The Enhancement of Individual Employment Rights Through Enterprise Bargaining: Australian Case Studies

When the Australian Industrial Relations Commission introduced its enter­ prise bargaining principles in 1991, it attempted to cement in place through its regulatory framework, mechanisms that would further enhance individual employment rights. This article explores the success of the commission's objectives through four case studies on organizations which have embraced the principles and progressed down the path of workplace reform. The organi­ zations have enterprise agreements that link corporate goals with employee and union goals and in doing so, have achieved considerable commitment of all parties to the process. The strategic philosophy of management appeared to be that consultation with, and the involvement of employees and the unions in the decision-making process, was not only desirable but essential. The assumptions that can be made from the case studies, are that the macroeconomic changes introduced by the commission to achieve microeconomic change at the workplace have been effective, and can be attributed to the fact that management has empowered employees with real involvement, both at an individual level, and in the overall operation and direction of the organizations. © 1995, Baywood Publishing Co., Inc. 229 doi: 10.2190/KU9E-P9FV-48F6-N6YP http://baywood.com 230 / KHAN, TRAVAGLIONE AND TAYA ENTERPRISE BARGAINING IN AUSTRALIA To fully appreciate the nature of the developments in Australia it is necessary to understand what enterprise bargaining is all about. Enterprise bargaining is the process of negotiation undertaken by management, employees, and unions. Its ultimate aim is the achieving of agreement on the actual implementation of enterprise-specific measures designed to improve enterprise efficiency and productivity in return for wage increases. Enterprise-specific measures are now negotiated with the organization, which is a major move away from the previous centralized processes of the former industrial relations system. The process of enterprise bargaining has been driven by the need to lift the international competi­ tiveness of Australian manufacturing industry [2]. It focuses on the enterprise itself and is a significant departure from the traditional adversarial industrial relations environment. Australia is currently grappling with the issue of its competitiveness in the Asian sphere. It has the immediate problem of needing to sell its goods and services in the expanding Asian market, yet at the same time defending its position in Australian markets against overseas competitors, with the benefit of tariff protec­ tion. Australia has attempted to deal with this problem through changes in the macroeconomic structure, in particular the centralized wage-fixing mechanisms that have been in operation for a number of years. The focus has now changed to microeconomic reform at the enterprise level, facilitated by the process of enterprise bargaining, and there have been a number of other associated outcomes. This article concentrates on one of those outcomes—the relationship between enterprise bargaining and the enhancement of employee participation rights in decision making in Australia. The enterprise bargaining arrangements put in place have served as excellent facilitators for worker participation. Management, workers, and unions have been encouraged by the decisions of the Federal Industrial Relations Commission to move out of the traditional mindset that has consigned certain areas to the preroga­ tive of management and suggested that others are of inherent conflict. To use the words of John Dunlop, "A new set of relationships is required among labour, government, and business, especially for the task of developing trained, produc­ tive, and adaptable human resources" [1, p. 55]. The research into the outcomes of enterprise bargaining involved four organiza­ tions. Three are subsidiaries of large private sector organizations. For comparative purposes, the fourth organization selected is a wholly owned subsidiary of a government business enterprise, progressing toward privatization. Data were col­ lected using a detailed questionnaire comprising forty-nine questions. Interviews were conducted with a senior management official from each organization prior to delivery of the questionnaires. EMPLOYMENT RIGHTS / 231 The importance of enterprise bargaining in Australia is realized when consider­ ing the industrial relations legal framework operating in the country. Australia followed the U.S. model of federation, with specific legislative powers conferred on the federal government and the states exercising the residual powers. While Australian trade unionism was shaped out of Australia's British colonial origin, the evolution of industrial relations in Australia has had no resemblance to that of Great Britain [3]. Great Britain retained a tradition of nonintervention by legal institutions in the collective relationships between employer and employee. Australia, however, established a system of compulsory arbitration with the crea­ tion of industrial relations commissions in all six states and at the federal level. These commissions have wide-ranging powers covering both economic and dispute situations. In the event of disputing parties being unable to reach an agreement through conciliation, the commissions would then arbitrate to resolve the disputes. The system of industrial relations in Australia was both highly regulated by the various commissions and tribunals and highly centralized, and to a large degree the major players were government, management, and the unions. Employees were often the poor relations. Awards that acted as contracts of employment determining the employees' wages and conditions were made through the processes of conciliation and arbitration and often did not require the parties to the award, which were unions and employers, to consult employees. In addition, awards were generally broad, ideologically based arrangements and not structured to meet enterprise requirements. Awards, once made, would control conditions of employment of employees working in a number of enterprises. As a result of the highly centralized system, there were very few workplace grievance procedures in place nor was there a tradition of strong, shop-floor delegate structures among Australian trade unions [3]. In October 1991 a major step toward decentralization of the industrial relations systems occurred when the full bench of the Australian Industrial Relations Commission handed down the enterprise-bargaining principles. The commission declared it was prepared to approve enterprise-bargaining agreements made between parties bound by minimum rates or paid rates awards. Legislative changes have subsequently expanded the scope of enterprise bargaining beyond the October 1991 principles. The latest of these legislative provisions became operative on March 30,1994. The federal system will now become one where the primary emphasis will be on enterprise bargaining. The legislation now provides for both certified agreements (CAs) and enterprise-flexibility agreements (EFAs). Union involvement is necessary for CAs, while EFAs will allow for nonunion workplaces to have access to enterprise bargaining. The development of EFAs has meant that for the first time since 1904 agreements between employers and employees (as distinct from employers and unions) will be able to be made via the Australian Industrial Relations Commis­ sion. The federal government, in introducing this legislation, was very much 232 / KHAN, TRAVAGLIONE AND TAYA driven by the various state governments. Prior to the federal legislation allow­ ing for EFAs, five out of the six state governments had enacted legislation allow­ ing for workplace agreements to be ratified between employees and employers without union involvement. The federal enterprise-bargaining legislation requires the establishment of bar­ gaining units. Bargaining units go to the corporate structure of an organization and have been a difficult area to rationalize. In large organizations there are a number of considerations, such as defining what are corporate units and what are revenueproducing ones. The corporate units are those necessary for the organization to function effectively and efficiently, yet they may not have performance indicators linked to revenue outcomes. Examples are corporate planning and strategy branches, and the finance and administration branches. If enterprise bargaining is to be undertaken properly so as to maximize the benefits, appropriate bargaining units must be established; otherwise organizations run the risk of alienating sections of the workforce and reducing productivity in the long run. Appropriate bargaining units would ensure that the total workforce has input into the agree­ ment and thus a sense of ownership. EMPLOYEE PARTICIPATION IN AUSTRALIA In Australia in recent years there has been a concerted move away from the regimented Tayloralist approach to work arrangements. Through a number of initiatives, organizations have attempted to develop mechanisms that allow for greater employee involvement and consultation on a whole range of matters. The need to humanize the workforce has been seen as a critical factor to achieve competitiveness. Humanization of the workplace has been defined as: establishment of an organisational structure that frees people to use their qualities of imagination, initiative, technical expertise, sociability and leader­ ship during their working day. Nothing, certainly not money, can compensate for a working day of monotonous, mind-killing work [4, p. xi]. Australian managers by and large have recognized that the need to improve competitiveness by participative management and team leadership is very often a requirement for corporate survival. The current industrial relations debate on deregulation and competitiveness has brought to the surface the recognition that "constructive union/workforce/management r