a threat of significant economic harm to the employer or any of the employees who will be covered by the agreement. The complainant contends that section 423, as drafted, appears likely to render all successful industrial action unlawful – in contravention of freedom of association principles. Additionally, section 431 permits the Minister to issue a declaration to terminate industrial action if the Minister is satisfied that it is threatening, or may potentially threaten, significant damage to the national economy, or an important part of it.
15. 182. The complainant further indicates that Part 3-3, Division 8, of the FWA, contains provisions governing the secret ballot procedures for the calling of a strike. The provisions contained in Part 3-3 provide for the removal of protected action status in the absence of a secret ballot (section 445), require “numerous stages” before a ballot can be taken (subdivisions B–C), and requires a majority, not of the actual votes cast, but of those eligible to vote in order for protected industrial action to be authorized; these provisions, the complainant contends, are unduly burdensome and complicated and contravene freedom of association principles. Finally, the complainant states that section 470 of the FWA restricts industrial action in support of strike pay.
16. 183. Finally, the complainant states that Part 4-1 of the FWA concerning remedies establishes heavy sanctions for taking unprotected industrial action and exercising rights permitted under the relevant ILO Conventions. Workers and their unions remain exposed to: (1) orders from Fair Work Australia and penalties and sanctions for breach thereof; (2) court orders and the enforcement thereof; and (3) substantial monetary penalties. The above sanctions, the complainant contends, amount to undue restrictions on freedom of association rights.
17. 184. The complainant attaches a number of documents in support of its complaint, including: a statement dated 22 April 2009 by Mr Dean Mighell, National Vice-President of the complainant’s Electrical Division, on the effects on unions of the provisions of the Fair Work Bill 2008 and of past court and tribunal decisions; documents setting out the proposed amendments to the Fair Work Bill, 2008, prior to its adoption as the FWA; a copy of the Fair Work Bill, 2009; and a summary of several relevant decisions of courts and tribunals in Australia interpreting provisions of the WRA of 1996 that are reproduced in the FWA.

B. The Government’s reply

1. 185. In its communication of 15 January 2010, the Government states that the FWA commenced on 1 July 2009 and became fully operational on 1 January 2010, when the provisions relating to the new statutory minimum standards (called the National Employment Standards) and modern awards commenced. The Government maintains that it takes seriously its commitments under international labour standards and strongly supports the ILO in its objective of promoting decent work for all and raising labour and social standards. In doing so, it has sought to give effect to the firm belief that decent, fair protection for employees can, and indeed should, be a feature of modern economies based on the principles of competition and prosperity. The FWA is an expression of this commitment and, therefore, due consideration was given to Australia’s international obligations during the drafting of the new legislation. The Government is confident that the legislation gives effect to Australia’s commitments under ratified ILO Conventions.
2. 186. The Government rejects the complainant’s assertion that the FWA is inconsistent with Australia’s obligations under ILO Conventions Nos 87 and 98, and that the FWA is not consistent with ILO advisory opinions. It states that the new workplace relations system established under the FWA represents a deliberate and substantive move away from the fundamental elements of the previous Government’s Work Choices regime that were the subject of criticism by the CEACR in recent years. The FWA has introduced significant workplace reforms which place collective bargaining at the enterprise level at the heart of the workplace relations system and does not restrict the choice of multiple employers to voluntarily bargain together for a multi-enterprise agreement.
3. 187. According to the Government, the FWA expands the range of content that can be included in enterprise agreements and, consequently, the range of matters over which protected industrial action can be taken. Employees will continue to have the right to take industrial action to support or advance claims during collective bargaining. This right is balanced with clear rules around taking industrial action, including the requirement for a secret ballot to authorize protected industrial action that is free from threat of legal sanctions. Finally, the right of entry provisions in the FWA strike a balance between the right of employees to be represented by their union with the right of employers to run their businesses with minimum disruption.
4. 188. The Government states that it adopted an extensive programme of consultation at every stage of the development and implementation of the new legislation, ensuring that employers, unions, state and territory governments and the community had the opportunity for their concerns to be raised and addressed before the Bill was debated in Parliament and adopted in amended form. This was the most comprehensive consultation on workplace relations ever undertaken in Australia. The principal object of the new laws is to provide a balanced framework for cooperative and productive workplace relations that promotes national economic prosperity and social inclusion for all Australians.
5. 189. The Government indicates that the FWA also establishes two new independent statutory institutions to investigate and enforce the new laws: (1) Fair Work Australia is an independent tribunal headed by a judicial officer with the power to carry out a range of functions in relation to modern awards, minimum wages, collective agreements, unfair dismissal claims, good faith bargaining and industrial action, and to help employees and employers resolve disputes at the workplace; and (2) the Office of the Fair Work Ombudsman is an independent statutory office. Its functions include promoting harmonious, productive and cooperative workplace relations and ensuring compliance with Commonwealth workplace laws, for example through inspections.
6. 190. The Government considers that much of the complainant’s concerns are of a technical nature and do not relate to substantive policy. The complainant, in identifying select provisions of the draft legislation, fails to acknowledge the content, intent and impact of the new legislation as a whole and the historic reform it represents in Australia. It is also important to note that the FWA is in the early stages of being implemented, and that the Government will closely monitor its implementation to ensure that it is in accordance with the policy intentions outlined in this report.
7. 191. The Government states that the complainant’s contention that the FWA permits “take it or leave it” individual agreements to be made and that unions no longer have a role in the collective bargaining process, misrepresent the legislation. Under transitional legislation which came into effect in March 2008, no new Australian Workplace Awards could be made under federal workplace relations law. In limited circumstances, Individual Transitional Employment Agreements (ITEAs) could be made if they passed a “no disadvantage” test against the relevant award or collective agreement that would have applied. In other words, ITEAs cannot be used as a device to undermine collective bargaining and, in any event, could only be made up until 31 December 2009. Additionally, the general protections part of the FWA prohibits an employer from taking “adverse action” against an employee in relation to the making or termination of an individual flexibility arrangement. The FWA contains penalties for employers who coerce or use undue influence in having an employee enter into an individual flexibility arrangement (sections 343 and 344). Similarly, an employee can bring an action for compensation and penalties for breach of an enterprise agreement or award if an individual flexibility arrangement disadvantages an employee.
8. 192. According to the Government, the FWA does not provide for individual statutory agreements of any form. Indeed, the objects of the FWA include: “ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind, given that such agreements can never be part of a fair workplace relations system”. The FWA also places collective bargaining at the enterprise level at the heart of its new workplace relations system and recognizes the legitimate rights of employees to be represented in the workplace and to negotiate collectively, including through new good faith bargaining requirements. Moreover, the FWA permits individual employers and employees to negotiate an arrangement that best suits them and their workplace (such as family-friendly arrangements) through individual flexibility arrangements, but these are substantially different to the previous Government’s individual statutory agreements (or AWAs). In particular, they cannot be made a condition of employment, are limited to certain matters, can be terminated with 28 days notice by either party and, importantly, cannot undermine industrial award safety net conditions or the provisions of a collective agreement, as an employee must be “better off overall” under the arrangement. Additionally, the FWA does not restrict the ability of unions to be involved in the collective bargaining process. In fact, it allows unions to be automatically recognized as bargaining representatives for those of its members in the workplace; to be covered by collective agreements in workplaces where they have members; and to seek redress if employers refuse to bargain with them in good faith.
9. 193. The Government states that although the FWA removes the distinction between union and non-union agreements, it in no way restricts the ability of unions to be involved in the collective bargaining process. To the contrary, the FWA reinforces the fundamental right of employees to be represented in negotiations by a union. Employers must notify employees that they have this right when bargaining commences, and bargaining representatives (including employers) are required to meet the good faith bargaining requirements (section 228), including a requirement to recognize and bargain with other bargaining representatives. Fair Work Australia has the power to make bargaining orders if the good faith bargaining requirements are not being met.
10. 194. As regards the complainant’s allegation that the FWA establishes a preference for enterprise-level bargaining over multi-employer agreements by not allowing the parties to choose the level at which to bargain, not providing for protected industrial action in support of multi-employer agreements or “pattern bargaining” and by not protecting employees involved in negotiating multi-employer agreements, the Government states that the FWA places collective bargaining at the enterprise level at the heart of the workplace relations system and also specifically provides for multiple employers to voluntarily bargain together for a multi-enterprise agreement. The FWA removes the requirement under the previous laws, which required employers to seek prior authorization in order to bargain together. Furthermore, single employers and single-interest employers, such as employers that are related bodies corporate, or engaged in a joint venture, for example, franchises, are now also able to bargain together for a single-enterprise agreement with their employees. Protected industrial action is available in this case. The FWA also includes provisions to assist low-paid employees and their employers to access the benefits of collective bargaining through facilitated multi-employer bargaining; this special stream of facilitated multi-employer bargaining for low-paid employees is intended to help workers who have not been able to access the benefits of bargaining in the past.
11. 195. To ensure that multi-employer bargaining remains voluntary, however, the Government indicates that protected industrial action is not available in support of claims for a multi-enterprise agreement; also, action taken in support of “pattern bargaining” is not protected industrial action (i.e. immune from legal action such as claims in tort or contract) under the FWA. However, the making of common claims across multiple workplaces is not regarded as pattern bargaining, provided that the bargaining representative is genuinely trying to reach agreement and is willing to negotiate those claims at each enterprise (section 412(2)).
12. 196. As regards the allegations concerning restrictions on the content of collective agreements, the Government maintains that the FWA expands the range of matters that can be included in collective agreements, compared to the previous Government’s workplace relations laws. For example, it allows provisions in enterprise agreements on paid leave to attend union meetings or training, requirements for an employer to consult with unions about major change in the workplace and the ability for unions to be involved in dispute settlement procedures; such provisions were not permitted under the previous legislation. The FWA provides that collective agreements can deal with such subjects as “matters pertaining to the employment relationship”, including: matters pertaining to the relationship between the employer and their employees; matters pertaining to the relationship between the employer and the employee organization or organizations to be covered by the agreement; deductions of wages for any purpose authorized by an employee; and how the agreement will operate. The Government states that this is an appropriate parameter, ensuring that agreements deal with issues that properly relate to work performed and the entitlements of employees in the workplace.
13. 197. As concerns the allegations relating to restrictions on negotiations over strike pay, the Government states that, consistent with the general common law rule that employees are not entitled to receive payment for employment services they do not perform, it is unlawful for an employer to pay, or an employee to demand or request, strike pay. However, the FWA provides fairer and more proportionate options for employers to respond to employee industrial action than previous legislation. The new workplace relations system distinguishes between payments withheld during periods of unprotected and protected industrial action and includes special rules for protected partial work bans. When protected industrial action is taken, there will no longer be a minimum mandatory deduction of four hours’ pay (this was known as the “four hour rule” under the previous workplace relations system). The employer must only deduct pay for the actual period of industrial action taken by the employee. The “four hour rule” continues to apply to unprotected industrial action, in acknowledgement of the fact that snap strikes and bans can have severe and damaging effects on businesses. For unprotected industrial action that is of less than four hours’ duration, employers are required to withhold four hours’ pay. For more than four hours of unprotected industrial action, pay is withheld for the duration of the action. A mandatory minimum deduction of pay acts as a disincentive to taking unprotected industrial action.
14. 198. The FWA also introduced additional options to provide for greater proportionality and fairness in managing and responding to protected industrial action taken in the form of partial work bans. After giving notice, employers may deduct wages proportionate to duties not being performed. Fair Work Australia is able to settle any disputes about the amount of wages an employer proposes to deduct. Previously, any payment of wages where any form of work ban (no matter how minor) was in place was considered illegal strike pay. The Government believes that the provisions governing strike pay in the FWA are reasonable and appropriate for Australian conditions and do not impose undue restrictions on freedom of association. The Government will carefully monitor the application of the provisions to ensure that they work as intended.
15. 199. As concerns the allegations of restrictions on the right of entry to workplaces, the Government states that the FWA permits unions to enter workplaces to investigate suspected breaches of the law, an award, agreement or State occupational health and safety laws and to hold discussions with those members (or those employees who are eligible to be members) of the union. In the case of right of entry for the purpose of holding discussions, there is no longer a requirement that employees are covered by an award or agreement that binds the union; it is no longer necessary for the union to be actually covered by an employment instrument operating in the enterprise. Also, there are no restrictions on the subject matter of discussions. Moreover, while the employer can determine the location on the premises for holding discussions, the FWA now provides guidance on what would be an unreasonable location.
16. 200. According to the Government, the provisions of the FWA ensure that only “fit and proper persons” are able to hold a right of entry permit. The factors to be considered in making this determination are listed in section 513 and include whether the official has any previous convictions under industrial law or for certain criminal offences. Importantly, in recognition of the vulnerable nature of the industry, the FWA also includes new right of entry provisions that have been tailored specifically to apply to outworkers in the Textile, Clothing and Footwear (TCF) industry. Under the provisions, a permit holder can enter premises to inspect documents relevant to an alleged breach involving TCF outworkers, even if the TCF outworkers do not work at the premises where the documents are held. In addition, advance notice of entry is not required when permit holders enter any premises to investigate suspected breaches relating to TCF outworkers. The Government indicates that it considers that the new system properly recognizes the rights of employees to meet with their union in their workplace, while also preventing unreasonable behaviour.
17. 201. With regard to the allegations concerning restrictions on secondary boycotts and sympathy strikes, the Government states that the complainant’s reference to the restriction set out in section 438 appears to concern the former WRA, which provided that industrial action was not protected if taken “in concert” with persons who are not “protected persons”. This provision is not in the FWA: instead, the FWA now provides that industrial action is protected if organized or engaged in by a bargaining representative of an employee covered by the agreement, or by the employees specified, in the protected action ballot order.
18. 202. Secondary boycotts continue to be regulated by the Trade Practices Act. Those arrangements prohibit a person engaging in conduct with a second person which hinders or prevents a third person (who is not an employer of the first or second person) supplying or receiving goods and services from a fourth person (who is also not an employer of the first or second person) and which has the effect of causing a substantial loss or damage to the business of the fourth person (section 45D), or has the effect of causing a substantial lessening of competition in any market (section 45DA) and also prohibits a person engaging in conduct with a second person which prevents, or substantially hinders, a third person (who is not an employer of the first person) from engaging in trade and commerce (section 45DB). However, section 45DD of the Trade Practices Act provides that a person does not contravene sections 45D–45DB if the dominant purpose for which the conduct was engaged is substantially related to the remuneration, conditions of employment, hours of work or working conditions of that person or another employee also employed by the employer of that person.
19. 203. As concerns restrictions on the right to strike during the life of an agreement, the Government indicates that it is not appropriate for protected industrial action to be available during the life of an agreement on the basis that once parties have entered into an enterprise agreement, they should abide by the terms of that agreement. The Government believes that this is a reasonable requirement, noting that the new agreement and bargaining framework under the FWA facilitates the making of enterprise agreements that are fair and reasonable. This is achieved, for example, by enabling employees to be represented in bargaining and requiring the parties to bargain in good faith. Further, Fair Work Australia will only approve an agreement if satisfied that it has been genuinely agreed to and passes the “better off overall” test against the new safety net. Also, enterprise agreements must include a term in the agreement that requires employers to consult employees about major workplace changes and allows for the representation of employees.
20. 204. As concerns prohibitions on industrial action on grounds of economic harm, the Government states that the thresholds for suspending and/or terminating protected industrial action are sufficiently high and strike an appropriate balance between the rights of employees to take protected action with the need to protect the public interest by ensuring economic stability. Protected industrial action threatening trade or commerce is not prohibited under the FWA. Only in very limited circumstances does the FWA provide for protected industrial action to be suspended or terminated. It is only where Fair Work Australia is satisfied that protected industrial action is causing, or is threatening to cause, significant damage to the Australian economy, or an important part of it, or endangers the life, personal safety or health or the welfare of the population, or part of it, that it must suspend or terminate the protected industrial action.
21. 205. Subject to certain qualifications, Fair Work Australia must suspend protected industrial action for a period of time if it is satisfied that industrial action is adversely affecting the bargaining participants and is threatening to cause significant harm to a third party. Fair Work Australia must also be satisfied that the suspension of the industrial action is appropriate, taking into account whether the suspension would be contrary to the public interest as well as any other relevant matters. The harm to the third parties must be significant, that is, a more serious nature than merely suffering a loss, inconvenience or delay. This may occur, for example, where industrial action in one sector is significantly affecting another enterprise to the point where the other enterprise is at risk of insolvency. Fair Work Australia also has the discretion to suspend or terminate protected industrial action where significant economic harm is being caused to the parties themselves. Again, Fair Work Australia is required to consider such matters as the source, nature and degree of harm suffered, or likely to be suffered, the likelihood the harm will continue to be caused, or will be caused, and the capacity of the person to bear that harm. If the action is threatening to cause significant economic harm, Fair Work Australia must be satisfied the harm is imminent.
22. 206. The Government indicates that, in circumstances where Fair Work Australia believes that a “cooling off period” is appropriate and will help resolve the issues in dispute, it must also suspend protected industrial action. Fair Work Australia is required to take into account a range of matters including whether the suspension would be beneficial to the bargaining representatives for the agreement; the duration of the protected industrial action; and whether the suspension would be contrary to the public interest or inconsistent with the objects of the Act.
23. 207. Moreover, where industrial action is terminated because the action was causing, or threatening to cause, significant economic harm to the employer and employees, or the action was endangering the life, personal safety or health, or the welfare, of the population, or part of it, or was causing significant damage to the Australian economy, or an important part of it, then Fair Work Australia must, after a 21-day negotiating period, make a workplace determination (that is, arbitrate an outcome to the matters that are still in dispute at the end of the negotiating period). Fair Work Australia must extend the negotiating period to 42 days if all of the bargaining representatives jointly apply for the extension. Fair Work Australia may continue to use its powers to assist bargaining representatives to reach an agreement during the negotiating period. The Government strongly believes that the thresholds for suspending or terminating protected industrial action on each of these grounds under the FWA are sufficiently high to balance the rights of employees to take industrial action in pursuit of an agreement with the Government’s responsibilities for protecting the national economy, the safety, health or welfare of the population and the legitimate interests of other affected parties.
24. 208. As regards restrictions on the right to strike through the imposition of compulsory arbitration by the Minister, the Government states that the thresholds for the Minister making such a declaration are sufficiently high when balanced with the rights of employees to take protected action under the FWA. Importantly, under these provisions, the harm to the economy must be considered as significant and of a more serious nature than a mere loss, inconvenience or delay. The Minister for Employment and Workplace Relations has recently stated that she would intervene in industrial disputes only as a last resort, noting also that the outcome of ministerial intervention would be arbitration by Fair Work Australia. The power of the Minister to make such a declaration was also present in the WRA and, to date, has never been exercised.
25. 209. As regards the allegations concerning the FWA’s secret ballot strike provisions, the Government indicates that they are designed to be fair and have been simplified compared to the previous workplace relations laws. They are not intended to frustrate or delay the taking of industrial action. Protected action ballots ensure that eligible employees are free to make their own choice about whether or not to authorize industrial action. They are a simple mechanism for ensuring a democratic process for determining the views of employees about taking protected industrial action and are being carefully monitored by the Government. The FWA also provides for employees to take protected action in response to industrial action taken by employers without the need for a secret ballot.
26. 210. The Government states that, at this early stage, the protected action ballot provisions in the FWA are generally operating as intended. Based on data from the first six months of the FWA’s operation, of the 615 protected action ballot applications lodged, Fair Work Australia has made 529 protected action ballot orders; that is, 86 per cent of the applications were successful. The remaining applications comprise those that are rejected for reasons such as non-compliance with the requirements for a protected action ballot or technical errors, and those withdrawn for reasons such as bargaining representatives reaching agreement. At this stage, the Government’s view is that the parties are testing the parameters of the new laws and that, with time, the percentage of protected action ballots being granted should increase as Fair Work Australia decisions establish a body of case law in relation to the concept of genuinely trying to reach agreement, a key requirement for the granting of a protected action ballot order.
27. 211. The Government states that unnecessary delays in the ballot process have been minimized, as determinations for protected ballot applications, as far as practicable, are being made within two days of the application. Analysis of the 105 protected ballot applications lodged in September 2009, and scheduled for hearing by Fair Work Australia, indicates that 84 applications were heard within two days, 17 within three days, two within four days, one within five days and one within six days. The Government adds that it will continue to monitor carefully the application of the provisions to ensure that the secret ballot provisions work as intended.
28. 212. Finally, as concerns the complainant’s allegations on severe sanctions for engaging in unprotected industrial action, the Government states that it is necessary to provide appropriate deterrents, including the imposition of pecuniary penalties, against persons taking unprotected industrial action in the workplace. The Federal Court retains the discretion to determine what the appropriate level of penalty is, having regard to the circumstances of the case.

C. The Committee’s conclusions

1. 213. The Committee notes that the present case concerns allegations of contraventions of freedom of association contained in the FWA, particularly restrictions on the right to engage in collective bargaining and the right to strike.
2. 214. The Committee notes, firstly, the complainant’s allegations to the effect that the FWA undermines collective bargaining by permitting an employer to negotiate directly with an employee, or prospective employee, for conditions which vary from the relevant enterprise agreement. The Committee further notes the Government’s indication that the FWA does not provide for individual statutory agreements of any form, but rather takes as one of its objects “ensuring that the guaranteed safety net of fair, relevant and enforceable minimum wages and conditions can no longer be undermined by the making of statutory individual employment agreements of any kind, given that such agreements can never be part of a fair workplace relations system”. Moreover, according to the Government, individual flexibility arrangements cannot undermine industrial award safety net conditions or the provisions of a collective agreement, as an employee must be “better off overall” under the arrangement. The Committee further notes that section 202(3) provides that an individual flexibility arrangement under a flexibility term in an enterprise agreement does not change the effect the agreement has in relation to the employer, and any other employee, and does not have any effect other than as a term of the agreement. Observing that the provisions concerning individual flexibility arrangements have been carefully drafted and, according to the Government, do not undermine collective agreements, given that their impact is largely dependent on their application by Fair Work Australia, the Committee requests the Government to keep it informed of the application of the individual flexibility arrangement provisions in practice.
3. 215. As regards the complainant’s allegation that the FWA permits employers to enter into agreements directly with employees, even where a union exists, the Committee notes the Government’s indication that the FWA reinforces the fundamental right of employees to be represented in negotiations by a union: employers must notify employees that they have this right when bargaining commences and, under section 228, bargaining representatives, including employers, are required to meet the good faith bargaining requirements. In respect of this issue, the Committee additionally notes that section 172 provides that in the case of greenfield agreements – agreements relating to a “genuine new enterprise” – employers are to conclude agreements with one or more employees’ organizations; moreover, section 173 stipulates that an employer that will be covered by a proposed enterprise agreement must take all reasonable steps to give notice of the right to be represented by a bargaining representative to each employee who will be covered by the agreement.
4. 216. The Committee also notes, however, that section 172 could place employees, and organizations of employees, on an equal footing with respect to the conclusion of agreements that are not greenfield agreements – irrespective of whether or not an employees’ organization exists. Recalling that the Collective Agreements Recommendation, 1951 (No. 91), stresses the role of workers’ organizations as one of the parties in collective bargaining, and that direct negotiation between the undertaking and its employees, bypassing representative organizations where these exist, might, in certain cases, be detrimental to the principle that negotiation between employers and organizations of workers should be encouraged and promoted [see Digest of decisions and principles of the Freedom of Association Committee, fifth edition, 2006, para. 945], the Committee requests the Government to ensure respect for this principle and to provide detailed information on the application of section 172 of the FWA in practice, so as to allow it to determine the impact of this provision on the promotion of negotiations between employers and workers’ organizations.
5. 217. The Committee notes the complainant’s allegation that, by its stated objects and several of its provisions, the FWA establishes a preference for enterprise-level bargaining over bargaining at other levels – particularly multi-employer or “pattern bargaining”. In this respect, the Committee notes that one of the FWA’s stated objects, as set out in section 3(f), is “achieving productivity and fairness through an emphasis on enterprise-level collective bargaining underpinned by simple good faith bargaining obligations and clear rules governing industrial action”. Similarly, one of the stated objects of Part 2-4 of the FWA, which concerns enterprise agreements, is “to provide a simple, flexible and fair framework that enables collective bargaining in good faith, particularly at the enterprise level, for enterprise agreements that deliver productivity benefits” (section 171(a)). Additionally, the Committee notes that section 186(2)(ii) of the FWA requires, with respect to a multi-enterprise agreement, that Fair Work Australia be satisfied that the employer or employers concerned were not “coerced” into making the agreement, and that section 229(2) prohibits applications for bargaining orders made in relation to proposed multienterprise agreements – unless a “low-paid authorization” is in operation in relation to the agreement concerned.
6. 218. The Committee observes, moreover, that industrial action taken in furtherance of multienterprise or “pattern bargaining” is excluded from the definition of protected industrial action under sections 408–413 of the FWA: section 409(4) provides that for an employee claim action undertaken by a bargaining representative to qualify as protected industrial action, the bargaining representative must not be engaged in pattern bargaining in relation to the proposed agreement unless, as stipulated under section 412(2), the bargaining representative is “genuinely trying to reach an agreement with the employer”; and section 413, which sets out the common requirements that apply for industrial action to be protected industrial action, stipulates that the industrial action must not relate to a proposed enterprise agreement that is a greenfields agreement or multi-enterprise agreement (subsection 2). The Committee further notes that section 409(1)(b), by limiting protected employee claim actions to those “against an employer to be covered by the agreement”, would appear to exclude sympathy strikes and general secondary boycotts from the scope of protected industrial action.
7. 219. The Committee takes note of the Government’s indications regarding multi-enterprise bargaining, in particular that the FWA places collective bargaining at the enterprise level at the heart of the workplace relations system, and that multi-enterprise bargaining is facilitated by: (1) removing the requirement under previous legislation that employers seek prior authorization before bargaining together; and (2) facilitating multi-employer bargaining in low-paid industries. The Government also confirms, nevertheless, that to ensure the voluntary nature of multi-employer bargaining, protected industrial action is not available in support of claims for a multi-enterprise agreement, or for “pattern bargaining” – although under section 412(2) the making of common claims across multiple workplaces is not regarded as. “pattern bargaining”, provided that the bargaining representative is genuinely trying to reach agreement and is willing to negotiate those claims at each enterprise.
8. 220. In respect of these matters, the Committee recalls that, according to the principle of free and voluntary collective bargaining embodied in Article 4 of Convention No. 98, the determination of the bargaining level is essentially a matter to be left to the discretion of the parties and, consequently, the level of negotiation should not be imposed by law, by decision of the administrative authority or by the case law of the administrative labour authority. Furthermore, workers and their organizations should be able to call for industrial action (strikes) in support of multi-employer contracts (collective agreements) [see Digest, op. cit., paras 988 and 540]. The Committee further recalls that in a previous case concerning Australia, and with reference to the Building and Construction Industry Improvement Act of 2005, it had already reached conclusions noting that a general prohibition on sympathy strikes could lead to abuse and workers should be able to take such action, provided the initial strike they are supporting is, itself, lawful [see Case No. 2326, 320th Report, para. 445]. In view of the above, the Committee considers that subsections (1)(b) and (4) of section 409 and section 413(2), by excluding sympathy strikes, secondary boycotts and industrial action in support of multiple-enterprise agreements from the scope of protected industrial action, could adversely affect the right of organizations to seek and negotiate multi-employer agreements, as well as unduly restrict the right to strike. Taking into account its conclusions on such matters reached in previous cases concerning Australia, it requests the Government to review these sections, in full consultation with the social partners concerned.
9. 221. The Committee notes that section 409 also contains other restrictions on the right to strike. Section 409(1)(a) provides that industrial action is protected only to the extent that it is “organized or engaged in for the purpose of supporting or advancing claims in relation to the agreement that are only about, or are reasonably believed to only be about, permitted matters”. (Permitted matters are defined under section 172(1) as matters pertaining to: (1) the relationship between the employer or employers, and the employees, employee organization or employee organizations, that will be covered by the agreement; (2) deductions from wages for any purpose authorized by an employee who will be covered by the agreement; and (3) how the agreement will operate.) Furthermore, section 409(3) excludes from the scope of protected industrial action actions in support of the inclusion of “unlawful” terms, including terms relating to: the extension of unfair dismissal benefits to workers not yet employed for the statutory period; the provision of strike pay; the payment of bargaining fees to a trade union; and the creation of a union’s right to entry for compliance purposes that are different or superior to those contained within the Act.
10. 222. Moreover, the Committee notes that other provisions of the FWA provide for the suspension or termination of protected industrial action if: (1) it is causing, or may cause, significant economic harm (section 423); and (2) it has threatened, is threatening, or would threaten, significant damage to the economy or an important part of it (section 424(1)(d)). Section 431 further empowers the Minister to terminate protected industrial action in support of a proposed agreement in case of significant damage to the economy or a part of it, and section 426 provides that Fair Work Australia must suspend, or terminate, industrial actions threatening to cause significant harm to a third party. The Committee notes, finally, that section 417 prohibits industrial actions undertaken before the nominal expiry date of an agreement.
11. 223. In respect of these provisions, the Committee notes that according to the Government: (1) the thresholds for suspending and/or terminating protected industrial action are sufficiently high and strike an appropriate balance between the rights of employees to take protected action with the need to protect the public interest by ensuring economic stability; (2) only in very limited circumstances does the FWA provide for protected industrial action to be suspended or terminated; and (3) harm to the economy must be considered as significant and of a more serious nature than a mere loss, inconvenience or delay – the power of the Minister to make such a declaration has, to date, never been exercised. The Government adds that it strongly believes that the thresholds for suspending or terminating protected industrial action on each of these grounds under the FWA are sufficiently high to balance the rights of employees to take industrial action in pursuit of an agreement with the Government’s responsibilities for protecting the national economy, the safety, health or welfare of the population and the legitimate interests of other affected parties.
12. 224. These indications notwithstanding, as regards the right to strike, the Committee must recall that the occupational and economic interests which workers defend through the exercise of the right to strike do not only concern better working conditions or collective claims of an occupational nature, but also the seeking of solutions to economic and social policy questions and problems facing the undertaking which are of direct concern to the workers. Furthermore, the right to strike may only be restricted or prohibited: (1) in the public service only for public servants exercising authority in the name of the State; or (2) in essential services in the strict sense of the term (that is, services the interruption of which would endanger the life, personal safety or health of the whole or part of the population) [see Digest, op. cit., paras 526 and 576]. In the light of the above-noted principles, the Committee requests the Government to provide detailed information on the application of these provisions and to review them, in consultation with the social partners, with a view to their revision, where appropriate.
13. 225. As regards the complainant’s allegation that the provisions in Part 3-3, Division 8, of the FWA governing the secret ballot procedures for the calling of a strike are unduly burdensome and complicated, the Committee notes that according to the Government, the said procedures are designed to be fair, have been simplified compared to the previous workplace relations laws, and are not intended to frustrate or delay the taking of industrial action. In respect of this matter, the Committee recalls that the conditions that have to be fulfiled under the law in order to render a strike lawful should be reasonable and, in any event, not such as to place a substantial limitation on the means of action open to trade union organizations. Furthermore, the requirement of a decision by over half of all the workers involved in order to declare a strike is excessive and could excessively hinder the possibility of carrying out a strike, particularly in large enterprises [see Digest, op. cit., paras 547 and 556]. The Committee requests the Government to ensure respect for these principles in practice, as well as to provide detailed information on the practical application of the secret ballot procedure provisions.
14. 226. The Committee notes that the FWA contains several provisions concerning the content of collective agreements. As noted above, section 172 provides that an agreement may be made on matters pertaining to the employment relationship, deductions from wages, and the operation of the agreement. Section 186(4) further requires that an agreement contain no “unlawful terms”, which, as defined under section 194, includes terms relating to: the extension of unfair dismissal benefits to workers not yet employed for the statutory period; the provision of strike pay; the payment of bargaining fees to a trade union; and the creation of a union right to entry for compliance purposes that are different or superior to those contained within the Act. Additionally, section 470 bans the provision of strike pay; the Government further confirms in this connection that negotiations concerning strike pay are also prohibited.
15. 227. The Committee notes that, according to the Government, “matters pertaining to the employment relationship” include such matters as the deduction of wages for any purpose authorized by an employee, and how an agreement will operate. In spite of this clarification, the Committee observes that the exact scope of the term “matters pertaining to the employment relationship” remains elusive. Further recalling that measures taken unilaterally by the authorities to restrict the scope of negotiable issues are often incompatible with Convention No. 98, and that tripartite discussions for the preparation, on a voluntary basis, of guidelines for collective bargaining are a particularly appropriate method of resolving these difficulties [see Digest, op. cit., para. 912], the Committee requests the Government to provide further clarification on the application of sections 172 and 194 of the FWA and review these sections, in full consultation with the social partners, in line with the principle cited above.
16. 228. The Committee notes that under sections 512 and 513 of the FWA, union officials require a permit issued by Fair Work Australia in order to access the workplace, and that the said permits are issued on the fulfilment of a “fit and proper person” test, under which the factors to be considered include: whether the official has ever been convicted of an offence involving entry on to premises, or intentional use of violence against another person, or intentional damage or destruction of property; as well as whether the official, or any other person, has ever been ordered to pay a penalty under this Act, or any other industrial law, in relation to action taken by the official”. In respect of this matter, the Committee recalls that workers’ representatives should enjoy such facilities as may be necessary for the proper exercise of their functions, including access to workplaces and, moreover, that workers’ representatives should be granted access to all workplaces in the undertaking where such access is necessary to enable them to carry out their representation function [see Digest, op. cit., paras 1102 and 1104]. Bearing in mind the aforementioned principles, the Committee requests the Government to provide information on the practical application of section 513, including any statistics relating thereto, in order to allow it to assess the impact of that section on the right of workers’ representatives to access the workplace.