A Matter of Choice
Back to School Employee Relations and the Individual Employment Contract Model:
A Victorian Lesson
In this paper I want to put to you the proposition
that the vital employee relations reforms necessary
for the future of Australia, will not successfully
be implemented if reformists only concentrate on legal
and legislative matters. My conclusions are born from
direct experience at implementing individual employment
agreements in the workplace.
Let me first explain my background. I am a professional
unionist. I consult to the third teacher union in Victoria,
the Victorian Affiliated Teachers Federation. The VATF
has a membership of 2000 and was established 19 years
ago when a group of primary and secondary teachers
felt the need for an alternate, competitive union
force to that of the militant Victorian teacher unions.
I am not here as a representative or spokesperson of
the VATF although they are fully aware of my attitudes
and make use my services.
Unlike most paid union officials I support an individual
contractual model as the basis upon which employee
relations in Australia should be conducted. I am an
advocate of the destruction of the compulsory award
and arbitration system on grounds such as worker's
rights and union relevance. I have argued this case
in newspaper articles and radio interviews and it appears
that I am viewed as a rebel by the union movement.
I was amused when the union-funded, Melbourne
radio station 3CR, called me "armed and dangerous".
I hope so!
I suspect that 3CR tagged me so because I argue that
Australia is not a mature democracy. We instead exist
in a "nanny" state which controls our working lives
through the instrument of compulsory arbitration and
awards. We have democracy in most areas of our citizenship
but we do not have it in the workplace. Mature democracies
create social order by allowing citizens to freely
relate directly to one another. Freedom, I am happy
to note, is a primary theme of the H. R. Nicholls
Society. Until we as a country break from the tied
strings of compulsory awards and arbitration, we will
never find our place in the world as a mature nation
and robust democracy.
However, change is happening despite the current award-imposed
order. A maturing process is occurring and Australians
are rejecting those who seek to oppress us. Like the
Berlin Wall the award system will one day collapse
under the weight of the demands of the people.
The collapse of the system is not occurring through
the rearranging of legislated structures. What is
causing our maturing is the change of attitudes by
employers and employees to each other. People in the
workplace want to change together. There is a positive
realisation that what can best be described as workplace
class consciousness must be destroyed and replaced
by the commonsense reality that the needs of employers
and employees are mutually dependent.
There are two prime examples of this to which I wish
to refer, namely the efforts of Alcoa at their Portland
smelter and the activities of CRA. I want to look at
these two companies by way of introduction and comparison
with my experiences with reform in the Victorian public
In June of 1993, at the Alcoa Portland Aluminium smelter,
a ground-breaking enterprise bargaining agreement was
signed with the workers. The agreement eliminated
the then existing award arrangements. What is of interest
is how the agreement came into being.
In discussions I had with people at the Portland plant,
I discovered that the agreement had its birth some
seven years earlier. Management had concluded that
working class consciousness at the site had to be combated.
A program of removing management-employee differences
began. Time clocks were removed, a common carpark and
cafeteria were created, and the hundreds of indicators
of class differentials were whittled away. When the
company formulated the agreement it wished to put to
the smelter workers, it was confident that because
of good employee relations, and because employees and
management had developed strong working relationships
most employees would agree to the proposals. They did
The process of seeking Commission approval delayed
implementation of the reforms but it was done to ensure
compliance with legislative and political requirements.
Enterprise bargaining through the award-approved process
did not create or assist the agreement. The agreement
was a result of commonsense and the determination of
the employer to treat the workforce as intelligent,
skilled decision makers who would operate in a manner
conducive to the best interests of the company. In
short, mature democracy in the workplace.
Similar, it appears, are the efforts of CRA to treat
their workers as equals. CRA's well publicised offer
of staff contracts to employees and its acceptance
by between ninety and one hundred percent of employees,
has been billed as anti-union by the press and the
union movement. This is not the case. Something more
significant is happening at CRA. It is the destruction
of workplace class consciousness.
This is demonstrated in a presentation made at your
May 1993 conference by David Brewer, General Manager
New Zealand Aluminium Smelters (a CRA operation) which
reveals the CRA philosophy. This quotation from Sir
Roderick Carnegie, Chairman of CRA, is illuminating:
- We have confirmed the evidence that when employees
work with feelings of personal responsibility there
are very substantial gains both in individual satisfaction
in work and in productivity, in quality of work, in
innovativeness and in stewardship concern.
When the Chairman's remarks are coupled with David
Brewer's description of the New Zealand smelter where,
as David says, they now have:
- A single status workforce where the only real difference
between the General Manager and an Operator, is the
work of the role, the associated remuneration and the
Operator does not manage others.
a pattern emerges.
The conclusion is, that the CRA approach has the hallmarks
of a company committed to the destruction of workplace
class consciousness and the treatment of all employees
as management contributors. The legal device CRA chose
to step around the restrictive Award system was stunningly
simple, and I suspect impossible for a government to
My observation is that where successful workplace
reform occurs, it appears to be the result of a conscious
effort by the employer to breakdown workplace class
This sets the environment in which to reveal my experiences
with the Victorian Employee Relations Act.
The Victorian Employee Relations Act, of which I
have a detailed working knowledge, is the first serious
legislative attack mounted in Australia against the
conservative status quo of centralised wage
and work practices control. Has it, like CRA and Alcoa
For those of you who are not familiar with the Act,
agreements can be collective or individual and must
contain certain minimum statutory requirements. These
include four weeks annual leave, five sick days leave
per year, maternity, paternity, adoption and long service
leave. Hourly pay rates cannot be less than that applying
under the old, but expired awards. Existing employees
and new employees are deemed to be on individual employment
agreements, the terms of which are in the old awards.
Employees cannot be forced to sign new agreements.
Effectively, the legislation froze Victorian employees
conditions as of 1 March 1993 unless employees sign
new agreements. New agreements cannot breach the minimum
statutory pay and leave requirements. Above that, everything
I am aware that even amongst those who reject the
award system, there are divergent views on the applicability
of the Victorian Act as a contractual model. For example,
the criminal sanction provisions included, are criticised
within many legal and Coalition party circles.
Certainly the Victorian model is one possible contractual
model amongst many alternatives. The CRA approach,
which I gather is based on the use of Common Law principles,
is another. If common law contracts can work, why reinvent
the wheel? Maybe the common law route is the path to
follow? I am not sufficiently familiar with the technicalities
of the possible alternatives to make a judgement, but
have an open mind. I have found however, that the Victorian
Employee Relations Act is a workable piece of legislation
which deserves serious attention.
The provisions of the Victorian Act have been taken
up by some employers and employees in Victoria. One
such employer is the Sizzler chain of family restaurants,
where in mid-1993, approximately ninety percent
of the 1400 employees signed agreements offered to
them by the company.
Although the Act is workable and other examples exist,
the impact of the legislation on workplaces has not
been widespread. Unfortunately it is not possible to
accurately gauge, because the State government does
not collect the necessary statistics. It appears that
only a small percentage of State covered employees
have signed agreements that effectively alter the format
or content of their old state award.
A major slow uptake is the cause of Federal legislation
and union efforts to transfer Victorian workers to
Federal awards. The Employee Relations Act was introduced
on the assumption that a Liberal government would be
in Canberra in 1993 and would introduce complementary
legislation to the Victorian model. This of course
did not occur and left Victoria with an Act looking
for a strategy. It appears that the fallback approach
has been to resort to legal battles hoping for a favourable
Federal election result in 1995.
More significantly, and in contrast to the success
of Alcoa and CRA, has been the apparent inability
of the Victorian government to implement its workplace
agenda with its own employees. This has been a surprise.
It could have been expected that as the largest single
employer in the State, the Victorian Government would
have attempted to encourage its own employees onto
employment agreements. The government should have
been in a position to demonstrate to employees and
private sector employers that its reforms could succeed.
The state government could have provided a model for
the private sector to follow. Success in having large
numbers of state employees voluntarily sign employment
agreements, would have provided the government with
a strategic advantage in its reform battle. This has
In claiming this lack of implementation success, I
have been criticised by the relevant Minister for not
having accurate facts but given the lack of published,
verifiable evidence proving that state employees have
voluntarily signed new employment agreements, I believe
my assertions are valid.
The first indication of implementation problems occurred
when the State government introduced contracts for
executive officers of the public service and removed
the senior public servants from the provisions of the
Employee Relations Act. In my opinion the removal of
senior public servants from the Employee Relations
Act signalled lack of commitment to, and faith in,
The impact of this was twofold. First, it indicated
that the state government and its senior public servants
adhered to the concept of different classes of employees,
namely management and workers. As I have tried to
demonstrate, successful employee relations reform attempts
to break down such cultural barriers. The government
created and cemented barriers.
The second impact was to eliminate any personal commitment
senior public servants may, or could have had, to employment
agreements. If the people on whom the state government
had to rely to implement the Employee Relations Act,
were not covered by the Act, how could effective implementation
be expected to occur?
Of great significance, was what occurred when some
state employed workers attempted to access employment
agreements in 1993; there was a resultant administrative
debacle which verged on the farcical. The problems
manifested themselves strongly when Victorian Education
Department personnel requested employment agreements.
It was here that I had my experiences and battled at
first hand the policy implementation failure. I act
as a bargaining agent for the VATF negotiating agreements
on behalf of employees, explaining agreements to interested
employees and assisting employees to access the agreements.
I have a detailed knowledge and documented record of
events which I shall briefly summarise.
The process of constructing the agreements involved
reasonably vigorous but amicable negotiations. The
Department, with the interested employees and through
their bargaining agents, developed standard employment
agreements that the Department now uses as its agreement
offers to all school staff. The six page, plain English
agreements, replace the long, legalistic and convoluted
awards. The agreements facilitate significant managerial
flexibility in workplace arrangements and retain most
if not all entitlements. In some instances entitlements
Given that the Department worked to bring the agreements
into existence, it could have been expected that employees
wanting to sign, would have been provided every assistance.
The opposite proved to be the case. Over a nine month
period, a steady pattern of obstructionism unfolded.
Employees who asked for agreements waited for up to
eight weeks for copies to be sent for signing. Often
agreements never arrived.
When agreements did arrive they were frequently wrong,
requiring the employee to notify the Department of
errors. Corrections would take multiple weeks to be
forthcoming. Some errors appeared to embarrass the
Department and affected employees were subject to abuse.
Confidential agreements were mailed to the wrong employees,
exposing those wanting agreements to ridicule and harassment.
Line managers who were supposed to sign on behalf
of the government, did not receive briefings on the
content or implications of agreements. Some line managers
tried to talk employees out of signing and refused
to sign when requested to do so by the employee. Employees
who were entitled to pay increases under their Agreements,
waited for over ten weeks without a pay adjustment.
Payment occurred after the employees threatened to
invoke dispute settling procedures.
One employee who signed an Agreement and subsequently
became subject to intimidation, mysteriously disappeared
from the Department's computer employment records and
was not paid for many weeks.
On several occasions the Department asserted that
the Department was not bound by the Agreements and
that internal Department procedures should not be changed
because of the Agreements.
All this occurred in an environment in which employees
who had faith in employment agreements bore the brunt
of opposing Union vilification and attack. Employee
bargaining agents willing to assist state employees
to access agreements, have become cautious in pursuing
These were indeed strange occurrences and indicate
that the Victorian State government has severe problems
in implementing its own workplace reform program for
its own employees. It appears that the government
was not philosophically or administratively prepared
for the task of implementing its own employee relations
legislation with its own employees. Is it any wonder
that the reforms have been slow to be adopted in the
To assume that my relating of these facts represents
criticism of the Act, is to miss the point I wish to
make. The Victorian government is a self-assured,
reformist government treading where others would not
go. Unforseen circumstances must eventuate. We should
study events and learn lessons to assure future success.
The view I put, is that should other governments or
aspiring governments seek to introduce individual employment
contracts, consideration of legislative drafting matters
alone is not sufficient. Analysis of human relations
strategies adopted by the likes of CRA and Alcoa,
and how to apply them to the Public Service, should
be part of the planning.
In seeking to create workplace reform, government
needs to ensure that a good individual contract model
is established at law as one segment of a complete
strategy. Government must then use its position as
a large, influential employer to apply its stated principles
to its own workforce. Government should prove by its
actions that contractual approaches benefit the employee
as much as they benefit the employer.
Legislated award systems hinder workplace reform and
frustrate worker democracy. Conversely, legislative
attempts to free Australians from award constraint
do not of themselves cause reform. Reformists interested
in change cannot expect legislation on its own to cause
workplace change. It simply does not happen. The Victorian
situation demonstrates the point.