Magazine article IPA Review

Breaking out of the Award System

Magazine article IPA Review

Breaking out of the Award System

Article excerpt

WHEN the Berlin Wall fell at the end of the Cold War, it symbolized the end of the authoritarian and centralized control of the lives of half of the peoples of Europe. The collapse of the wall was spectacular, but resulted from generations of people pushing against the structure.

In Australia, we have our own legally-constructed version of the Berlin Wall. It is the award system and it imposes centralized control over our working lives. Like the Berlin Wall, the people are pushing, but the incumbent labour establishment is proving strong in defence of its self-interest.

Many have tried to move away from he award system but few have succeeded. This article focuses on one success and how responsible, award-free work is possible in Australia.

The principle at stake for Australians is simple. Workers and businesses want the democratic right to decide what is best for them without interference from outside parties. Outdated notions of class consciousness in the workplace are being replaced by the realization of employers and employees that they either make money together or not at all.

Working Australians have realized the inappropriateness of the compulsion of awards and employers and workers are striving together to overcome the anti-democratic rigidity of the system. When they succeed in achieving workplace freedom, the results are mutually beneficial. Employees earn more, absenteeism drops and the incidence of workplace injuries plummets. Businesses are more responsive to market demands, become more profitable, and additional employment is thus created.

LANDMARK RULING: The freedom for workers land businesses to realize this outcome was achieved by a small labour-hire agency in a landmark 1991 High Court ruling. The decision, known as the Odco Judgment, legitimized a system of award-free work arrangements, the essence of which is that people can work as independent contractors, instead of employees, supplying their services to business. The High Court ruling rocked the labour establishment at the time and created extensive media interest. While the Odco Judgment is studied by law students as a precedential labour law, its practical and commercial application has been little realized in comparison to its potential.

The outcome of the Odco Judgment was that it legitimized the continuing operation of the original labour-hire agency and facilitated the development of a system known as agency contracting. Agency contracting operates under the Odco Judgment precedents, supplying award-free contractors to a large variety of businesses and industries in every Australian State.

How does the agency contracting system work? Three parties exist within the arrangement -- the contractor, the agency and the business. The contractor has a contract with the agency to supply work. The agency supplies the contractor to the business. The business pays the agency a fee. The agency pays the contractor and administers all the statutory obligations related to personnel supplied.

The High Court ruled that under this arrangement no employer-employee relationship exists. Nor does any contract exist between the contractor and the business. This is a genuine award-free arrangement which now has a successful track record and can be utilized by any Australian business which wants to benefit from the arrangements.

One example is sufficient to demonstrate how agency contracting overcomes the disadvantages of awards. A Melbourne-based manufacturing company producing high quality vehicle parts cannot attract skilled tradespeople of a particular type. The company explains that the problem is a result of an inability to pay the tradespeople additional bonuses. Any attempt to pay over the award on an individual basis results in award demands for pay increase flow-on to all workers in the business. The company cannot afford this flow-on. The award rate is too low to attract the specically-skilled tradespeople needed and, as a consequence, production is below capacity and markets known to be available are left unexplored. …

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