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Industrial fight looms over ‘nuclear option’

Brendan O'Connor's speech may mark the beginning of a Work Choices-style campaign.

Brendan O'Connor's speech may mark the beginning of a Work Choices-style campaign. Photo: Getty

Labor and unions say employers are increasingly threatening to rip up workplace agreements and return their workers to less generous Awards rates as a negotiating tactic.

In a speech on Friday, Shadow Employment Minister Brendan O’Connor signalled he is gearing up for a fight over the issue because it had become “too easy and too common” for bosses to terminate expired EBAs (enterprise bargaining agreements).

“This has serious negative impacts on the conduct of negotiation and bargaining in our industrial relations system,” Mr O’Connor said.

“We are looking at how the Fair Work Act might be changed so that, rather than resorting to the ‘nuclear option’ of terminating agreements when negotiations fail, the system works to assist the parties to come to a resolution, and to do so on a level playing field.”

Section 225 of the Fair Work Act gives employers the power to apply for EBAs that have reached their nominal expiry date (but still in force) to be terminated. And in a string of recent cases – including CFMEU v AGL in 2017, AMWU v Griffin Coal in 2016, and CEPU v Aurizon in 2015 – the Fair Work Commission has granted these applications, despite the concerns of unions.

According to analysis by Mr O’Connor’s office, EBA terminations have more than doubled, from 156 in 2014 to 517 in 2016. He blamed the 2015 Aurizon case, saying it created a precedent that favoured employers.

What might be happening is, as the expiry date for an EBA nears, unions demand better pay and conditions. Emboldened by the Aurizon case, employers refuse and apply for termination, throwing workers back onto the Award. Or, under threat of being put back on the Award, workers agree to a less favourable offer.

In the 2016 Griffin Coal case, workers kicked off the EBA lost up to $50,000 a year in pay, Mr O’Connor said.

“Labor’s concern is that the consequence of the Aurizon and subsequent decisions is that employers now have the threat, and the reality, of termination of agreements and reversion to significantly lower award rates of pay, as a powerful weapon in their bargaining arsenal,” he said on Friday.

“Labor is very concerned that this has tipped the negotiating balance too far in the favour of employers. Or, as bad, acts as a disincentive to bargain at all.”

The Australian Industry Group, a lobby group for employers, is opposed to any change to the law.

“Ai Group believes that s225 of the Act does not need to be tightened, as the unions are seeking,” CEO Innes Willox told The New Daily.

“The number of enterprise agreements terminated on application by an employer in contested proceedings remains very low.

“In the Aurizon, Griffin Coal and AGL cases, clearly it was in the public interest and appropriate for the agreements to be terminated given the circumstances surrounding each case.”

A spokesman for Employment Minister Michaelia Cash said Labor’s proposed amendment “appears to be designed only to strengthen the power of union bosses to impose their will on employers”.

“Before the Fair Work Commission can terminate an agreement it must take into account a number of matters, including the impact on the relevant employees and union,” the spokesman told The New Daily.

“A strong set of rules already applies for terminating agreements. Labor does not appear interested in a balanced approach, but instead seems interested only in granting union wish lists.”

In a statement, ACTU secretary Sally McManus welcomed the proposed changes, saying that the cancelling of workplace agreements “has caused severe hardship to many working people and their families who have had a sudden and unacceptable cut in their wages”.

“The fact that employers can now threaten to abolish agreements and drop workers’ pay by up to 40 per cent has radically strengthened their power at the bargaining table,” she said.

“Our system should never allow this and action is urgently needed to stop it.”

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