Awards and enterprise agreements

Introduction

In this chapter, we will look at two common types of employment contracts: Awards and Enterprise Agreements (Certified Agreements), which comprised the long-lasting system of industrial relations. The collective bargaining power of unions and employees was strong within this system. Accordingly, employers had less bargaining power under the system of awards and enterprise agreements, compared with their increased power under the present system of individual agreements. See image 1

The Constitutional framework

When Australia became a nation (1901), labour relations had been one of the most important topics of debate. Trade unions had become an important force in the economy. Economic productivity, however, was dependent on settling industrial disputes. This would avoid strikes (by the unions) and lockouts (by employers). Strikes and lockouts reduce productivity and decrease economic growth.

It was proposed by the framers of the Commonwealth Constitution that the federal government would have power to make laws with respect to conciliation and arbitration of industrial disputes that spread beyond the borders of any one State. This was accepted (by referendum) by a majority of voters in a majority of States and became section 51 (xxxv) of the Commonwealth of Australia Constitution Act 1901 (Imp).

The federal system concentrated on arbitration. It required, therefore, two parties (usually unions and employers) to bring forth a dispute. Without a dispute, there would be nothing to arbitrate. The following is an overview of the results of federal arbitration.

Wage determination: awards and enterprise agreements

For a long period of its brief history, collective bargaining has been a feature of industrial relations in Australia. Awards are a type of employment contract outlining the basic (minimum) terms and conditions applying to particular jobs (such as the Award for teachers). Award wages and conditions existed for most industries, along with 'over-award' agreements (such as awards set at enterprise or workplace levels). The industrial tribunals set Award rates and Australian workers across industries received general wage increases over time. This is known as centralised wage fixing. The process was similar to a court case. Each side (usually the unions and the employer groups) put forth their argument about wages and conditions. After hearing both sides, the Tribunal made a decision (an Award). See image 2

Awards tended to ensure that employees performing similar jobs would receive a minimum (or higher) level of pay and conditions, such as sick leave, maternity leave, overtime rates of pay, holiday periods and long service leave. Awards were binding determinations decided by an industrial tribunal. At a federal level, the relevant body was the Australian Industrial Relations Commission.

It is fairly common for employers to provide 'above-award' pay and conditions, to attract and retain employees. Employees have also negotiated above-award pay or conditions, especially when their bargaining power is strong. There are many federal and State Awards still providing minimum statutory entitlements for workers. There was, generally, an award-free group of employment contracts, involving such workers as professionals (like accountants, managers and lawyers) who whose expertise was rare and who did not need the security of collective bargaining. See image 3

Collective bargaining is where all workers in a business or an entire industry (for example, every single coal miner) agree to present a united front to negotiate for their pay. If every single coal miner decided to go on strike, the employer would not be able to sell any coal, so this is a very powerful weapon. This is known as collective bargaining power. Concerns over rising inflation (successive wage and price increases) led business, government and unions to discuss the idea of decentralised wage-determination (known as the Accord during the 1980s).

Certified Agreements

Decentralised determination of employees' wages and entitlements involved the growth in enterprise bargaining (Certified Agreements): collective bargaining by employers and unions at the workplace level as opposed to an entire industry. The idea was to negotiate the most appropriate employment terms and conditions for particular workplaces. Over the course of the 1980s and 1990s, enterprise bargaining tended to replace awards as the main type of employment arrangement, with enterprise agreements featuring 'trade-offs'- such as wage increases with increased productivity (or reduced entitlements).

By the 1990s, employers advocated enterprise bargaining instead of industry wide Awards. Lower paid workers were protected by minimum award pay and conditions (known as a 'safety net'). A more radical shift, towards non-union collective bargaining, also arose at this time. This form of negotiation would give rise to the idea of individual contract negotiations between employers and employees. Certified Agreements, however, were prohibited from reducing wages and conditions below what was available through the Award process. It follows that transferring from an industry-wide Award to a Certified Agreement would not cause any disadvantage to an ordinary worker. See animation 1