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Delivering to the unions

By John Roskam - posted Monday, 14 September 2009

If you ever wanted to know the impact of Kevin Rudd's industrial relations policies there are easy ways of finding out. You could read the decision (September 2, 2009) of the Australian Industrial Relations Commission, which declared that "award simplification" will simultaneously cut employee wages and increase costs to business. Or you could go to the web site of Fair Work Australia and read some of that organisation's recent decisions.

You'll see for yourself how Australia runs the risk of returning to the industrial relations dark ages. And you'll also see what the Rudd Government delivered to the unions in exchange for the ACTU helping get the ALP elected.

Fair Work Australia began on July 1 and administers Labor's Fair Work Act. The legislation requires employers and unions to bargain in "good faith", Even though good faith bargaining is a new principle in Australian law the unions knew exactly what they were doing when they demanded the ALP include good faith requirements in the Fair Work Act.


At the Fair Work Australia website you can study the decision of National Union of Workers v Defries Industries Pty Ltd (B2009/10439) made recently. Defries Industries is just the sort of business Kevin Rudd would like. Some might say it is a bit of an Australian manufacturing industry success story. Based in Melbourne, it is a family owned company with more than 100 staff, making and exporting medical products ranging from surgical forceps to wound dressings.

Throughout July the company had been in discussions with its employees about an enterprise agreement. The company had planned its staff would vote on the agreement at the beginning of August. On July 7 the National Union of Workers served a log of claims on Defries on behalf of those 40 per cent of the company's employees who were union members.

After two meetings in July between the union and the company tile union went to Fair Work Australia and complained Defries wasn't bargaining in good faith as required by the Fair Work Act. On August 10 Fair Work Australia agreed with the union and ordered the vote on the enterprise agreement be cancelled and directed the company to negotiate with the union.

What's interesting is that the views of the majority of Defries employees who were not union members and who may have wanted to vote on the enterprise agreement appear not have to been considered by Fair Work Australia. Further, Fair Work Australia declared the company was not allowed to communicate with the 60 per cent of its employees who were not union members because the union, which represented 40 per cent of employees, was not given the chance to tell the company what the company should say.

According to Fair Work Australia, Defries was not bargaining in good faith because its two meetings with the union had been too short and the company refused to negotiate with the union on issues that Defries had decided were non-negotiable. The first meeting between the company and the union lasted 10 minutes and the second was 15 minutes. It didn't seem to occur to Fair Work Australia that the reason the meetings were so short was because the union wanted to negotiate, on precisely the things the company had said were non-negotiable.

What's happening at Defries Industries is not an isolated case. As industrial relations lawyer John Pesutto explains in a forthcoming research paper, it's becoming obvious that good faith bargaining is the vehicle by which unions will regain and expand their influence.


While only 14 per cent of private-sector employees are union members, a union doesn't need to have the majority of a company's employees as members to achieve its aims - as the experience at Defries demonstrates. Good faith bargaining requirements give unions an array of opportunities to delay and frustrate employers so that in the end some employers will find it easier to simply capitulate.

In July Fair Work Australia ordered the Queensland Tertiary Admissions Centre to cancel its employees' vote on an enterprise agreement because the centre had not had a meeting with the relevant union to discuss the agreement - even though the union had not indicated it had ever wanted a meeting.

The shape of the industrial relations regime under Kevin Rudd and Julia Gillard is becoming clear. And all those business lobby groups who sat on their hands while WorkChoices was abolished and the Fair Work Act introduced in the hope they would somehow get a better deal can now see exactly what their strategy achieved.

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First published in the Australian Financial Review on September 4, 2009 as "Dark Ages is the Real Deal".

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John Roskam is executive director of the Institute of Public Affairs.

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