The Law and the Labour Market
A South Australian View of Nauru House
While I have no statistics with me I believe it is
widely accepted that in recent years the proportion
of the South Australian work force covered by Federal
awards has decreased and the proportion of the South
Australian work force covered by State awards has increased.
It has been suggested to me that it follows from this
that the influence of the Australian Industrial Relations
Commission ("the Australian Commission") over South
Australia's industrial relations is also on the wane.
The Australian Commission is of course, housed in Nauru
With respect, that view is not correct. Indeed, objectively
the influence of the Australian Commission in extending
its determinations on wages and working conditions
well beyond the mere proportion of South Australian
employees covered by Federal awards has never been
Why? There are a number of reasons.
First, as a generalisation the influence of the big
eastern State based Federal employer organisations
and the big eastern State based Federal unions has
probably never been greater.
Their big picture policies play a pivotal role in
fixing the wages and working conditions for a vast
number of industries and enterprises throughout Australia.
At the very least, the small South Australian enterprise
and its small Federal award or awards covered work
force has little or no input into the formulation of
the wages and working conditions most appropriate for
that workplace. Indeed, as will be seen, that proposition
flows onto the small South Australian enterprise and
its small State award covered work force. I do not
consider it too large a leap to say the same can be
said for larger South Australian enterprises.
Secondly, over recent years there has been much done
to ensure what is called a "better fit" between the
Australian Commission and various State Industrial
Tribunals. Historically, of course, much has been made
of the difficult interwoven Australian industrial relations
framework. Traditionally it is said the difficulty
arises from the Federal Government's limited powers
to make laws in the area.
In South Australia the prime piece of industrial relations
legislation is the South Australian Industrial Relations
Act 1972 ("the State Act"). On the very point I have
just mentioned, this legislation was called the South
Australian Industrial Conciliation and Arbitration
Act until a name change effective from 1 July 1991
brought it into line with the Federal Industrial Relations
But the attempts to make the State Act even more complementary
with the Federal Act go beyond this superficial name
For example, in the mid 1980's the State Act was amended
- members of the State Commission could confer with their
counterparts on the Australian Commission on matters
of joint concern in order to secure co-ordination between
- the President of the State Commission could refer matters
to the Australian Commission for resolution.
These amendments were subsequently complemented by
amendments to the Federal Act, enabling joint sittings
to be conducted between the Australian Commission and
a number of State Industrial Tribunals, including the
Further, with effect from 1 July 1991, the State Act
was amended to permit, with the Minister's approval,
the holding of concurrent office under both the Federal
and State Acts.
The last published report of Judge Brian Stanley,
the President of the Industrial Court and Commission
of South Australia, is for the year ended 30 June 1990.
In that report Judge Stanley noted that during the
preceding year the State Commission had assisted the
Australian Commission by hearing disputes referred
to the State Commission by the President of the Australian
Commission and he had, in turn, referred one matter
within the State Commission's jurisdiction to be determined
by a member of the Australian Commission, as in his
opinion the dispute was best able to be handled by
To return then to my second point, all of this is
designed to overcome apparently uncomfortable consequences
arising from the interwoven Australian industrial relations
framework. At the same time, it further entrenches
the Australian Commission's role at all levels of the
industrial relations spectrum.
Thirdly, I turn to the State Commission. It is concerned
with arbitral matters such as claims for increases
in wages and improved working conditions and also the
settlement of industrial disputes. It is trite to say
so, but the State Commission regulates these matters
by means of awards, industrial agreements and orders.
Section 36 of the State Act enables the full State
Commission to flow onto State awards and industrial
agreements decisions of the Australian Commission involving
wages or remuneration, that is to flow on National
Wage Case decisions.
More importantly, in addition Section 146b(1) of the
State Act provides:
- ".. in arriving at a determination affecting remuneration
or working conditions the Full Commission must have
due regard to, and may apply and give effect to in
whole or in part and with or without modification,
any principles, guidelines, conditions, practices or
procedures enunciated or laid down in, or attached
to, any relevant decision or declaration of the Australian
Moreover under section 146b(2) the Full State Commission
may on its own initiative or on the application of
the Minister, the United Trades and Labour Council
("UTLC"), the State Chamber of Commerce and Industry
or the State Employers Federation make a declaration
adopting in whole or in part and with or without modification
any principles, guidelines, conditions, practices or
procedures referred to in subsection (1).
Section 146b is a 1983 amendment to the State Act
intended to provide flexibility by allowing the Full
State Commission to exercise its discretion having
regard to local South Australian circumstances.
That is, the legislative frame work exists for the
Full State Commission to regulate the wages and other
working conditions having regard to particular considerations
and needs of South Australia.
However, since 1983 the Full State Commission has
consistently adopted the principles established in
National Wage Cases with only minor modifications or
I do want to spend a little time on the most recent
example of this approach, that is the Full State Commission's
July 1991 "State Wage Case" decision. On 15 May 1991
the State Chamber of Commerce and Industry and the
State Employers Federation jointly filed an application
in the State Commission seeking, pursuant to Section
146b, a declaration adopting with relatively minor
modifications, the principles and guidelines promulgated
by the Australian Commission in its April 1991 National
Wage Case decision.
The application came on for hearing before the Full
State Commission on 30 May 1991 when the UTLC applied
for, and was granted, an adjournment of the proceedings
to allow all interested parties to confer in relation
to the principles to see if an agreed approach for
the betterment of industrial relations in South Australia
could be put to the State Commission. Discussions ensued
and, unsurprisingly, impasse occurred. Hence, on 2
July 1991, the UTLC filed a separate application in
the State Commission containing a set of principles
which it requested should be adopted in lieu of those
laid down by the Australian Commission.
The employer bodies then submitted that the State
Commission should follow the policy that had been generally
accepted over recent years of adopting the Australian
Commission's principles in full with only those minor
modifications necessary because of the different legislative
framework within which the State Commission operates.
- that in line with previous State Wage Case decisions
in recent years the State Commission should maintain
as much consistency as possible between the principles
of wage fixation which it establishes and those which
operate in the federal arena within South Australia.
- that as approximately fifty percent of all
employees in South Australia are bound by Federal awards,
the contracts of employment of those particular employees
had already had imposed on them that framework of wage
- that to introduce a substantially different
system for that part of the work force covered by State
awards would cause industrial chaos and turmoil.
- that while they wished to see the Australian
Commission's wage fixation principles introduced for
the benefit of both employees and employers covered
by State awards, they acknowledged that some individual
employers or groups of employers and their employees
may wish to enter into industrial agreements in the
pursuit of structural reform.
- that nevertheless the acceptance of the Australian
Commission's principles by the State Commission was
most likely to provide industrial stability in South
Australia, and be conducive to the betterment of industrial
Counsel for the Minister supported the general flow-on
of the principles established by the Australian Commission
arguing that such a course was not only consistent
with the general purpose and intent of section 146b
of the State Act, but provided broad uniformity and
consistency between the wage fixation principles which
should operate in both Federal and State jurisdictions.
In its decision the Full State Commission acknowledged
the current debate about the move from broadly based
industry awards to enterprise based agreements or industrial
agreements but said the issue had not yet crystallised.
In summary, the Full State Commission said:
- that it is inappropriate for it to sit in judgment
on the National Wage decision of the Australian Commission.
- that any attempt by it to drastically alter the character
of the Australian Commission's National Wage Case decision
would be likely to have damaging implications for the
centralised system of wage fixation currently operating
- that whether or not the centralised system should continue
to operate is a matter open to debate, but the applications
which were then before it did not provide either the
appropriate forum or the opportunity to resolve that
- that in the general interests of the community in South
Australia it should not, without very good and adequate
reasons, drastically depart from the decision of the
Australian Commission in a National Wage Case for to
do so would tend to cause industrial havoc due to the
fact that approximately half the work force in the
State are already bound by the Australian Commission's
set of wage fixation principles.
- that equity suggests that all workers in South Australia
should, as far as is possible, have their wages and
conditions of employment governed by a similar set
My third point then is that there is no better example
of the Australian Commission's determinations on wages
and working conditions flowing far beyond those employers
and employees covered by Federal awards than the provisions
of Section 146b of the State Act and the expressions
contained in the judgment I have just summarised.
Bearing in mind the existing Australian industrial
relations framework discussed before, the particular
objects of the State Act, the submissions made by the
employer bodies, the Minister and indeed the UTLC,
the Full State Commission's decision is hardly surprising.
Indeed within the confines of the existing Australian
industrial relations framework a decision not to pass
on the Australian Commission's wage and work conditions
determinations to State award employees would be to
invite considerable industrial disputation and the
odium of State employer bodies, the Minister and the
Understandable though this decision is within the
confines of the existing Australian industrial relations
framework, what are the broader considerations for
I cannot pretend to be as committed in my views on
Australia's industrial relations future as I know so
many of you are. Equally though I am a concerned and
interested South Australian operating in the Industrial
Relations and Employment area and I have, during the
course of sixteen years of legal practice in an Adelaide
commercial law firm, seen much of our South Australian
corporate client base disappear or, more particularly,
change dramatically in character as national or multi
national concerns acquire local enterprises and management
control moves to the eastern States.
Regrettably for all South Australians there has been
an insufficient increase in new or expanded South Australian
enterprises to fill all of the resultant gaps.
I appreciate that a number of factors bear on this
position but surely wage costs are a factor.
Before pursuing this line of thought I give a brief,
non historian non economist, view of South Australia.
No doubt some with greater expertise in these areas
may pick fault with it.
Prior to federation South Australia was to the fore
in colony intervention in industrial relations.
So, in 1876 South Australia was the first colony to
legislate for the legal recognition of unions.
In 1890 "a bill to facilitate the settlement of industrial
disputes" was introduced into the South Australian
Parliament and four years later a modified version
was enacted setting up boards of conciliation in a
restricted number of industries and trades with a view
to having employers and employees agree about rates
of pay and working conditions.
Post federation South Australia quickly adopted a
position designed to mirror wherever possible what
occurred at Federal level.
So, in 1912 South Australia established an Industrial
Court which, like its Federal counterpart, had authority
to make binding awards relating to wages and other
working conditions and an ability to adjudicate in
strikes and lock outs.
In 1916 this State Industrial Court adopted a living
wage for unskilled adult male labour in the metropolitan
area closely following the basic wage principles established
at Federal level in the Harvester case of 1907.
Thereafter South Australia's living wage was deliberately
fixed to a similar level to the Federal basic wage.
Lately with the adoption federally of a total wage
concept in 1967, State wage case principles continued
to track the Federal position.
Stepping backwards a moment, my basic South Australian
history tells me that prior to World War II South Australia's
economy was rurally based. After the war and in particular
until the late 1960's, South Australia's economy grew
and changed remarkably. A predominant primary production
economy gave way to secondary industry aided and abetted
by government assistance with, so I understand, State
taxation and costs well below those in the major eastern
states. Industry was attracted to South Australia.
A decade later, that is by the late 1970's, economic
problems prevailed particularly in the consumer durables
and car manufacturing industries which had played such
a large part in South Australia's post war industrial
transformation. State taxes and costs increased dramatically.
The attractiveness of South Australia to industry reduced.
Returning then to my view as an interested South Australian,
it seems to me that notwithstanding South Australia's
comparatively peaceful industrial relations and disputation
history there are now a number of disincentives to
enterprises contemplating setting up or expanding operations
in this State.
As generalisations establishment costs, small local
markets and distribution costs come readily to mind.
Furthermore, the days of lower State Government taxes
and costs to attract industry are long gone. Indeed,
it appears State imposts increase steadily.
With that in mind a potential incentive must be if
South Australia could offer enterprises the opportunity
to negotiate different terms on wages and working conditions
than is virtually automatically imposed by the Australian
Commission via the processes I have mentioned.
On this basis, greater flexibility on wages and working
conditions may provide enterprises with the incentives
to invest or invest further in South Australia or may
allow existing enterprises to compete more successfully
in their chosen market places.
Compare this with one of the key Full State Commission
findings in the most recent State Wage case, that is
that equity dictates all workers in South Australia
should as far as is possible have their wages and conditions
of employment governed by a similar set of rules. Moreover,
as I have said, these rules must fit the same set as
the Australian Commission directly or indirectly dictates
must uniformly be accepted throughout Australia.
Where the debate on these alternative views, flexibility
on the one hand or uniformity on the other, ends up
is, I suggest, most important for South Australia's
general wellbeing into the 1990's.
Put simply, at the moment, it seems to me the disincentives
to investment in South Australia mean we could well
do with the kick start that greater flexibility in
the fixing of wages or working conditions may provide.
So, this South Australian's view of Nauru House? The
Australian Commission increasingly dominates the industrial
relations scene in South Australia. I suggest the uniform
rules it applies directly or indirectly, to fixing
the wages and working conditions of the South Australian
work force, need critical examination and evaluation
now as South Australia embarks on the 1990's.
I will conclude by canvassing briefly three matters
in the State Act of relevance or potential relevance
to national enterprises with a presence in South Australia.
First the State Act permits the registration of industrial
More particularly associations, registered or not,
are allowed to make industrial agreements with any
other association or any other person as to any industrial
matter or in relation thereto. Such industrial agreements
have no force or effect unless or until they are approved
by the State Commission under Section 108.
The Commission may withhold its approval in certain
circumstances. Furthermore, in exercising this discretion
the State Commission must consider whether it should
consult with the appropriate main State employer or
employee associations and must also:
- "have regard to the objective of achieving a coherent
national framework of employee associations and to
any awards or decisions of the Australian Commission
directed to achieving that objective (and must give
regard to principles on which those awards or decisions
are based so far as may be appropriate in the circumstances
of the particular case)."
The influence of the Australian Commission in the
industrial relations life of South Australia is further
entrenched by this provision.
Furthermore, by amendment with effect from 1 July
1991 more stringent conditions on the approval of industrial
agreements to which unregistered associations are a
party were imposed so that such an agreement must not
be approved unless:
- "(a) the membership of the association consists wholly
or substantially of employees who cannot appropriately
and conveniently belong to a registered association
of employees; or
- (b) the agreement varies an industrial agreement previously
approved by the State Commission."
I consider the likelihood of further industrial agreements
being approved under this section is dramatically reduced
by this amendment. Certainly, I consider it is virtually
inevitable that in the future no industrial agreement
will be registered without union involvement. The role
of the unions in this process is further enshrined
and enhanced by this recent amendment.
But to go on Section 108a(3) says that where an agreement,
if approved by the State Commission, would affect remuneration
or working conditions the State Commission must have
due regard to any relevant guidelines laid down by
the Australian Commission in accordance with Section
Again the far reaching effect of the Australian Commission
is demonstrated by the provision, particularly when
I go on to say that remuneration is defined as including:
- wages or salary;
- amounts payable by way of piece work or contract rates
in respect of employment or service in an industry;
- amounts payable by way of penalty rates for shift premiums;
amounts payable as compo for lost time;
- amounts payable for overtime and special work; and
allowances and working conditions means conditions
of employment or service.
Far reaching and again further entrenching the Australian
Commission's principles within South Australia.
Secondly, Section 143a, inserted into the State Act
by a 1984 amendment, provides that no action in tort
lies in respect of an act or omission done or made
in contemplation or furtherance of an industrial dispute.
Certain exceptions are provided for.
Furthermore, the limitation on bringing an action
in tort is lifted when an industrial dispute has been
resolved by conciliation or arbitration under the Act
and the Full State Commission determines on application
under the section that the dispute arose or was prolonged
by unreasonable conduct on the part of the person against
whom the action is to be brought or where the Full
State Commission determines on the application of any
person that all means provided by the State Act for
resolving a dispute have failed and there is no immediate
prospect for the resolution of the dispute.
The section was inserted into the Act to ensure that
industrial matters are dealt with and resolved within
the system set up for that purpose but if that arbitral
system for resolving disputes fails the sanction of
a common law action then becomes available provided
the Full State Commission first so determines.
Thirdly Section 31 of the State Act allows dismissed
employees the right to apply to the State Commission
for an order for re-employment to the former position
or to another position or more likely for compensation
if the dismissal is found to be harsh, unjust or unreasonable.
From 1 July 1991 applications may only be made by
employees whose remuneration is governed by a South
Australian or Federal award or industrial agreement
or whose remuneration is less than $65,000 per annum.
In my experience, national enterprises with a presence
in South Australia find this unfair dismissal section
the severest of all State jurisdictions. Currently,
applications are being filed in record numbers. No
doubt many employees, encouraged by what is basically
a no cost jurisdiction, flash out applications on the
basis that their former employers will take a commercial
decision to make a quick further payment to resolve
the matter rather than fight it on the merits.
Section 31 applications are a constant source of worry,
time and effort to the industrial relations and human
resource managers of many of my firm's eastern State
corporate clients with a presence in South Australia.
Self servingly I conclude then by saying the work
this section provides to me in advising our employer
clients goes some way to filling the gaps caused by
the trends of the past sixteen years to which I referred