Business reacts strongly to union push towards mandatory arbitration

The business community has hit out against a push led by the Government to increase the possibility for wage negotiations to be decided through arbitration, saying there would be no incentive for unions to enter negotiations.

The push was included as part of a number of changes to the Australian Labor Party platform, with the party holding its conference over the weekend. The union movement wants to see workplace agreements include a clause for arbitration to be used as a last resort when negotiations break down.

But employer groups say such a move would widen Fair Work’s role in the workplace.

“This was hard fought during the development of the Fair Work Act, and the outcome of the discussion was to allow arbitration only in very limited circumstances as a compulsory act,” Australian Industry Group industrial relations director Stephen Smith told SmartCompany this morning.

The move has also been criticised by the Australian Chamber of Commerce and Industry, with chief executive Peter Anderson saying the group will not be supporting extending arbitration powers beyond minimum standards. The Australian Mines and Metals Association has also highlighted its opposition.

The move has been backed by the ACTU, which says the move would allow employers to bargain over job security.

The resolution itself would include last-resort arbitration clauses to “deal with those circumstances where such disputes cannot be resolved through discussion, conciliation or mediation”.

It would also require “dispute resolution procedures in agreements provide for arbitration as the final stage where disputes cannot be resolved”.

But Smith says the clauses dissuade unions from entering negotiations.

“Once a party knows that arbitration is available, there’s little incentive to reach agreements and it encourages parties to make ready for arbitration.”

“We’ve had compulsory arbitration for more than100 years up until 1993, and we still have a very comprehensive safety net of awards and legislated minimum standards that are there.”

Smith says if bargaining doesn’t work, the current safety net exists to provide an outcome. And as he argues, “our safety net is very comprehensive compared to other countries”.

The Government disagrees. Workplace relations minister Chris Evans told the Australian Financial Review the new platform shows “the priorities of the labour movement”.

“You have seen an increased focus on how we resolve protracted disputes… people are looking at the role of Fair Work Australia, whether it has the powers to effectively resolve these things and whether it has the powers to ensure good faith bargaining occurs.”

But Smith says the issue is one that could end up hurting businesses across the country, forcing them into situations where they are forced to enter arbitration.

“Employers don’t have a problem with voluntary arbitration, if all parties agree to put their dispute to a third party. But what this debate is about is having the right to impose arbitration on other parties.”

“We’ll be continuing to raise our views on these issues publicly to make sure people understand the arguments. In our review, we will be arguing strongly against expanding arbitration powers.”