Conflict beats consensus in IR again, says COSBOA chair Mark McKenzie

Workplace relations, industrial relations, Fair Work, WorkChoices — anything to do with employment law — has long been about conflict, ideology, mistruths, hyperbole and emotions. It shouldn’t be.

Employment rules should be easy to understand for employers and employees. It should be easy to regulate. It isn’t. 

It is a fact that the failure of the federal parliament to pass four of the five elements of the Industrial Relations (Omnibus) Bill in recent weeks is disappointing. There were no winners. We were all left shaken by a ferocious debate that belied the modest nature of the proposed reforms.

Within this context, the Prime Minister Scott Morrison’s May 2020 call for unions and employer groups to ‘lay down their swords’ and set aside their differences, for the good of Australia has fallen on the defiantly deaf ears of the employer IR Club.

Big employer groups like the Australian Chamber of Commerce and Industry (ACCI) and the Australian Industry Group (AIG) have publicly blamed federal parliamentarians for the failure. Such criticism is disingenuous.

These two groups have practised behaviours that have paralysed IR reform in recent years. Motivated by self-interest, they both promoted conflict and then took this conflict to the Australian Parliament. These groups bullied the Coalition into championing their proposed reforms in the wake of their own failures. The ACTU responded in kind, petitioning the federal opposition to oppose the bill. 

Claims by these industry groups that they represent small business are invalid. Their actions were about protecting some of their members — the big labour hire firms — who are now free to continue the very employment practices that got us all into this mess in the first place.

Those not privy to the detail of the political ugliness associated with workplace relations must be bewildered.

Why, for example, is it so hard to come up with a definition of casuals and agree on a fair mechanism for casuals to elect to convert to permanent employment?

Why can’t we develop a better mechanism for enterprise bargaining agreements for big business that shares productivity gains with employees?

Why shouldn’t we strengthen our IR laws to prevent systemic and deliberate wage underpayment?

The simple answer is we must do all these things. Like any form of bargaining, however, the parties must work in good faith to achieve consensus. Despite the efforts of some, that did not happen.

‘Casual’ employment: An IR sticking point

To understand why everything went so pear-shaped, we need only look at what happened with the proposed casual employment changes.

The need to insert a definition of casuals arose from two separate legal actions taken by unions against a big labour hire company in the mining industry.

The absence of an agreed arbitration mechanism meant this dispute had to be decided outside of the Fair Work Commission, through proceedings in the Federal Court. AIG defended the company and lost. Aspects of a second court decision, again lost by AIG, gave rise to a risk that the decision could spread to all ‘casual’ employment — not just labour hire arrangements — with a potential retrospective business liability of around $39 billion.

To reverse the problem they had created, AIG (with the support of ACCI) promoted the need for new legislation to remove this risk. A fierce lobbying effort ensued and both groups sought to advance a definition that deliberately conflated “labour hire” with “casuals” to protect big labour hire companies.

The ACTU opposed this action for obvious reasons. COSBOA was also awake to AIG’s tactics and noted a possible compromise lay in developing a definition that was constrained solely to the real-world definition of a casual, with labour hire issues to be resolved in the courts.

This middle ground meant that the accumulated liability for most businesses would be nil, while liability for big labour hire companies would likely be a fraction of the $39 billion suggested.

Mindful of the Prime Minister’s call for consensus, COSBOA entered into last minute conversations with the ACTU, which indicated a willingness to discuss this concession with an arbitration safeguard inserted into the casuals bill. This would deal with any disputes between employers and employees about requests to convert from a casual to permanent employment.

Both parties agreed and this was announced at Parliament House during the week of the omnibus bill debate. The deal was met with shrill cries of opposition from AIG and ACCI; neither organisation was able to state the exact nature of its concerns.

The casuals bill ultimately passed by just one vote. It came at the cost of discarding the other important elements of the legislation relating to wage underpayment penalties and enterprise bargaining. (On enterprise bargaining it is also worth noting that the Business Council of Australia and the ACTU came to a similar style of agreement late last year, which was similarly torn down by AIG and ACCI).

The ability of our economy to thrive post-COVID is dependent upon growing productivity and sharing the financial benefits fairly between businesses and employees. COSBOA, the BCA and the ACTU have all demonstrated an ability to adopt a consensus approach. ACCI and AIG (and others) have not.

It is time for consensus to become the new norm. Conflict and zero-compromise behaviours must be relegated to pre-COVID IR history, where they belong.