In brief

Australia's coalition government introduced the Workplace Relations Amendment (Work Choices) Act 2005 to create "a more flexible, simpler and fairer system of workplace relations for Australia".[1] The legislation faced strong opposition from unions and the public, who argued that it was overcomplex and biased in favour of employers. Its public impact was limited and, despite the government's strong commitment, it was repealed in 2009 and replaced by the Fair Work Act.

The challenge

Recent decades seen many changes in Australian society and work that have affected the overall dynamic of the workplace. "The aspirations of working men and women are high and rising. Our institutional structures must reflect these realities. A single set of minimum wages, conditions, awards and agreements will provide the long overdue framework to drive future productivity growth, create jobs and increase further the living standards of the working men and women of our nation."[2] The challenge for government in the first decade of the twenty-first century was to address these issues and introduce appropriate labour laws.

The initiative

The Workplace Relations Amendment (Work Choices) Act 2005 came into effect in 2006. It amended the Workplace Relations Act from 1996 (the WR Act) with the intention of creating "a more flexible, simpler and fairer system of workplace relations for Australia". The 2005 Act was expected to carry forward the evolution of Australia’s workplace relations to improve productivity, increase wages, balance work and family life, and reduce unemployment. The major reforms to be implemented by the Act were to:

  • “Simplify the complexity inherent in the existence of six workplace relation jurisdictions in Australia by creating a national workplace relations system based on the corporations power that will apply to a majority of Australia’s employers and employees
  • “Establish an independent body called the Australian Fair Pay Commission (AFPC), to set and adjust minimum and award classification wages, minimum wages for juniors, trainees/apprentices and employees with disabilities, minimum wages for piece workers and casual loadings
  • “Enhance compliance with the WR Act
  • “Enshrine in law minimum conditions of employment (annual leave, personal/carer’s leave (including sick leave), parental leave (including maternity leave) and maximum ordinary hours of work), which, along with the wages set by the AFPC, will be called the Australian Fair Pay and Conditions Standard (the Standard) and will apply to all employees in the national system
  • “Place a greater emphasis on direct bargaining between employers and employees by replacing the certification and approval process for making agreements with a simpler streamlined lodgement only process.”[3]

The public impact

The impact achieved by the 2005 Act appears to have fallen short of its objectives, and has even exacerbated the situation in the labour market. It was repealed in July 2009 and replaced by the Fair Work Act 2009.

The reforms implemented by the 2005 Act adversely affected many members of the workforce. “The system was heavily criticised on the basis that many low-income earners and small business employees were being hurt by the legislation. Many argued that, as a result of Work Choices, they were losing conditions at work, penalty rates and overtime were being taken away, and too many of them were being unfairly dismissed, with little remedial action available."[4]

A report by the University of Sydney specifically addressed the impact on women in low-paid employment, and found that several significant changes had occurred in the workplace for women and their employment relationships. For the most part, these changes had been negative, "reducing decency and democracy at work and in society, [including] reductions in pay for already low-paid workers, less certainty about wage rates and pay rises, intensification of work, weakening of job security, less financial independence, less money for children and basic household costs, less representation and say at work and in the community, and poorer health and wellbeing.”[5]

Have an idea for a case study? Print

What did and didn't work

All cases in our Public Impact Observatory have been evaluated for performance against the elements of our Public Impact Fundamentals.

Legitimacy

Stakeholder Engagement Fair

The Workplace Relations Amendment (Work Choices) Bill was introduced by the minister for employment and workplace relations, Kevin Andrews, on behalf of the federal government. It went through several consultation processes (including input from opposition parties) and amendments which circulated between the Senate and House of Representatives. However, there was a wide range of opinions put forward by various stakeholders during the discussions.

There was informal consultation with a large number of key stakeholders. They included industry organisations and individual enterprises, unions, academics, and legal firms. Business groups generally called for a unified system, further simplification of awards, and simplified agreement processes. Some suggested more radical reform. Unions generally called for the retention of the existing system.[6]

Stakeholder contributions included the following:

  • Associations such as the Business Council of Australia and The Master Builders Association provided their input on issues such as allowable award, as well as provisions on award simplification, union right of entry, etc.
  • Unions got closely involved in campaigns against the federal reforms, with the Australian Council of Trade Unions (ACTU) launching an AUD8 million radio and television campaign to challenge the federal government's proposed changes to industrial relations laws.
  • A group of 17 academics drew up a report of the proposed industrial relations reforms arguing that the reforms would remove employees’ rights at work, deliver one-way flexibility, do nothing to increase productivity, and disadvantage the most marginalised workers.[7]

Political Commitment Fair

The 2005 Act was passed into a law by the coalition government, led by the Prime Minister John Howard. However, the Bill had received mixed support from other factions of the government, which made it vulnerable from the outset. The Bill passed the Australian Parliament’s House of Representatives by 80 votes to 61 on 10 November 2005. It then went to the Senate and, after amendments, passed the Senate with 35 to 33 votes on 2 December 2005.

John Howard and his supporters had worked on the campaign to re-regulate workplace relations for approximately 20 years. Their majority in the Senate after the 2004 elections provided an opportunity to pass the bill.[8]

In November 2005, a Senate inquiry report recommended that the government's workplace relations legislation should be passed by parliament and made law. However, all opposition senators, in dissenting reports, were opposed to the Work Choices Bill. In addition, within the first few months after the Bill was enacted, several states such as Tasmania, Queensland and Victoria raised High Court challenges to the new legislation.[9]

Public Confidence Weak

The Bill faced strong opposition from both the unions and the public, while most of its support came from the government and its supporters. Both the unions and the government launched advertising campaigns to influence public opinion. However, once implemented, the initiative was strongly challenged, in particular by the "Your Rights at Work" campaign, which was central to eventual repeal of the 2005 Act.

In July 2005, before the Bill was passed into law, opinion polls showed low popularity over the proposed reforms, partly influenced by an ACTU campaign. After the Bill was passed, a National Day of Community Protest against the federal government was proposed – where the ACTU claimed that half a million people took to the streets of cities and towns across Australia to protest against the proposed reforms. The Australian Chamber of Commerce and Industry (ACCI) said that more than 95% of workers had ignored the call to join the protest.[10]

The Your Rights at Work campaign, in particular, grew stronger over time and was central to the defeat of the Howard government's policy. “The Australian labour movement faced an unprecedented challenge to trade union and workers’ rights when the conservative coalition government introduced the Work Choices legislation in 2005. The unions’ Your Rights at Work campaign became the most significant political campaign mounted by a non-party political group in Australian history for its blend of television advertising, mobilising and grassroots organising, web-based campaigning and televised national days of protest.”[11]

Policy

Clear Objectives Fair

The objectives stated when the legislation was launched were rather broad and difficult to measure. The high-level aim of the government in implementing a national framework for workplace relations in Australia was to raise the country’s productivity and, hence, living standards. “The national framework should be structured to reduce unnecessary restrictions on labour market flexibility and reduce the burden on employers and employees in complying with workplace relations regulation. The government considers that increased labour market flexibility and reduced regulation will contribute to greater productivity.”[12]

More specifically, the Act included the following objectives:

  • “Encouraging the pursuit of high employment, improved living standards, low inflation and international competitiveness through higher productivity and a flexible and fair labour market
  • “Establishing and maintaining a simplified national system of workplace relations
  • Providing an economically sustainable safety net of minimum wages and conditions for those whose employment is regulated by this Act
  • “Ensuring that, as far as possible, the primary responsibility for determining matters affecting the employment relationship rests with the employer and employees at the workplace or enterprise level
  • “Enabling employers and employees to choose the most appropriate form of agreement for their particular circumstances.”[13]

Evidence Good

The 2005 Act was an "evolution" from the Workplace Relations Act of 1996, which provided the experience and lessons for the change: "The Work Choices Act 2005 is not a standalone new statute, but instead substantially rewrites the Workplace Relations Act 1996."[14]

In addition, there were several surveys and studies referenced in the design of the legislation, particularly to determine the costs and benefits to businesses and employees. “In 2004, the government undertook a longitudinal study to examine long-term outcomes for clients of its employment assistance programmes. The study particularly examined how disadvantaged people fare in the labour market up to two years after assistance has ceased. This study confirmed a key finding of a body of related studies in that a substantial number of low paid workers do move to higher paying jobs over time – ‘in the case of more disadvantaged job seekers, taking even low-paid, casual jobs will increase their chances of finding better paid, more permanent employment'."[15]

The government also focused on the supposedly restrictive effects of existing labour laws, particularly those relating to unfair dismissal. "Research [by the University of Melbourne] showed that dismissal laws contributed to the loss of about 77,000 jobs from businesses which used to employ staff and now no longer employ anyone… The survey also showed that the laws impact negatively on the most disadvantaged jobseekers. It found that businesses were now less inclined to hire young people, the long-term unemployed, and those with lower levels of education, turning instead to casuals and others on fixed-term contracts or longer probationary periods.”[16]

Feasibility Weak

Although the policy went through long stages of consultation and analysis, there appeared to be significant weaknesses in its capability for implementation.

The financial feasibility analysis addressed the costs expected to be incurred as a result of introducing reforms over the period of 2005-2009. These costs were outlined in an explanatory memorandum to the 2005 Act, including estimates for compliance, the Work Choices advertising campaign, the awards review taskforce, unlawful dismissal, dispute resolution, etc.[17]

However, the legislation was considered to be complicated, difficult to implement, and inconsistent. These factors impacted on its logistical feasibility. "Three factors complicate any analysis of the legislation. The first is the sheer size and complexity of the Work Choices Act, which in its final form runs to a staggering 762 pages. Far from simplifying the Workplace Relations Act 1996, the amendments have taken what was already an overblown, poorly drafted and needlessly complicated statute – and made it even worse... Large slabs of the amended WR Act are virtually unintelligible to all but the most persistent and expert reader, while the haste with which the legislation was rushed through parliament has meant that areas of uncertainty as to the meaning or effect of certain changes have been overlooked or left unresolved."[18]

Some states labelled it "unconstitutional", which affected its legal feasibility. "There is the matter of the constitutional challenge. The States, with support from various union bodies, have asked the High Court to rule that the Work Choices Act is wholly or partially unconstitutional."[19]

Action

Management N/A

The management of the legislative progress of the 2005 Act was the responsibility of the coalition government, principally the minister for employment and workplace relations, who introduced the Bill. The excessive length and complexity of the legislation, as indicated above (see Feasibility), as well as its failure to secure a consensus, suggests that the government's management of the process was flawed.

Measurement Good

The Centre for Employment and Labour Relations Law was engaged in comprehensive and long-term analysis of the Work Choices legislation before and after it was enacted. It participated in the initial consultations, and was later involved both in monitoring the legal and social changes brought by the new legislation, as well as exploring options for future policy development and new regulatory regimes.

The Centre published multiple articles, papers and inquiries looking into various aspects of Work Choices in the Australian Journal of Labour Law, the Economic and Labour Relations Review, and the University of New South Wales Law Journal. It also delivered seminars and conference papers analysing the legislative changes.[20]

Alignment Weak

There was not good alignment among the federal and state employees to achieve the objectives of the legislation. In addition, the Bill was exposed as having inconsistent guidelines and several procedures that were difficult to implement. Support for the Bill was not uniform at state level with the result that, even though it was passed with a majority in the Senate, it was challenged in the High Court by several states – including Tasmania, Queensland and Victoria – just a couple of months after its enactment.[21]

In addition, although the purpose of the amendment had been to streamline procedures, some of its changes seemed to have increased the complexity of employment processes. Under the Work Choices amendments, certain states’ employment laws cease to apply to federal system employers in relation to their employees. Although state laws applying to contractors were not generally affected, there was an intention to add a separate Independent Contractors Act in 2006.[22]

Sign up to stay updated on news about our meetings, our insights and our other activities.
Back to top