The Coverage and Charactersitics of Federal and State Labor Laws under Work Choices - A Comparative Analysis

Introduction
In March 2006, the Workplace Relations Act 1996 as amended by the Workplace Relations Amendment (Workchoices) Act 2005 came into effect. One of its key amendments being the formulation of a single national industrial relations body, replacing the previous model where the various state and federal industrial relations systems coexisted side by side. This radical shift towards centralisation brings with it opportunities for the federal government to be more proactive in promoting economic growth, yet a degree of flexibility is lost where state systems could cater to particular needs and circumstances in their respective jurisdictions.

History of Industrial Relations
Prior to the Workchoices amendments, the Commonwealth lacked jurisdiction to enact national legislation directly on employment conditions (such as wages). Instead, the Federal Government was empowered to establish mechanisms that facilitate the resolution of certain types of disputes through conciliation and arbitration under section 51(xxxv) of the Constitution. With this, the Commonwealth Court of Conciliation and Arbitration was created pursuant to the Conciliation and Arbitration Act 1904 (Cth), currently known as the Australian Industrial Relations Commission. During its history, the Commission has laid the foundation for a centralised system of wage fixing and other legislative industrial documents and awards. The current division between the state and federal jurisdiction on labour laws is due in part to the expansive approach to the interpretation of the Commonwealth powers by the High Court, a product (by and large) of the formulation of industrial powers in the Constitution. Traditionally, the Commonwealth had a prominent influence over Australia’s unique system of wage fixing while areas such as occupational health and safety, together with the compensation of workers injured at work were a state matter. Recent years have seen the coalition federal government led by John Howard take a more dynamic approach on labour law by increasing its dominance over the states on matters of industrial relations.

Federal Labour Law
The Workchoices amendments are the most prominent and comprehensive manifestation of the federal government’s power to enact national labour laws. This extremely complex piece of legislation replaces the original Commonwealth Conciliation and Arbitration Act of 1904. The principal objective of the previous 1996 Act was stated to be the provisions of ‘a framework for cooperative workplace relations so as to promote the economic prosperity and welfare of the people of Australia’. The Australian Industrial Relations Commission and the Federal Court of Australia became vital components of this framework. Together, these legislative bodies constituted the contemporary equivalent of the traditional Arbitration Court. The Australian Industrial Relations Commission, however, lacks judicial powers, as opposed to the Federal Court which operates as a general court of law and its jurisdiction is not restricted to only matters of labour law. The new Workchoices laws introduced many significant amendments to the original Workplace Relations Act 1996 (Cth). The major amendments include the following:

- Changing dismissal protection laws for some employees
Under this provision, employees of businesses under 100 staff will no longer come under the jurisdiction of unfair dismissal laws. In addition, employees of larger businesses who are dismissed for ‘bona fide operational’ reasons are also not protected.

- Forcing all constitutional corporations into the Federal system
All corporations under the constitution (Financial, trading and foreign corporations) are forced into the new Workchoices system, which the Government argues is valid under the Australian Constitution. This argument relies on the corporations’ power given under section 51(xx) as the entire basis for the government’s new laws. In the case of NSW and others v Commonwealth 2006, the High Court ruled that the Workchoices amendments were constitutional.

- Removing the "No Disadvantage Test" for agreements
Prior to the Workchoices amendments, Collective Agreements also known as Certified Agreements under both the amended Workplace Relations Act as well as Australian Workplace Agreements had to satisfy a No Disadvantage Test. This test aims to evaluate a proposed agreement which should cover employees up until the proposal for the agreement through relevant awards. By contrast, only five minimum entitlements are sought by employers in the amended Workplace Agreement Act 1996 (Cth). These entitlements seek to cover maximum ordinary working hours, annual leave, parental leave, personal/carer's leave and minimum pay scales for workers. The minimum entitlements are collectively referred to as the Australian Fair Pay and Conditions Standard. Although in terms of retrospectivity, the above conditions will have no bearing on any agreements that were certified prior to the commencement of Workchoices.

- Streamlined process for agreement certification
Prior to the introduction of the new amendments in Workchoices, all ‘certified agreements made by an employer directly with employee or unions had to be lodged and certified by the Australian Industrial Relations Commission’. With the changes to the Workplace Agreements Act 1996 (Cth), responsibilities concerning the overseeing of agreement certification were transferred to the Office of the Employment Advocate, which had some of its powers of investigation assigned to the Office of Workplace Services. Therefore, parties to a collective agreement will no longer be required to appear before the Commission but rather need only to lodge the agreement with the Office of the Employment Advocate.

Criticisms
Although the new laws are supported by various business associations such as the Business Council of Australia and the Australian Chamber of Commerce and Industry, they are opposed by the labour movement, principally the Australian Labor Party and the Australian Council of Trade Unions as well as attracting criticism from nearly all state and territory governments, which are currently held by the Labor Party.

State Labour Law
Prior to the Workchoices amendments, the federal jurisdiction governing industrial powers was limited. These Constitutional limitations, however, do not hamper the state legislatures. The states’ emphasis on industrial relations is not focused on regulating conditions of employment but rather seeks to mimic a more effective copy of the Federal Industrial mechanism, tailored to the needs of individual states and territories. In a broad sense, substantive legislation in matters of labour law is restricted to the domains of workers’ compensation, which takes the shape of the so called ‘workers’ compensation statutes’. It is also at the state level that various forms of leave entitlements for workers (like long service leave) are catered.

Resolution of Inconsistencies between the States and Commonwealth
Where there is an inconsistency between State and Federal laws, Section 109 of the Australian Constitution stipulates that the latter prevails. It is widely accepted that the latter is sufficiently broad to include federal awards as well as legislation. However, the notion of inconsistency is somewhat more problematic. The notion of a direct inconsistency is a simple process of discerning the area where there is a conflict of interest although often, this inconsistency is more ambiguous. Typically, the simultaneous compliance of both laws is impossible. However, in the case of Clyde Engineering Co Ltd v Cowburn (1926) 37 CLR 466, the federal award fixed a standard 48 hour working week as opposed to the states, which imposed 44 hours prescribed by relevant state awards. In general, a narrow interpretation to inconsistency is preferred, which would include instances of indirect inconsistency.

The Victorian Industrial Relations System
In 1996 the Victorian Government, under the Premier Jeff Kennet, referred most of its industrial relations powers to the Commonwealth Government. This allowed for the formation of a single framework of laws regulating industrial matters in Victoria through the Workplace Relations Act 1996 (Cth). While Victoria no longer has a state-based IR system, except for some specialist legislation, the Victorian Government still retains certain conditions, among which, preserve for the state, the power to regulate various aspects of public employment. Even though this allowed Commonwealth industrial relations law (the Workplace Relations Act 1996 (Cth)) to have a broader reach in Victoria, the Workplace Relations Act is generally limited in operation by the corporations’ power and the conciliation and arbitration power.

Conclusion
Even though federal labour laws were never intended to play more than a minor role, federal laws have prevailed over any inconsistent state laws ever since federation. In terms of employees affected in Australia, the various state systems far outweigh that of the federal system, even though the regulatory framework for industrial dispute resolutions at state and territory level has mirrored their Commonwealth counterpart. In part, this explains why the focus of the academic community tends to favour uniformity. In addition, a federal system of industrial governance would see many advantages such as greater foreign investment, cost reduction, legal equality and stronger economic growth to name a few. However, a unified national industrial authority would still be a dual system. As the corporations’ power is a centre piece for the new Workchoices amendments, only corporations and their employees will be covered by the Federal system while the states will still regulate other employers and employees not covered under the federal scope. Even though it is in the best interest of the economy to have a unified system of industrial governance, unification should be achieved through consultation with states on a mutually agreeable basis rather than what some states are calling a ‘hostile takeover’.