An increasing number of employers are asking themselves why they should have to abide by the terms of an Enterprise Agreement with their workers and unions, when it would cost less money if they didn't. Many have come to the conclusion that they should simply escape the obligations of their agreements.
The problem for workers is that companies who attempt this find that the Fair Work Commission (FWC) and the federal government increasingly support the idea that companies should be able to escape agreements so they can pay their workers lower wages and have fewer limitations on their management prerogative.
The most recent example of this is the decision by FWC to terminate the Murdoch University Academic and General Staff Enterprise Agreement as of September 26. The effect of this decision, albeit with an undertaking from the employer to maintain wages, leave and other conditions for six months, is:
- Salaries could fall by between 20% and 39%;
- Superannuation contributions could fall from 17% to 12.5%;
- Redundancy payments could fall by at least 33% for academic staff and up to 80% for professional staff;
- Parental leave could become unpaid leave;
- Personal leave could fall from 12 days a year to 10;
- Academic workload regulation could disappear; and
- Staff will become dependent on promises and policies that the university could change at any time for any reason.
FWC Commissioner BD Williams accepted Murdoch University management’s argument that it is facing serious financial difficulty and that 25 of the agreement’s clauses “were not supportive to Murdoch operating as a flexible and efficient enterprise” and that the termination of the agreement would strengthen the position of Murdoch management to negotiate a new agreement with the clauses it is seeking.
On August 30, federal education minister Simon Birmingham called on all universities to take advantage of this opportunity.
The criteria for seeking the termination of an agreement is extremely limited. The agreement must have passed the nominal expiry date; a genuine attempt must have been made to reach agreement; it needs to be in the public interest; and the commission must consider it appropriate to terminate the agreement.
The “public good” test is increasingly low. The test used in the Murdoch case was the potential impact on the WA state economy if Murdoch wages were to revert to the award. Universities are relatively large employers, but they are still only small components of the total wages paid in any state.
It would seem unlikely that many private employers would have a wage bill large enough to have a major impact on the economy, making the test largely meaningless.
Change the rules
The National Tertiary Education Union (NTEU) and the ACTU have both rightly pointed to the Murdoch decision as further evidence of the need to change the rules of Australia's industrial relations system.
NTEU WA Division Secretary Gage Gooding said: “The way in which this agreement has been terminated is another example that our laws are badly broken and must change to ensure the just treatment of workers”.
ACTU Secretary Sally McManus said: “This is the latest in a very long list of companies that have exploited this incredibly destructive precedent set by the Aurizon case at Fair Work. We need immediate action to stop companies completely bypassing the normal bargaining process and reaching for this nuclear option … we need to change the rules so they are not used by employers to blackmail workers into accepting lower pay and job security.”
Tasmanian independent MP Andrew Wilkie has announced his intention to introduce a private members bill to ban such “nuclear” terminations of enterprise agreements.
But it is important to note that making it tougher to terminate agreements — or even putting the decision in the hands of workers and their unions — would only close the door on one avenue for employers to seek to massively undermine agreements through reversion to the award. Options such as using labour hire or outsourcing work to contractors would remain and enterprising companies could find further options to escape an agreement.
The fundamental problem is the massive gap between the wages and conditions in the majority of EBAs and the underlying awards and the ways employers can seek to employ new workers paid at the award rate or just above it.
While awards were the primary mechanism of providing employment conditions prior to the introduction of enterprise bargaining in 1993, unions had always been able to secure above award conditions. These conditions could then be incorporated into the underlying award and from there flow onto other awards. This process was central to the Australian Manufacturing Workers' Union (and its precursors’) “hot shop approach” to collective bargaining.
Gap between enterprise agreements and awards
With the passing of the 1993 Industrial Relations Reform Act and the subsequent Workplace Relations Act the relationship between local conditions and awards became one directional: only awards could affect conditions in an individual workplace not the other way around. This meant that over time there was a gap grew between the wages and conditions in enterprise agreements and the underlying awards.
The gap between enterprise agreements and awards was exacerbated by the Howard government's award stripping, which limited the number and types of matters that could be included in an award. This not only massively increased the gap between awards and agreements, but at a stroke of a pen it stripped hundreds of thousands of workers of rights they had previously won.
Re-establishing a two-way relationship between local working conditions enshrined in an agreement and industry-wide award conditions will not only help protect agreements from being undercut by employers seeking to revert to the award, but also enable the hard work of workers seeking to improve their conditions to flow onto other workers in their industry, helping to build social solidarity and limit the competitive advantage of employers who resist enterprise agreements.
Such a shift would be deeply opposed by employers and would be a fundamental break with the direction and thinking of the FWC and its precursor over the past 25 years. But it would be a significant change that could dramatically improve the working lives of millions of workers.
However, simply changing the rules would not be enough, as history has shown that bodies like the FWC are not neutral umpires who can be relied upon to deliver fairness to working people. Wage justice will require an ongoing movement of working people in support of improved wages and conditions.