Award safety net - 2019

Women are significantly more likely than men to rely on the award safety net than agreements (Fair Work Commission, 2014, ix). This is because women tend to be in industries, workplaces and jobs that are hard to unionise – contracted ‘caring’ and service delivery industries, small and decentralised workplaces, shops and restaurants, and casualised work.

When enterprise bargaining was introduced, the legislated function of awards was to protect those who could not bargain (Industrial Relations Reform Act 1993 s.3(b)). Now, the legislated function of awards is to protect bargaining by maintaining a wide gap between award rates and agreement rates, and so ‘encouraging’ people to bargain (Fair Work Act s 134(1)(b)).

The rationale for suppressing award rates of pay wages to push workers into bargaining has not stood the test of time. The award/agreement gap is now large enough for employers to find it more profitable to terminate old agreements and decline to make new ones, leaving employees on old agreements or awards. In some cases, threatened EA termination implies dramatic potential wage cuts for workers of as much as 60 per cent (Pennington, 2018, p.6).

The bargaining stream is collapsing; more and more employees are being left on expired agreements or returned to the award system. In the private sector the number of current enterprise agreement has almost halved since the end of 2013, and the number of employees covered by them has dropped by 34 per cent. Only 12 per cent of Australians employed in the private sector are now covered by current EAs. There has been a corresponding increase in the number of workers operating under an award – up from 10% in 2010 to 24% (Pennington, 2018, p.6, The Guardian, 2017).

• At the same time, employers are taking a range of measures to decrease access to the safety net itself. These measures include labour hire, insourcing or outsourcing arrangements, sham contracting, the use of gig economy workers and unnecessary or contrived casualisation (casuals have fewer award entitlements).
• The withholding of award wages (“wage theft”) is now a considerable, if unquantified, issue. Underpayment of workers is the responsibility of the Commonwealth, with the law meant to be enforced by the Fair Work Ombudsman, which can take offenders to the civil courts and can mount criminal prosecutions only in limited circumstances. The Ombudsman received more than 14,000 allegations relating to underpayment in a single year but launched only 42 litigations on the issue.

The union movement has argued that access to the safety net should be safeguarded and that the Fair Work Act should be amended to ensure that wage rates for the lowest paid are improved over time relative to average earnings. It has submitted that the best mechanism for achieving this follows the model adopted by the UK Low Pay Commission, which is to set a medium term target for the ratio of the national minimum wage to average earnings (ACTU, 2017).