The Australian Institute of Employment Rights (AIER) Executive Director Lisa Heap and barrister Malcolm Harding argue that the current controversy over the recent decision of Commissioner Smith of Fair Work Australia in Woolworths Ltd trading as Produce & Recycling Distribution Centre (AG 2009/14435) presents the opportunity to remind ourselves of some of the basic tenets of our industrial relations system under the Fair Work Act 2009.

An object of the new Act is the promotion of a balanced and cooperative framework that includes “…providing accessible and effective procedures to resolve grievances and disputes”. In fact, this object goes to the heart of what the Labor Government promised to deliver when it said it would repeal WorkChoices: balance and fairness. To that end, Commissioner Smith has found that the Act requires that an enterprise agreement provide for a means of resolving disputes and grievances that, if agreement fails, ends with its determination by an independent third party.

The provision of the Act the subject of this decision contemplates the settlement of disputes during the life of an enterprise agreement. The language selected is well known to Australia since it has featured in all but the WorkChoices iteration of Australia’s industrial laws. It should be steadily born in mind that in the Fair Work iteration of these laws, the collective exercise by employees of industrial power is limited to the times when they are bargaining. During the period that an agreement is on foot the only means sanctioned by the Act to ventilate an industrial dispute or grievance is by means of the dispute resolution mechanism every enterprise agreement must contain. Since for all practical purposes it is employees who tend to rely on dispute resolution procedures, it cannot be just or effective for an employer to insist that such a procedure stop short of requiring or authorising binding settlement by an independent person.

As a matter of public interest, the Commonwealth Parliament has decided that the parties to enterprise agreements must provide for dispute resolution during its life “to settle disputes”. An unfair procedure does not settle disputes, it suppresses them. A procedure that permits a self-interested party from preventing the other from achieving an objectively fair resolution to the causes of a dispute or grievance is no form of resolution at all, and undermines the plain purpose of parliament in insisting on machinery to settle disputes during the life of enterprise agreements. Since reasonable employers are likely in any event to want an effective system of dispute resolution that fairly resolves disputes with its employees, at least as a final measure, what is to be gained by anything less.

As the objects of the Act tell us, the statute proclaims its interest to be the establishment of effective procedures to resolve grievances. Why might this be the case? Plainly because workplace disputes, conflicts and grievances require resolution for the good of the individual employee, the affected business and the public. The cost of unresolved disputes, particularly disagreements allowed to fester in the workplace, include increases in absenteeism, lower productivity, higher incidences of workplace illness and injury and the increases in insurance premiums that flow on from this.

It may be exciting to focus on full-blown industrial disputes of the type that can occur during the bargaining process, however industrial disharmony does not come and go in conformity with the cycle of agreement making between industrial parties. Disagreements in the workplace occur on a daily basis, left unresolved they have as much impact on the organisation and its employees as any full-blown industrial dispute. In any event, agreement making is necessarily concerned with multiple issues. It is not designed to focus on a small clutch of particular issues. On its face, the Act recognises this. However, if employees are precluded by law from utilising industrial action during the life of an agreement to ventilate disputes, the ability for an independent third party to make a binding decision about the merit of each party’s position and the way forward for resolution is imperative. Otherwise, a party who fears an adverse outcome is placed in a position whereby it can prevent the other from the means of obtaining industrial justice.

It would be a mistake to think of Commissioner Smith’s decision as one that would require the parties to litigate as to the means of resolving disputes. In the matter before him, as is typically the case, it was the final stage of the procedure that was in issue. Generally, dispute resolution procedures have several resolution stages. Moreover, even if the internal processes of dispute resolution procedure have failed to settle it, nothing prevents Fair Work Australia or other independent persons from utilising methods such as conciliation or mediation. All these methods depend on agreement. If the matter remains unresolved at this stage surely everyone benefits from having the matter finally settled by the application of a fair and transparent process based on assessment of merit.

If the view of the Fair Work Act, as put by Woolworths, is given ascendance there are likely to be a number of negative consequences. We have already mentioned the unfairness it is likely to encourage. However, there are others. First, it would undermine resolution by agreement. If a party knows that the dispute can go no further unless it agrees, why compromise at all? For example, an employer determined to drive through a change whatever the views of its employees and irrespective of the merit, has little incentive to look at the matter constructively and act reasonably. It has little incentive to moderate its proposal by agreement. An individual employee who is unable to obtain a satisfactory outcome through the preliminary stages of a dispute resolution procedure is left without further recourse if the employer is empowered to refuse it and does. In that event, the choice is likely to be stark: accept or resign.

Second, a system of ineffective dispute resolution that does not, despite the Act, settle disputes undermines confidence in the system. In that respect, consider the employee with a meritorious grievance who is told to utilise the agreement’s dispute resolution procedure. In good faith, the employee does as advised only to discover that the employer is not obliged to do any more than meet and confer. That employee would be entitled to think that dispute resolution under the Fair Work Act was more apparent than real, a Clayton’s system that promised much but delivered little. They are likely to feel that their employer, the agreement and the system have let them down. It certainly won’t be seen as a fair outcome. This cannot be what was intended when the government legislated for a system that specifically provides for accessible and effective procedures to resolve grievances and disputes.

As well as being the Executive Director of AIER, Lisa Heap has worked as a practising solicitor, consultant, adviser in the area of workplace rights and as a trade unionist for over 20 years. Her work is internationally recognised and she has been engaged as a technical adviser by the International Labour Organisation and other international bodies.

Malcolm Harding is a member of the Victorian Bar who practices in the areas of administrative, discrimination equal opportunity, employment and industrial law. He was formerly a Senior Policy Advisor to the Victorian State Government.