Freedom of contract v collective bargaining

One of the issues that might concern the Cat crowd is where does the principle of freedom of contract fit in with the current revelations about Shorten’s time at the helm of the AWU.

Here’s the important thing to note: the unions are dead against the principle of freedom of contract, the idea that a worker should be able to bargain directly with an employer to secure mutually beneficial terms of engagement, without coercion or fraud.

That is why unions have been so vociferous in their opposition to INDIVIDUAL CONTRACTING.  This has been their consistent position.

The officials will cloak their explanation by saying that (enforced) collective bargaining leads to better outcomes for workers.  (What? Suspend the laws of supply and demand?)

But here’s what collective bargaining does:

  • It can dud all workers because the deal is done by the agent and the workers won’t be made aware of alternatives;
  • It will definitely dud some workers because all workers are not the same (productivity or preference-wise);
  • It imposes the collective bargaining conditions on new workers when an agreement is in place and who haven’t had a chance to vet or vote on those conditions;
  • It creates scope for deals to be done between the agent (the union) and the employer to secure an inferior deal for the worker but a better deal for the union and employer (the current scenario we are seeing in a number of instances);
  • When the collective bargaining (EBA) requires legal certification, the willingness of the FWC to waive through collective union deals without thorough scrutiny (which is typically the case –  only non-union deals are fully vetted) is a helpful – nay, vital – part of the conspiracy against workers.

The point is that the unions don’t really think that collective bargaining is good for workers – and with jobs now more differentiated, the argument for a collective approach is very weak.  Moreover, the scope for industrial action to back up the collective approach is very limited these days – workers aren’t going to lose pay on the basis of some union frolic.

But collective bargaining is very good for unions.  It enables them to hoodwink workers (only a fraction typically vote on the agreement and many will naively follow the union’s advice, being told this is the only way to get a pay rise) and to do disguised deals with employers that enrich the unions.  And note the dollars and favours may not just go to the union but to associated groups such as GetUp!

This approach may be unethical by employers but it is rational, given the constraints of the system (in particular, the inability to bargain directly with individual workers because of the legislation – thanks Jools).  There are only a few managers/owners running the Grocons and Douglas Site Services etc. who refuse to do deals on principle.

Just don’t forget the union ditty:

TOGETHER UNITED WE’LL NEVER BE DEFEATED

That’s together with the bosses and the FWC (hey, lots of our pals, former union officials, are there).

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42 Responses to Freedom of contract v collective bargaining

  1. Token

    As the Minister responsible – Bill Shorten did more to close down the options to contractors than any other person.

    Robert Gottliebsen in the Business Spectator had a good series of articles charting the decline into darkness (which was duly ignored by the partisan media).

    It is interesting to see his history of providing contractor like flexibility to AWU chosen favourite organisations.

  2. Fibro

    Work Choices or Shorten Choices?

    I think most union members would take the former if they had the choice.

  3. Ooh Honey Honey

    I’m conflicted over the Shorten biz. Yes he is the avatar of a covert socialist revolutionary movement which should be smacked back with poison-coated hammers, I’m with you there.
    But imagine a freer world where workers were free to organise but not free to black mail. Where unions had to compete for work just like companies have to compete for customers – by making themselves more attractive? This would drive down the price of labour, making everything cheaper, for everyone. Imagine there were labour broking firms that obtained the best deals for everyone, and who charged a fee for this publicly good service?
    Change the labels and isn’t that what Shorten did? I know the money the AWU received was put to nefarious use, but leaving that aside, that fact that the IPA thought it was good and the CFMEU thought it was bad is a clue. He negotiated and dropped a lot of militant bullshit in exchange for a quick, efficient project and work for his members.
    Is it really all bad?

  4. Token

    Imagine there were labour broking firms that obtained the best deals for everyone, and who charged a fee for this publicly good service?

    The higher end software sub contracting model works with this model. The Uber type models of matching customers & suppliers are evolving to a point where more and more labour works on this basis. Those with the right skills are in demand and are able to pull work from organisation globally.

    Similarly there are groups in the US using such a model to align building sub contractors of skill to jobs requiring specialised skills. If they ever get control of their borders the model will really start to get some momentum.

  5. notafan

    I suspect the reason the AWU and employer ‘got away’ with their deal is because pay and conditions for workers in that industry are incredibly, ridiculously generous.
    And maybe working (for more money) on weekends and forgone rdos is more valuable to the employees .
    There might be some young and naive people in building and construction but not too many.
    I do remember reading about the then BLF attempting to storm the tax office after their sweet heart arrangements for the ‘tax free allowances’ than had grown to over half their pay packets was finally quashed .
    I don’t remember anyone involved in recent projects complaining about being hard done by.
    Perhaps they were mostly independent contractors rather than genuine employees.

  6. Old School Conservative

    He negotiated and dropped a lot of militant bullshit in exchange for a quick, efficient project and work for his members.

    I thought he exchanged workers conditions for payments to the AWU and memberships, thus building his own voting bloc and power base.

  7. OldOzzie

    Bill Shorten and Labor complain about Restaurants trying to change Penalty Rates

    Look at the Hypocrisy from Bill Shorten an d the Labor Party

    From Grace Collier in The Australian

    Bill Shorten, you left these workers worse off

    In the face of multiple claims to the contrary, Bill Shorten has said that when he used to be a union official, his deals always left workers better off. He guaranteed it. Is this statement true?

    There are a few Shorten deals sitting on my desk and many more on the Fair Work website. Here is my analysis of just one.

    An enterprise bargaining agreement was signed on January 22, 2001, by three men, including the now Opposition Leader. The EBA was made between the Media Entertainment and Arts Alliance, the Australian Workers Union and the Melbourne and Olympic Parks Trust and the employees of the trust. Documents show the workforce fluctuated but there were up to 850 employees covered by the agreement.

    The EBA passed the “no-disadvantage test” of the Australian ­Industrial Relations Commission on the basis of statutory declarations and submissions made by the unions and the employer, on the assurance that no employees would be worse off. Senior deputy president Anne Harrison ­approved the EBA.

    These declarations and assurances were accepted by the commission, but the EBA, in my opinion, significantly disadvantages employees.

    The short (31-page) EBA commenced on March 5, 2001. It ­removed all award conditions and entitlements from staff. Award ­entitlements were replaced with a basic set of conditions that provided cheap labour with extraordinary flexibility to the employer.

    The EBA “recognises (a) That the ordinary hours of business for operating the Trust’s facilities are different from the normal hours of business applicable in most industries, as the Trust’s venues will typically operate at weekends and nights on weekdays” and “(b) In the spirit of co-operation the Trust and the employees have taken into consideration the competitive ­nature of the industry.”

    GRAPHIC: The award v Bill Shorten’s EBA

    The trust operates Melbourne sports facilities, including but not limited to Olympic Park, Melbourne Sports and Entertainment Centre, Melbourne Park, Rod Laver Arena, Vodafone Area, parklands and various function ­facilities. In addition, the trust was able to use this EBA when it contracted to other facilities to provide operator/event management services.

    Permanent staff — cleaners and workers engaged in kitchen duties — were paid a flat rate of $14.70 an hour, while ushers, carpark attendants, groundskeepers, ticket sellers, reception workers and other staff were paid a flat rate of $16.59 an hour.

    Employees were required, under rosters with no mandated notice period, to work any time, on any day, at any venue that the trust nominated. Work was required 24 hours a day, seven days a week, ­including on public holidays, ­although employees were directed to work between 1am and 6am “generally only when there is a need to ensure that the next event can meet its schedule or when emergency maintenance work is required”.

    Work on all weekends and public holidays was mandatory if ­required, at ordinary rates of pay, with no loadings or penalties. However, work on Christmas Day and Good Friday, again with no loadings or penalties, was optional for employees and the EBA says “a decision to not work will not prejudice their employment”.

    Employees were required to work up to 12 hours a shift unless it was an “emergency”, whereby under “mutual agreement” they could work longer. These shift lengths excluded meal breaks, which were all unpaid, and meal breaks could be forfeited by ­“mutual agreement”. Employees could be rostered to work 13 days straight, after which time they must have a break of one day or more. Workers were guaranteed four days off in a 28-day period.

    Employees were required, without notice, to undertake ­duties across other work streams, including those lower than their own. This means a supervisor could be directed to clean toilets or stack chairs.

    The hourly rates of pay, all flat rates, included “a loading for hours worked in excess of 12 hours per day, for hours in excess of 38 hours per week, 76 per fortnight or 152 per 28-day period, as well as hours worked on Saturdays, Sundays and public holidays. Wages for full-time employees include a loading of 1.3 per cent in lieu of payment of a 17.5 per cent annual leave loading” and “all penalty payments except” for a loading of 25 per cent (time and a quarter) for work between “1am and 6am for hours worked only during that ­period”.

    Workers were required to wait for their pay cheques, as they were paid once a fortnight on a Wednesday, for all work undertaken up to the previous Sunday. If workers had worked additional hours in one fortnight, they were forced to wait for the second fortnightly payday in the month for payment on those hours, as the first payday of the month was only ever for standard hours (76 for full-time staff and 38 for part-timers). While the trust had an “intention” to supply car parking at no charge, to provide “accessibility and to ­encourage employees to be punctual and well groomed”, this could not be relied upon and so workers could “pre-purchase” a car park “at an agreed fee of $5.50 per shift”. However, if the event had “state or national significance or extraordinary circumstances” then no car parking would be available, and the trust bore no liability for any costs incurred to the worker.

    Workers who worked between 1am and 6am and commenced work before 5am were given a breakfast meal or paid a meal ­allowance of $8.25. If a uniform was required, a uniform allowance of $1.60 per day worked was ­payable.

    Full-time employees were given 25 annual leave days a year, but each day was only deemed to be 7.6 hours. Ten days of sick leave (again based on 7.6-hour days) were available per year but only after 12 weeks of employment.

    In a redundancy situation, ­depending on the length of service and the worker’s age, up to five weeks’ notice would be provided, however no redundancy severance pay at all would be payable, unless “government policy” said otherwise.

    The following questions were sent to Shorten’s office:

    Can you guarantee that this EBA did not leave any workers worse off?

    If not, why was it recomm­ended to workers?

    Did the AWU have an agreement with the trust to ensure workers became members of the AWU?

    Did the AWU have any financial transaction with the trust ­before, during or after the life of the EBA?

    Did Shorten have any financial transaction or receive any hosp­itality or consideration from the employer, before, during or after the life of the EBA?

    A spokesman for Shorten ­replied last night: “Vested interests and people with old scores to settle will make all sorts of baseless claims to try to create stories where there are none. As Mr Shorten has said, he will not be further responding to matters before the royal commission until he is able to appear.”

    The Melbourne and Olympic Parks Trust EBA has been passed on to the Heydon royal commission.

    Shorten and his colleagues say those questioning his past deals are unfairly smearing him as part of a political witch-hunt. They also say that bad EBAs sometimes happen, and there is nothing wrong with employers and employees making their own deals.

    However, the AWU has had a terrible reputation for decades. Now plenty of hard evidence is emerging to support that reputation. Bad EBAs do not just happen, and when a union receives money from an employer at the same time a really bad EBA is in place, it doesn’t pass the sniff test. As to employers and employees making their own deals, if only the employees were involved or had knowledge of these deals, that excuse might wash. What we see instead is that employers and unions make their own deals behind the employees’ backs. It is high time people started making a distinction between the rights of workers and the rights of union officials. They are two very different things.

    So, was Shorten a well-meaning but inept union official, accidentally doing hopeless EBAs that led to significant losses for workers, or was he schmoozing it with the bosses, deliberately doing ­lucrative deals to benefit his union, or himself? Or was it something else? All that can be examined when Bill Shorten fronts the commission.

    And if people in the Labor Party continue to defend deals like the one above, and attack anyone who questions them, then what does that say about their integrity and purpose?

  8. Linden

    Exactly, ShortenChoices!

  9. steve

    Just don’t forget the union ditty:

    TOGETHER UNITED WE’LL NEVER BE DEFEATED

    That’s together with the bosses and the FWC (hey, lots of our pals, former union officials, are there).

    Apparently it excludes the members of the unions though

  10. Baldrick

    Bill practised for hours each day leading up to fronting the Royal Commission, “Mmmyes, I don’t recall.”

  11. H B Bear

    If the Liberals had a clue they would be all over this preparing the ground for an IR policy to take to the 2016 election (instead of Abbott saying we’ll leave Gillard’s 1970’s union reward scheme in place for three years).

    Can anyone even name the Minister responsible for IR?

  12. Ooh Honey Honey

    Yeah but everyone here trying to criticise Shorten for “selling out the workers” is appealing to Bolshie sensibilities they would normally deride. He negotiated, actually competed with the CFMEU, and struck a deal governed by market forces. Come on, that’s a positive..

  13. ChrisPer

    Can anyone even name the Minister responsible for IR?

    Oooh, ooh – is it Grace Collier?

  14. Linden

    The thing is, Shorten was running around bagging Howard Government etc about Work Choices which would have produced the same kind of outcome. But he goes ahead and does sneaky deals with companies bringing about exactly the same thing as Work Choices, only in his case the only ones benefiting are him and his political career and of course the company which has paid for the privilege that nobody else can get. If he were half decent and did care about other things other than his own grandstanding hide, then he should of said Work Choices is the way to go with industrial relations matters

  15. Linden

    Would of have been if had of been up front about it, and did not receive kick backs for doing deals that others in the game could not get

  16. Old School Conservative

    Ooh Honey Honey
    #1713311, posted on June 18, 2015 at 10:38 am
    … He negotiated, actually competed with the CFMEU, and struck a deal governed by market forces. Come on, that’s a positive..

    Yeah. For a running dog lackey of western capitalism.

  17. Linden

    Yes that issue is a major failure of the Abbott government to take it up the opposition on IR instead they caved in frightened that they would be on a hiding for nothing. Imagine if they had of stuck to there guns on this, this revelation now coming public would of played right into Abbotts hands, (and still may) beautifully. The present IR system in Australia is a small business killer.

  18. Dave Wane

    Collective Bargaining has always been about the unions, and never about the welfare and remuneration of the employees.

  19. old bloke

    Can anyone even name the Minister responsible for IR?

    Sounds like a new job for Sir Scott.

  20. EBA commenced on March 5, 2001. It ­removed all award conditions and entitlements from staff. Award ­entitlements were replaced with a basic set of conditions that provided cheap labour with extraordinary flexibility to the employer.

    Remind me again of the core objection to the evil workchoices?

  21. notafan

    I don’t have a problem with the Trust eba quoted.
    I don’t support a minimum wage. No one was forced to accept the conditions of employment. They were free to withdraw their labour if they weren’t happy. It’s part time casual work that, even though the contract didn’t give much option to refuse work, would be reasonably forseeable as people tend not to organize major events at 24 hours notice. Being asked to do work beneath your station is a benefit not a disadvantage. Why would a supervisor stand idle when toilet paper needs replacing? They didn’t take a ten minute pay reduction.
    Like making patients wait in a chair as nurses stood around waiting for a pink to change a bed because nurses couldn’t change sheets. Demarcation for the hell of it is profit sucking rubbish.
    My issues are that employers unable or unwilling to bribe a union were unable to get similar deals.
    It’s time for work choices .

  22. Permanent staff … were paid a flat rate of $14.70 an hour,
    while … other staff were paid a flat rate of $16.59 an hour.

  23. thefrollickingmole

    The crux of the matter is unions allowed companies to win contracts by playing favourites with IR negotiations in exchange for money

    This is corruption.

    Its corruption by the companies involved, and its corruption by the union.

  24. Employees were required … with no … notice … to work any time, any day, at any venue … Work was required 24 hours a day, seven days a week, ­including public holidays.
    Work on all weekends and public holidays was mandatory if ­required, at ordinary rates of pay, with no loadings or penalties.

    This from the same people who ran those TV advertisments where a mother is playing with her kiddies, the phone rings;
    “Oh hello boss… er.. no I can’t come in to work, I’m not rostered until tomorrow night” (pause) “Oh…. oh… I see… ”
    Gravely intoned voiceover about da debbil debbil workchoices666.

  25. This is such a perfect opportunity for the Libs to chain the Work Choices canon ball to Labor by pointing out that while they were screeching and wailing about it in 2006/7 Bill Shorten and the Union’s were actually implementing it on their own members!
    “Bill “Work Choices” Shorten”, “Australian Work Choices Union” – it’s too good to miss. Thus now watch as the Libs PR machine drop the canon ball on their own foot and miss the best opportunity for work place reform in decades.

  26. That would be “cannon” ball of course, not Japanese cameras.

  27. feelthebern

    So why don’t some of the workers impacted contact Maurice Blackburn or Slater & Gordon to kick off a class action against the AWU & its office holders at the time of the contract?

    Oh that’s right….

  28. duncanm

    He negotiated and dropped a lot of militant bullshit in exchange for a quick, efficient project and work for his members.

    that’s called blackmail or standovr tactics where I come from. If you pay us money, we won’t break the windows.

    In a true free market of employee groups and employers, a militant bullshit employee group would have to offer lower wages due to their bad rep and risk to the employer.

    An employee group with a good rep could negotiate higher wages, as their risk to the employer would be lower.

  29. JohnA

    waive through

    Strewth it’s getting to be hard work reading this stuff. I keep having to drop the “i” to make sense of it – three times in three days? These excess letters have to be swept up, y’know!

    “waive” = “to refrain from claiming or insisting on; give up; forgo: to waive one’s right; to waive one’s rank; to waive honors. Law. to relinquish (a known right, interest, etc.) intentionally. to put aside for the time; defer; postpone; dispense with:”

    “wave through” as intended in the article – “to allow to pass (as through a gate or opening)” implying a failure of necessary scrutiny

    And to all those saying it is time for the Government to hit the Opposition on IR reform, I remind you of Napoleon’s maxim “Never interrupt an enemy whilst he is in the process of making a blunder”

  30. hzhousewife

    So why don’t some of the workers impacted contact Maurice Blackburn or Slater & Gordon to kick off a class action against the AWU & its office holders at the time of the contract?

    Oh that’s right….

    Exactly my thoughts feelthebern. There are NO law firms OR lawyers who could
    survive taking on the entrenched establishment.

  31. This is explosive stuff, the TURC is revealing what the unions are really up to.
    I have no doubt the Banking Royal Commission will be just as revealing.

  32. .

    Salvatore at the pub
    #1713413, posted on June 18, 2015 at 1:13 pm
    This is explosive stuff, the TURC is revealing what the unions are really up to.
    I have no doubt the Banking Royal Commission will be just as revealing.

    Pure slander.

    Insurance is openly a scam, re coinsurance writedowns and no equity given for over-insurance premiums charged.

  33. Agreed Dot, an Royal Commission into the insurance industry would be just as revealing as the TURC is, and as the Banking industry one will be.

  34. What ever it takes

    Ironic that the AWU was set up to fight the boss for the shearers, now the AWU are shearing the members for the boss. Sheep in a flock are easier to pen for shearing. Who in the party is going to crutch Bill, his wide -eyed look says it all.

  35. I am the Walras, Equilibrate and Price Take

    Salvatore at the pub
    #1713413, posted on June 18, 2015 at 1:13 pm
    This is explosive stuff, the TURC is revealing what the unions are really up to.

    Sure is.

    But nothing is going to come of it because Abbott, Hockey, Brandis, etc are RETARDED.

  36. Ant

    I’ve said this before but I was always amazed by Michael Kroger pumping up Shortie’s tyres when the Rudd/Gillard catfight was gracing our TV screens on a nightly basis.

    Kroger’s position was that Shortie “was the natural leader of the Labor Party” and the Party “should cut to the chase and hand the leadership to him”.

    Turns out that Shortie was at least 5 stubbies short of a sixpack after all. And that’s basically not a matter of opinion. The guy’s a blundering airhead in true Gillardian fashion (recall “I don’t know what my leader said but I agree with every word of it”?).

    I suspect Kroger knew this all along.

    When was the last time the ALP had a leader who could be regarded as at least moderately competent?

    And look who’ve they’ve got lined up post-Shortie!!!!

  37. .

    Salvo

    Under-insurance is recognised in legislation and common law to be on the side of the insurers.

    I guess it evens out some anti producer laws like Tenancy law.

    The unions are given licence by the ALP – much like how we licence Insurers to offer one sided contracts.

    You cannot legally set up a union without permission from the government, and the ALP effectively controls the Senate unless the Liberals get control of both houses or a situation like Harradine holding the balance of power.

    When these laws go, much of the rorting will go away. The unions act like a protected business because that’s what they are.

  38. Pete of Perth

    Let’s not forget CPSU members going on strike today.

  39. JohnA

    Pete of Perth #1713467, posted on June 18, 2015 at 2:28 pm

    Let’s not forget CPSU members going on strike today.

    Sorry, I forgot!

  40. Boambee John

    The part that stands out to me is how cheaply the AWU sold out the members, $75,000 a year from Cleanevent for three years, while the company saved $2 million a year, not even a five percent cut. Then $300,000 from Theiss/Holland who saved $100 million on the contract, not even a one percent cut.

    Work Choices would have been better for the members (albeit not so good for Bill’s political career).

  41. Boambee John

    Pete and John A,

    Did anyone notice?

  42. Nato

    This is a truly bizarre take on the Union’s corruption.

    It was a bad EBA. But Cleanevent workers did not want to be a part of the union.

    They could have joined and agitated for the Union to get a better deal. They got the contract they signed for and didn’t want to improve it with collective action. There is no conflict with the principle of freedom of contract.

    Here’s the important thing to note: swinging a broom or pouring drinks are not exactly scarce skills. What? Suspend the laws of supply and demand? Individual bargaining will not secure a better deal. That is why unions have been so vociferous in their opposition to individual contracting. This has been their consistent position.

    Which jobs are more differentiated? Truck drivers? Cleaners? Data processors? I hate to break it to you, but many workers in these unskilled/semi-skilled positions lack the nous to bargain for a good individual contract. There is plenty of argument for an agent to engage in collective bargaining.

    While workers aren’t going to lose pay on the basis of some union frolic, we will if it’s a reasonable cause. Many will naively follow the union’s advice, being told this is the only way to get a pay rise, and they are the same workers who will naively accept sub-par conditions for not signing with the union.

    “And note the dollars and favours may not just go to the union but to associated groups such as GetUp!” Ooga-booga!!! Just join the Union and have a say.

    The scope for deals to be done between the agent (the union) and the employer to secure an inferior deal for the worker but a better deal for the union and employer (the current scenario we are seeing in a number of instances) is corruption and already illegal under existing laws.

    You have laid out a compelling argument why highly skilled and educated economists should have an individual contract, but not labourers.

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