NATIONAL COMPETITION COUNCIL REVIEW OF SECTIONS 51(2) AND 51(3)
OF THE TRADE PRACTICES ACT 1974
ACTU RESPONSE TO DEWRSB SUBMISSION RE REVOCABLE EXEMPTION
January 1999
1. The ACTU strongly opposes the submission from the Department of Employment,
Workplace Relations and Small Business to the effect that the exemption for
employment agreements in paragraph 51(2)(a) be revocable by the ACCC “where the
anti-competitive detriment to the community of the particular arrangements in question
outweighed the labour law policy objectives”.
2. The issue was dealt with in the Draft Report, at pp43-4, where the NCC considered an
ACCI submission for removal of the exemption in certain circumstances, and stated:
“On the issue of a revocable block exemption, the Council notes that the current
industrial relations framework supports collective bargaining and its consequent
outcomes on wage and employment agreements. Having regard to this, it is not clear
to the Council in what circumstances it would be appropriate to revoke an exemption
for such arrangements were they, in the absence of the exemption, to be prohibited by
Part IV of the TPA. Consequently, the Council considers that the uncertainty
associated with a revocable block exemption raises similar issues of transactions,
compliance and regulatory costs to those discussed previously. The Council takes the
view that this uncertainty would remain in the absence of changes to industrial
relations law which removes its inherent policy conflict with competition law.”
The formal industrial relations framework
3. The DEWRSB emphasises that the revocation process would occur outside the formal
industrial relations framework, and would not apply to agreements made under
industrial relations legislation or pursuant to an award.
4. Unlike its predecessor, the Workplace Relations Act 1996 does not encourage formal
over informal agreement making. Subsection 3(c) states as part of the Act’s principal
object:
“enabling employers and employees to choose the most appropriate form of agreement
for their particular circumstances, whether or not that form is provided for by this
Act;”
In the Explanatory Memorandum to the Workplace Relations and other Legislation
Amendment Bill 1996, it was explained that that it was intended to encourage:
“more effective choice and flexibility as to the appropriate form of agreement for
parties reaching agreements, including forms not provided by the Act (such as
unregistered over award agreements).”
In his Second Reading Speech on the Bill, the then Minister for Industrial Relations
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stated:
“Mr Speaker, Under this Bill, the options for agreement-making will be significantly
expanded and simplified. Employers and employees in the federal jurisdiction will be
able to choose whether they want informal or overaward arrangements, or whether they
want to formalise their agreements.”
The point was reinforced by the Minister in his speech dealing with Consideration of
the Senate Message (the Bill amended by the Senate in line with the agreement between
the Government and the Australian Democrats):
“We have delivered a system in which there will be more effective flexibility for parties
in reaching agreements, a genuine choice of agreements, formal and informal, union
and non-union, individual and collective.” (Hansard 21/11/96 p7135)
5. The position taken by DEWRSB in relation to paragraph 51(2)(a) is quite inconsistent
with the scheme of the Act, which purports to not discriminate on the basis of the type
of agreement entered into by parties.
6. The provision of a revocation process for the exemption applying only to informal
agreements would mean that these would have to pass an additional “competition” test
not applicable to formal agreements. The DEWRSB submission gives no justification
for such a distinction to be made, and does not claim, let alone provide evidence for a
contention that informal agreements are more likely to be contrary to the public interest
than formal agreements. The fact that no examples are given of the type of conduct or
agreements from which the exemption should be removed is indicative of the
uncertainty which is associated with this proposal.
7. The inclusion of employment agreements in the scope of sections 45D and E (and 48, if
relevant) does not give weight to the DEWRSB submission. These provisions deal
with specific conduct which Parliament was concerned to prohibit. This is quite
different from a proposal to allow applications on any conduct or agreement.
8. To the extent that it is argued that the existence of sections 45D and E operate to
discourage prohibited conduct, this could not be the case with a revocable exemption,
where parties could not be certain as to whether or not their agreement would be
overturned by the ACCC, and when this would occur.
9. Although the DEWRSB contends that not all conduct in the labour market falls within
the formal system, no examples are given as a guide to the type of conduct which it is
sought to address. If industrial action is included, it should be borne in mind that a
number of legal avenues are available in relation to industrial action.
International obligations
10. Provision for revocation of the paragraph 51(2)(a) exemption would be completely
inconsistent with Australia’s international treaty obligations, and, in particular, would
constitute a breach of Article 4 of ILO Convention No. 98 Concerning the Application
of the Principles of the Right to Organise and to Bargain Collectively.
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11. Relevantly, the ILO Freedom of Association Committee has stated:
“The suspension or derogation by decree – without the consent of the parties – of
collective agreements freely entered into by the parties violates the principle of free
and voluntary collective bargaining established in Article 4 of Convention No. 98. If a
government wishes the clauses of a collective agreement to be brought into line with
the economic policy of the country, it should persuade the parties to take account
voluntarily of such considerations, without imposing on them the renegotiation of the
collective agreements in force.” (Freedom of Association: Digest of decisions and
principles of the Freedom of Association Committee of the Governing Body of the ILO
4th edition, Geneva 1996)
12. It is also relevant that, as reported by the NCC:
“Similar exemptions to section 51(2)(a) exist in countries whose economies and
regulatory and legal systems are most like Australia’s: the United States, Canada, New
Zealand and the United Kingdom.”
Costs
13. The costs of providing a revocation process would be considerable, in spite of the
DEWRSB’s view that these “do not appear likely to be significant”. The real costs lie
in legal representation for the parties, especially given that the anti-competitive effects
of employment agreements would be a relatively new area of law, and that use of
appeal processes is almost inevitable. The proposal for awarding of costs in cases of
vexation or malicious claims is not likely to be much of a deterrent to a company
wishing to use yet another legal avenue against trade union activity, leaving aside the
limited application of the concept of vexatious or malicious claims.
14. In the case of industrial action, the availability of revocation of the exemption would be
combined with all other courses of action (eg sections 127 and 166A of the WR Act),
increasing the litigiousness attached to the industrial relations process.
15. In relation to agreements, the DEWRSB proposal would allow applications to be made
after the coming into operation of an agreement, perhaps some considerable time. This
must lead to business uncertainty, as employers would not be in a position to know
whether or not their employment arrangements would withstand challenge on a ground
which has never previously been a consideration.
Conclusion
16. The ACTU believes that the issues raised by the DEWRSB were adequately addressed
in the NCC Draft Report, and that no amendment in required or desirable.
17. In particular, the ACTU opposes the submission for a revocable exemption on the
following grounds:
17.1. it would be inconsistent with the recognition given to informal agreements under
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the WR Act;
17.2. it would introduce additional considerations to informal agreements to those which
apply to formal agreements;
17.3. it would allow an additional legal avenue to be taken in relation to industrial action;
17.4. it would lead to business uncertainty about the validity of agreements;
17.5. costs of litigation would impact on all parties;
17.6. it would breach Australia’s international obligations and place us outside accepted
international practice in relation to this issue.
18. In light of these conclusions, the ACTU has not addressed the issue of applicants;
however, clearly the greater the range of applicants, the greater the likelihood of
political and/or tactical use of the process.
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