The new Labor government has promised an overhaul of the industrial relations system, but lawyers say a new system is likely to be firmly based on the much-debated WorkChoices legislation. The profitable days of large scale industrial action and unfair contracts claims are gone forever
"WorkChoices is dead," said opposition leader Brendon Nelson following a meeting of the Shadow Cabinet in December. Even the federal Coalition had to admit the controversial industrial reforms package had no support amongst the Australian public and was one of the main reasons it lost the election.
The Labor government has promised to repeal WorkChoices. This means another round of adaptations for businesses and this will have a subsequent effect on the workplace relation practices of law firms.
Impact of WorkChoices
WorkChoices changed the industry radically and many law firms saw a part of their work vaporise as industrial relations dispute work and the unfair contract jurisdiction in NSW were largely abolished.
"If you're looking at practices over the last 10 years, the big increase, in NSW anyway, has been in unfair contract litigation. That's just all gone; WorkChoices got rid of it," says Peter Punch, partner at Carroll & O'Dea. For some firms, the abolition of unfair contract work was a huge problem, he says. "For firms that did lots of unfair contract cases ... well they don't have a practice anymore."
Litigation from industrial actions has also largely disappeared under WorkChoices. "You can't go and take industrial action in relation to pattern bargaining," says Punch. "Years ago, what would happen is that unions would go on strike and the company involved would get its lawyers and go off to the industrial relations commission or the Federal Court seeking orders to force them back to work or get damages. Now, the unions aren't taking any industrial actions because the risk of doing so is too high under WorkChoices."
The measures meant a significant downturn in work for workplace lawyers, but WorkChoices also provided new work in other areas. "There was a lot more advice work for lawyers because WorkChoices was so complicated and so difficult to get your head around," says Punch.
Murray Kellock, partner with Mallesons Stephen Jaques, agrees: "WorkChoices helped us in the sense that it's certainly introduced a scheme that was a lot more complicated than what previously existed."
Forward to where?
The Labor party promised workplace reform if it won the election. Some might have interpreted the political lingo as returning to the pre-WorkChoices era, or even to the days before the introduction of the Workplace Relations Act of 1996, but close scrutiny of the proposed plans - which are detailed in Labor's paper Forward with Fairness - shows there are no plans to abandon the legislation completely. Instead, amendments are made to the existing system, leaving many aspects in place.
"WorkChoices was revolutionary because it constituted a national system for the first time," says Tim Greenall, special counsel with Madgwicks. "The Labor proposals have all the fundamentals of WorkChoices; it only takes out AWAs and shakes up the unfair dismissal legislation a bit. The only radical departure from WorkChoices is the introduction of the new duty upon employers to bargain with unions in good faith where a majority of employees at the workplace want a union agreement."
"What you'll see is that significant elements of WorkChoices will actually remain," agrees Punch. For example, unions still can't take industrial action in relation to pattern bargaining. "Labor's policy - and they're very consistent about that - is that they aren't going to change any of that. The union movement has adapted to it."
The previously lucrative NSW unfair contract jurisdiction is also unlikely to return. "There's nothing in Labor's policy that suggests it will come back," says Punch. "I think it's gone, forever."
Murray Kellock still has hopes litigation will pick up a bit. "It's hard to make the call, but the move to collective bargaining, the abolishment of the AWAs, the introduction of the good faith bargaining requirements and the proposed abolition of the current restrictions on prohibited content will create some work. But I don't think it will get back to the days gone past."
A spike in advisory work
The main effect of the proposed changes on workplace relations practices in law firms is a spike in advisory services, stemming from the introduction of new legislation or the amendment of existing legislation.
"Initially, it will cause a reasonable amount of work, because there's a fair amount of changes," says Kellock. "Clients that have their workforce regulated by AWAs are going to need some strategic advice in terms of how they're going to structure their employment arrangements, given that AWAs are going to be abolished."
There will also be work coming from changes to collective bargaining, says Kellock. "It appears that Labor is going to abolish the current restriction on including prohibitive content in agreements. There are some suggestions that they'll go so far as to no longer have the requirement that matters pertain to the relationship. That will significantly increase the size of the bargaining shopping list for unions."
For employers who are currently reaching the end of their enterprise bargaining agreement, this means that matters which previously were considered prohibited content will be brought back to the bargaining table.
The changes will mean long hours for lawyers who already have been working overtime to help the transfer to WorkChoices. "We've been very busy and flat out since WorkChoices came in and I don't see that slowing down in our practice," says Kellock. "We've got a very broad base of clients and I just don't see it slowing down."
Joydeep Hor does expect a downturn in certain areas. "If the ALP has its way, there will be even less work for lawyers than under WorkChoices, because they talk about making the unfair dismissal processes lawyer-free," he says. "If it goes ahead like that it will have an even more significant impact than WorkChoices had."
But Hor is not too concerned about the reduction of work in this area, because the legislative change will bring enough work in itself. "We feel that whenever there's legislative change that we'll actually be busier, because clients will come to us for advice on what the implications of the new laws are," says Hor. "We find ourselves almost two years after the change of legislation [brought by WorkChoices] and we're still advising clients on the implications of changes."
He also says that whenever an area of litigation disappears, claims in other areas tend to increase. "What we found under WorkChoices was that there was an increase in claims in bullying, discrimination, harassment, breach of contract and trade practices; all areas that we hadn't seen as much of before. It became a big part of what we do."
Despite the fact that legislative change brings an increase in advisory work for law firms, the proposed changes to the industrial relations system will not bring back the lucrative days of industrial action disputes and unfair contract claims. In fact, the new Labor system will be firmly based on the WorkChoices framework As Madgwicks' Tim Greenall rightly suggests, we're not going to see an abolishment of the system, but are more likely to end up with a WorkChoices Lite.
WORKCHOICES -YOU'RE DISMISSED!
WorkChoices was for the majority of Australians an anathema, but the strongest feelings of detestation were reserved for the abolition of unfair dismissal rights for employees of firms with 100 staff or less.
Labor has promised to reintroduce unfair dismissal laws, but won't do so before 2010 in order to address the concerns of small business. It also says the employee has to be working for a company for more than 12 months to launch a claim, if the business employs fewer than 15 people.
Despite these changes, it remains to be seen whether law firms will see much work returning from unfair dismissal claims, because the government has said it will keep this area 'lawyer-free'. All claims will be reviewed by the new body Fair Work Australia and will call the parties together to resolve the matter.
"Labor says it's going to be a lawyer-free zone, but I don't know how they're going to achieve that," says Peter Punch, partner at Carroll & O'Dea. "It doesn't bother me either way because there'll be plenty of other work to do, but I don't see how they're going to stop lawyers from participating. People still want to have lawyers to help them."
Tim Greenall, special counsel with Melbourne firm Madgwicks, agrees: "They might make the process less legal by removing arbitration, but clients will still seek the advice of lawyers."
ABOLISHING AWAs
One of the first changes to the industrial relations system is likely to be the abolishment of Australian Workplace Agreements (AWAs). The government will launch a transition Bill that allows for alternative arrangements to be made until 2010, when the new system is expected to be implemented. However, existing AWAs will run the course of their life, which could be up to five years.
AWAs are especially common in the energy and mining industry, where up to 32% of employees have an agreement in place. Unions have argued that AWAs are an attempt to undermine their collective bargaining power. Individuals have little bargaining power by themselves to effectively negotiate an agreement with an employer, and the agreements therefore tip the balance of power in favour of employers, unions argue.
In response to the criticism, the Coalition government introduced a 'fairness test' to which all agreements must be subjected. The new Labor government wants to replace this with a test based on 10 national employment standards and an equal amount of awards.
Transition
Law firms are helping their clients to prepare for the switch to new employment agreements. "We've got a number of clients who have a large part or all of their employees on AWAs," says Murray Kellock, partner with Mallesons Stephen Jaques. "We've got some clients in manufacturing that have the same scenario [as in the mining industry] and it's a matter of working through them strategically how they might deal with that issue going forward."
AWAs can still be concluded before the transition Bill comes into force, which is scheduled for February, and some companies have been trying to quickly put agreements in place before they get abolished, triggering public outcry.
BHP Billiton allegedly tried to entice its workforce at a Queensland mine to sign AWAs offering A$10,000 bonuses, while Telstra and the University of Wollongong have been suspected of similar attempts.
Kellock says he has not seen any of his clients trying to put new AWAs in place. "We certainly have provided some strategic advice to clients for this being one of the options, but thus far they haven't taken it up," he says.
Damian Sloan, partner with Middletons, also sees this as a legitimate option. "Employers who see advantages in the current system might want to think about taking the opportunity to make use of the existing laws while they can," he writes in reaction to the election results. "A workplace agreement made now could have a life until 2012. This would give an employer some certainty as to [his/her] workplace obligations."
Joydeep Hor of Harmers Workplace Lawyers is more cautious. "It's legal to do it if you have someone in your organisation that's on an AWA prior to 1 December, but we're advising clients to think very carefully about whether to do that because there could be some serious ramifications. [AWAs] might not actually provide all the solutions that clients are looking for."