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Issue #1671      February 4, 2015

Individual contracts on agenda

Anti-union wave coming Part 2

See here for part one.

Individual contracts, known as Australian Workplace Agreements (AWAs), were introduced by the former Howard Coalition government. They were at the centre of the Your Rights @ Work community/trade union campaign against WorkChoices that played a major role in the defeat of the Howard government in 2007. The incoming Rudd Labor government’s Fair Work Act phased out the AWAs.

Employers used AWAs to roll back more than a century of hard won conditions – increase working hours, reduce wages, casualise their workforces, remove penalty rates, treat public holidays as ordinary working days, reduce or cut out the annual leave loading, etc.

In 2007, one University of Sydney study of 8,343 employees found that people on AWAs on average earned $106.40 per week less than workers on collective enterprise agreements.

The introduction of non-union AWAs was the culmination of a process started under Labor in the 1980s from reliance on a highly centralised and comprehensive system of union negotiated awards to enterprise agreements (EBAs) and non-union individual contracts. AWAs enabled employers to dictate terms and conditions, in particular, in non-unionised workplaces where workers are extremely vulnerable.

The question of individual contracts and EBAs was one of the subjects raised by the Productivity Commission which is holding an inquiry into Australia’s workplace relations system commissioned by the Abbott Coalition government.

On January 23 the Commission released five issues papers calling for submissions on the specific issues. See last week’s Guardian (“Anti-union wave coming”, #1670, January 28), for what the Commission had to say about modern awards, national employment standards and minimum wages – the three components that underpin the system in setting a “safety net” for workers lacking industrial muscle.

Enterprise agreements

“Pattern bargaining”, where trade unions negotiate identical agreements with different employers, is also on the employer hit list. The Commission raises concerns about its impact. Unions adopted this process as the system was decentralised, attempting to maintain uniform conditions across an industry. There is a real danger that competition between companies would see a race to the bottom in labour costs. If one company cuts costs, the others have to follow or go out of business.


Unions in industries where the principal companies use contractors to provide labour have sought agreements that apply to all contractors and their employees. This prevents the driving down of conditions by competing contractors and uniformity across the site, whereas the Coalition and employers are strongly opposed to unions being able to negotiate an agreement with principal companies that applies to all workers on site.

The Commission takes up this issue from the perspective of employers. It raises the concept of “employee groups” negotiating a joint agreement with both the labour hire agency and the host business. Not the unions negotiating a single agreement applicable to all contractors and workers on site.

At present the Fair Work Act requires that EBAs contain “permitted matters” that relate to the employee-employer or union-employer relationship. The Act fails to define “employee-employer relationship”. The Commission is seeking recommendations on “what aspects of the employee/union-employer relationship should be permitted matters under enterprise agreements.” In other words it would like to further restrict the content of enterprise agreements.

Trade-offs back again

There is scope in an enterprise agreement to trade off particular benefits of a modern award against other benefits, as long as all employees covered by the agreement are better off overall – what is known as the “better off overall test” or BOOT.

The Commission is considering the scope of BOOT in enterprise agreements and whether the types of trade-offs by workers could be expanded.

It is also looking at measures to promote productivity increases in agreements – another form of trade-offs by work flexibilities to increase profits. This was done in the 1980s (two-tier wages system) by such means as cutting staff levels, reducing paid breaks, introduction of casuals, multi-skilling and the loss of other non-monetary conditions.

Concrete conditions were traded off for a few extra dollars which over the coming years were eroded by inflation. The Commission sounds eager to increase the scope of such trade-offs. It means workers pay for their own wage rises through saving their boss money by sacrificing conditions. In fact, many employers made a profit out of the trade offs by saving more than the extra they paid workers!

Individual agreements

Under the Fair Work Act, all awards must contain a clause that gives the parties to the agreement the capacity to form Individual Flexibility Arrangements (IFAs) that vary the effect of the award. Similar provisions exist for enterprise agreements for flexibility terms “in order to meet the genuine needs of the employee and employer”. Variations include such things as greater flexibility regarding working hours, rostering, etc. The question here comes down to who gains the flexibility – the boss or the worker!

Unions have expressed concern over IFAs because they are supposed to be agreed to on an individual basis and could thus be used to not only undermine important gains won by the union in collective bargaining but serve as de facto individual contracts. This is particularly the case where workers are in lower paid and “less skilled” work.

Employers on their part are seeking greater flexibility. The Commission notes that more than 90 percent of employers do not have any IFAs in place in their workplaces and is looking at how to change this situation.

“Should there be restrictions on the matters that parties can trade off in forming individually-tailored agreements, and if so, why?”, the Commission asks. Once again, reiterating the theme of trade-offs and individual agreements – a softer term for individual contracts.

The issues papers raise important questions and, as previously stated in Part 1, are presented as questions for organisations and individuals making submissions to offer their evidence and views. But the direction in which it is heading is not difficult to work out by its comments and the content of its questions. After all, the Productivity Commission has a well-earned, neo-liberal reputation that is far from pro-worker. The term “productivity” as used by neo-liberals is spin for “profit” per worker or rate of exploitation.

Part 3.

Next article – Is the US ready to trigger war in Asia?

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