One-stop industrial relations: coming soon to a workplace near you?

The Australian Government has long flirted with the idea of a national industrial relations scheme. The then Minister for Workplace Relations, Peter Reith, first canvassed the idea between 1999 and 2000. In 2001, when Tony Abbott took up the portfolio he introduced a Bill to create a single federal law for the regulation of unfair dismissals. If passed, it would have been the first step to a national regime covering all industrial matters. Now it seems that support also comes from the top, with Prime Minister John Howard also arguing for reform.

The idea has also proved attractive to many people in the business community. A small and geographically isolated country like Australia is not well served by multiple laws on basic rules of employment. It is difficult to justify the costs to businesses and government in regulating employment across as many as nine jurisdictions.

There are also advantages for employees. The current system makes it difficult to determine whether an individual’s rights in the workplace are defined under state or federal law. No employee should need a lawyer to work out their entitlements. Overall, a national law providing a one-stop shop for employment matters makes sense. Of course, the devil is in the detail of the law. A single scheme must get the balance right between the interests of employers and employees.

The main impediment to achieving a national scheme has been political. Under the Liberal Party, government has not controlled the Senate, and, even if the Labor Party was prepared to countenance a single federal law, there is no prospect of agreement on its content in areas like unfair dismissal in small businesses.

This political obstacle will be removed when the Liberals gain control of the Senate on July 1, 2005. However, a key problem remains. It is whether the Commonwealth actually has the power to enact the law. Federal parliament can pass laws in the 40 different areas listed in section 51 of the Constitution. They range from “Taxation” to “Quarantine”, but “Industrial relations” is not listed. The section which comes closest is “Conciliation and arbitration for the prevention and settlement of industrial disputes extending beyond the limits of any one State”. However, this power is clearly limited to interstate disputes, and then only where such disputes are to be prevented or settled through conciliation or arbitration.

To pass a national law the Commonwealth will need to be creative, and to compromise on the law’s coverage. It is likely to turn to its power to make laws addressing “corporations”. While the High Court has not finally settled upon the scope of this power, it appears wide enough to allow the federal parliament to regulate the rights and entitlements of employees of corporations.

In co-operation with corporations, the Commonwealth could enact a law which would increase the coverage of the federal system from around 49 per cent to 85 per cent of all employees. Where an existing state law also seeks to cover these employees, it would be overridden. The Constitution states, where there is an inconsistency between a federal and a state law, the federal law shall prevail.

Some employees would escape the federal net, such as people working for partnerships or sole traderships, or for other unincorporated associations. However, the new federal law would take the Commonwealth so far down the track to a single national scheme that the states could well concede the contest.

As Abbott said of his attempt at a national unfair dismissal scheme, such “an expansion of federal jurisdiction on this scale should eventually lead to a ‘withering away’ of the states”. Given the cost and infrastructure involved it may not be feasible to run a full regulatory regime in each state for 15 per cent or less of the workforce. If this was the case, the states may even decide to transfer their powers over the remaining employees to the Commonwealth. Victoria under the Kennett Government has already transferred its powers over industrial matters to the Commonwealth. Other states may - in time - follow this lead.