Manajemen | Fakultas Ekonomi Universitas Maritim Raja Ali Haji 2004 8
AUSTRALIAN WORKPLACE AGREEMENTS:
AN EMPLOYER RESPONSE
PAUL J. GOLLAN*
T
here is considerable political and industrial relations debate in Australia concerning
the value and merit of Australian Workplace Agreements (AWAs). However,
formalised individual agreements are a relatively new phenomenon in the Australian
industrial relations landscape. Consequently, to date, there has been limited assessment
of employer strategies and the perceived organisational outcomes involved in making
and negotiating such agreements. The paper presented here attempts to fill this gap by
reviewing responses from 688 employers who approved AWAs with the Office of the
Employment Advocate (OEA) before February 2000.
There are a number of issues that can be identified from this exploratory study. AWA
employers were likely to be ‘individualistic’ employers with more individual employee
consultation and human resource practices. In addition, the majority of AWAs were
introduced to change working time arrangements and simplify existing employment
arrangements. According to the survey respondents, employers who have drafted
AWAs have generally been able to achieve some positive organisational outcomes and
they have generally met the objectives of employers. The survey findings showed that
the majority of respondents intended to increase their use of AWAs in the future,
citing increased flexibility and some suggesting the benefit of all employees being
under one type of industrial relations instrument as the primary reasons for their
introduction.
INTRODUCTION
There is extensive political and industrial relations debate in Australia concerning
the value and merit of Australian Workplace Agreements (AWAs). However,
formalised individual agreement making is a relatively new phenomenon in
the Australian industrial relations landscape—there has been limited assessment
of the employer strategies, outcomes and processes involved in making and negotiating such agreements. The paper presented here attempts to fill this gap by
addressing four main reasons for investigation: (i) to explore the characteristics
of firms adopting AWAs; (ii) to determine the extent to which AWAs have
advanced the intended outcomes of employers; (iii) to explore the communication
* Lecturer, Department of Industrial Relations, London School of Economics and Political Science,
Houghton Street, WC2A, United Kingdom. Email: p.j.gollan@lse.ac.uk This paper is based on
research commissioned by the Office of the Employment Advocate (OEA). A full report on the
findings can be found in Gollan P (2000) Trends in Processes in the Making of Australian Workplace
Agreements at www.oea.gov.au/docs/report-awa_processes_survey.pdf The comments and views
expressed in this paper do not reflect the policy or the views of the OEA, the Department of
Employment, Workplace Relations and Small Business, or the Australian government.
THE JOURNAL OF INDUSTRIAL RELATIONS, VOL. 46, NO. 1, MARCH 2004, 116–124
AUSTRALIAN WORKPLACE AGREEMENTS
117
and consultation processes involved in establishing AWAs from an employer’s
perspective; and (iv) to assess the future application of AWAs in Australian
industrial relations.
An AWA is an individual written agreement between an employee (existing or
new) and an employer about the terms and conditions of employment. AWAs
can be negotiated with a group of employees but must be signed by each employee
who agrees to the terms of the AWA (Nightingale 2001). AWAs override all
existing employment contacts and agreements. They are similar to individual
contracts of employment, except that the Workplace Relations Act (WRA) determines the process to be followed, including the approval by the Office of
the Employment Advocate (OEA) (Davis 2001). The claimed advantages of
AWAs are that they can be a very effective vehicles for clarifying and recording
enterprise-specific work arrangements and can provide a more direct and
transparent mechanism than previous informal arrangements. As a result, such
arrangements can promote a relatively open, high-trust relationship between
managers and employees and increase productivity and commitment to the
enterprise (Smart Strategic Services 1999; Wooden 1999a, World Competitive
Practices 1999).
However, a contrary view is that AWAs lack procedural justice and fairness,
and are often associated with high levels of employee turnover that can
potentially impair organisational performance (Bray et al. 2001; Deery &
Walsh 1999). In addition, others argue that such arrangements encourage
work intensification through changes in working time arrangements leading to
an extension of working hours and/or the removal of penalties and allowances
for work undertaken out of ordinary hours (ACIRRT 1999a, 1999b, 1999c; Cole
et al. 2001; Roan et al. 2001).
What can be concluded from the existing research into individual agreements
and AWAs is that there is a variety of judgements over the fairness and perceived
benefits of such agreements. The major aim of this study was to analyse the ways
in which AWAs had been put into effect in organisations. The main method for
collecting data was an employer survey, which was distributed to all employers
who had filed AWAs with the Office of the Employment Advocate before February
2000. The 2000 questionnaires were sent out on 16 May 2000. All responses up
until 22 June 2000 were included in the survey. In total, there were 688 useable
responses out of 2000 questionnaires, which provided a response rate of just over
34 per cent.1
The questionnaires were sent to the contact person nominated by each
employer when filing the AWAs. The questionnaire comprised 34 questions
and had with five major themes: (i) the incidence and coverage of AWAs; (ii) the
motivating and inhibiting factors of establishing AWAs at the workplace; (iii) the
impact and outcomes of AWAs; (iv) the channels of communication and processes
involvement in establishing and maintaining AWAs; and (v) the linkage between
AWAs and other human resource management practices.
This study reviews AWAs from an enterprise perspective as opposed to a
workplace perspective. It could be argued that this is appropriate given that the
parties to an AWA contract are the employee and the enterprise (or employer
118
THE JOURNAL
OF
I N D U S T R I A L R E L AT I O N S
March 2004
representative). In addition, case study research would suggest that AWAs are
likely to be introduced as part of an organisational strategy or approach rather
than as an ad hoc workplace activity. However, it must be acknowledged that these
responses are from employers not employees and, as such, the conclusions are
qualified by their reliance on management opinions and the findings must be
considered against this background.
Since most evidence on AWAs processes and outcomes has been based on
isolated case studies or a small example of agreements,2 the advantage of this
survey is that it explores management strategies and reviews the views of
employers on the processes and outcomes of introducing AWAs within organisations. It could be argued that employers’ strategic aims and objectives of introducing AWAs may influence their potential outcomes and underpin the
effectiveness of such arrangements. The research did not intend to assess the
quality of such arrangements or the appropriateness of AWAs for employees.
However, notwithstanding the limitations of this research method, it could be
argued that there is a central role for surveys of managers in the study of AWAs.
As such, the first step in examining AWAs is to ask managers whether there has
been an attempt to adopt certain practices associated with it. Only when it has
been established that these practices are in place can a further and more detailed
investigation be made to explore the manner in which they operate. The views
of employees will be important, if not critical, for validating employer responses.
As such, the findings may provide the basis for comparison with other responses
from employees or their representatives.
SURVEY
FINDINGS
The respondents to the survey broadly reflect the general size and industry
distribution of employers with AWAs. In the survey, some 35 per cent of
organisations had 19 employees or less, with nearly half of those organisations
employing between one and five employees. Most of the responses came
from organisations employing between 100 or more employees, which represents
some 37 per cent of respondents.3 The respondents to the survey reflect
the general size distribution of employers with AWAs. Nearly half of the
organisations were located in four industries: (i) transport and storage
(15 per cent); (ii) manufacturing (13 per cent); (iii) health and community
services (13 per cent); and (iv) accommodation, cafes and restaurants (eight
per cent).
With regard to daily operating hours, there was a high proportion of
businesses operating between eight and 11 hours (45 per cent), and between
17 and 24 hours (29 per cent) a day. This may indicate that businesses have utilised
AWAs to increase flexibility and change working time arrangements, and to
overcome the award’s restraints, such as those concerning hours of work and
penalties. These findings highlight two possible strategies by employers:
First, employers may endeavour to reduce administration cost and time by
reducing complex arrangements for overtime and shiftwork patterns. Second,
employers may be formalising pre-existing informal arrangements regarding
working time.
AUSTRALIAN WORKPLACE AGREEMENTS
MANAGEMENT
OBJECTIVES FOR INTRODUCING
119
AWAS
The rationale for the introduction of AWAs has been to establish working
time provisions that better suit the needs of the organisation and employees.
In addition, it is suggested by the Employment Advocate that such agreements
can reduce the complex provisions often contained in awards and have the
potential to align the expectations of the organisation with the expectations
of employees by giving employees an opportunity to have a direct input into
determining their pay and conditions (Hamberger 2001). Other reasons stated
by the Employment Advocate for the introduction AWAs include encouraging
a more cooperative approach, formalising existing arrangements, reducing thirdparty intervention and avoiding ‘roping-in’ to a larger industrial relations agenda
(Hamberger 2000; 2001).
From the employers’ perspective, the survey findings seem to confirm these
views. Almost half of the respondents stated that the main reason for introducing
AWAs was to increase flexibility of hours (45 per cent). Other significant reasons
included the simplification of employment conditions (42 per cent) and the
improvement of employee-management relations (36 per cent). Low on the list
were direct cost considerations (such as containment of labour costs [18 per cent],
and reduced administration costs [12 per cent]), industrial relations issues
(limitations of collective bargaining and/or agreements [16 per cent]) and
competitive product market pressures (matching arrangements of competitors
[seven per cent]).
MANAGEMENT
PERCEPTIONS OF OUTCOMES FROM
AWAS
Notwithstanding that these responses are from employers not employees, it
could be argued that employers’ strategic aims and objectives for using AWAs
may greatly influence potential outcomes. However, it is worth adding that selfreporting of behaviour in a variety of contexts is methodologically fraught.
In addition, the nature of the causal relationship between the introduction of
AWAs and actual outcomes may be complex and problematical.4
Nevertheless, the AWA survey findings give some indication as to whether
employers have been successful in achieving their objectives through the use
of AWAs. These findings align very closely with the stated reasons for the
implementation of AWAs. As an example, two of three employers (66 per cent)
indicated that the ability to introduce change had improved, compared to just
one per cent who said it had got worse. Respondents to the survey stated that
this was a primary attraction of AWAs because collective arrangements often
involve lengthy discussions and negotiations before an agreement can be
concluded, thus taking considerable time.
Over 60 per cent of respondents reported that management–employee relations
and labour productivity had improved or greatly improved due to the introduction
of AWAs. Employee commitment had improved or greatly improved by a similar
margin and employee turnover had fallen in almost a third of the firms surveyed.
Even in relation to administrative overheads—arguably one area that deters some
employers from introducing AWAs—over twice as many respondents felt that
120
THE JOURNAL
OF
I N D U S T R I A L R E L AT I O N S
March 2004
AWAs had improved or greatly improved their situation than had worsened it.
Although this would be expected, in one area—union relations—there was a
slightly larger proportion of employers who thought they had got worse than
improved. Significantly, however, four of five respondents thought they had not
changed.5 These findings seem to be supported by the National Institute of
Labour Studies (NILS) survey findings (Wooden 1999a; 1999b), which reported
increases in profitability, labour productivity and quality; and an improvement
in management–employee relations; the ability to introduce change; job security
and workplace safety. The impact and outcomes of AWAs as found in our study
are shown in Table 1.
HIGH
PERFORMANCE MANAGEMENT
An analysis of the AWIRS (Morehead et al. 1997) data indicates that ‘individualistic’ employers are more likely to use Human Resource Management (HRM)
strategies encompassing performance-based financial incentives, such as profit
sharing, bonus schemes and performance-related pay. Evidence on whether these
employers are likely to use other consultative HRM techniques, which emphasise
broader employee participation in decision-making such as Joint Consultative
Committees (JCCs), task forces, autonomous work groups and quality circles, is
less clear.
The AWA survey findings would seem to support previous research. The vast
majority of respondents established AWAs through discussions between managers
and employees (83 per cent), or regular formal meetings between managers and
Table 1
Impact and outcomes from AWAs (%)
Worse
Workplace profitability
Labour productivity
Output quality
Employee skill levels
Management–employee relations
Ability to implement change
Employee job security
Employee turnover
Union relations
Employee commitment
Administrative overheads
Performance compared to others
in industry
Workplace safety
No change Improved
Greatly
improved
1
1
1
1
3
1
2
1
13
1
15
AN EMPLOYER RESPONSE
PAUL J. GOLLAN*
T
here is considerable political and industrial relations debate in Australia concerning
the value and merit of Australian Workplace Agreements (AWAs). However,
formalised individual agreements are a relatively new phenomenon in the Australian
industrial relations landscape. Consequently, to date, there has been limited assessment
of employer strategies and the perceived organisational outcomes involved in making
and negotiating such agreements. The paper presented here attempts to fill this gap by
reviewing responses from 688 employers who approved AWAs with the Office of the
Employment Advocate (OEA) before February 2000.
There are a number of issues that can be identified from this exploratory study. AWA
employers were likely to be ‘individualistic’ employers with more individual employee
consultation and human resource practices. In addition, the majority of AWAs were
introduced to change working time arrangements and simplify existing employment
arrangements. According to the survey respondents, employers who have drafted
AWAs have generally been able to achieve some positive organisational outcomes and
they have generally met the objectives of employers. The survey findings showed that
the majority of respondents intended to increase their use of AWAs in the future,
citing increased flexibility and some suggesting the benefit of all employees being
under one type of industrial relations instrument as the primary reasons for their
introduction.
INTRODUCTION
There is extensive political and industrial relations debate in Australia concerning
the value and merit of Australian Workplace Agreements (AWAs). However,
formalised individual agreement making is a relatively new phenomenon in
the Australian industrial relations landscape—there has been limited assessment
of the employer strategies, outcomes and processes involved in making and negotiating such agreements. The paper presented here attempts to fill this gap by
addressing four main reasons for investigation: (i) to explore the characteristics
of firms adopting AWAs; (ii) to determine the extent to which AWAs have
advanced the intended outcomes of employers; (iii) to explore the communication
* Lecturer, Department of Industrial Relations, London School of Economics and Political Science,
Houghton Street, WC2A, United Kingdom. Email: p.j.gollan@lse.ac.uk This paper is based on
research commissioned by the Office of the Employment Advocate (OEA). A full report on the
findings can be found in Gollan P (2000) Trends in Processes in the Making of Australian Workplace
Agreements at www.oea.gov.au/docs/report-awa_processes_survey.pdf The comments and views
expressed in this paper do not reflect the policy or the views of the OEA, the Department of
Employment, Workplace Relations and Small Business, or the Australian government.
THE JOURNAL OF INDUSTRIAL RELATIONS, VOL. 46, NO. 1, MARCH 2004, 116–124
AUSTRALIAN WORKPLACE AGREEMENTS
117
and consultation processes involved in establishing AWAs from an employer’s
perspective; and (iv) to assess the future application of AWAs in Australian
industrial relations.
An AWA is an individual written agreement between an employee (existing or
new) and an employer about the terms and conditions of employment. AWAs
can be negotiated with a group of employees but must be signed by each employee
who agrees to the terms of the AWA (Nightingale 2001). AWAs override all
existing employment contacts and agreements. They are similar to individual
contracts of employment, except that the Workplace Relations Act (WRA) determines the process to be followed, including the approval by the Office of
the Employment Advocate (OEA) (Davis 2001). The claimed advantages of
AWAs are that they can be a very effective vehicles for clarifying and recording
enterprise-specific work arrangements and can provide a more direct and
transparent mechanism than previous informal arrangements. As a result, such
arrangements can promote a relatively open, high-trust relationship between
managers and employees and increase productivity and commitment to the
enterprise (Smart Strategic Services 1999; Wooden 1999a, World Competitive
Practices 1999).
However, a contrary view is that AWAs lack procedural justice and fairness,
and are often associated with high levels of employee turnover that can
potentially impair organisational performance (Bray et al. 2001; Deery &
Walsh 1999). In addition, others argue that such arrangements encourage
work intensification through changes in working time arrangements leading to
an extension of working hours and/or the removal of penalties and allowances
for work undertaken out of ordinary hours (ACIRRT 1999a, 1999b, 1999c; Cole
et al. 2001; Roan et al. 2001).
What can be concluded from the existing research into individual agreements
and AWAs is that there is a variety of judgements over the fairness and perceived
benefits of such agreements. The major aim of this study was to analyse the ways
in which AWAs had been put into effect in organisations. The main method for
collecting data was an employer survey, which was distributed to all employers
who had filed AWAs with the Office of the Employment Advocate before February
2000. The 2000 questionnaires were sent out on 16 May 2000. All responses up
until 22 June 2000 were included in the survey. In total, there were 688 useable
responses out of 2000 questionnaires, which provided a response rate of just over
34 per cent.1
The questionnaires were sent to the contact person nominated by each
employer when filing the AWAs. The questionnaire comprised 34 questions
and had with five major themes: (i) the incidence and coverage of AWAs; (ii) the
motivating and inhibiting factors of establishing AWAs at the workplace; (iii) the
impact and outcomes of AWAs; (iv) the channels of communication and processes
involvement in establishing and maintaining AWAs; and (v) the linkage between
AWAs and other human resource management practices.
This study reviews AWAs from an enterprise perspective as opposed to a
workplace perspective. It could be argued that this is appropriate given that the
parties to an AWA contract are the employee and the enterprise (or employer
118
THE JOURNAL
OF
I N D U S T R I A L R E L AT I O N S
March 2004
representative). In addition, case study research would suggest that AWAs are
likely to be introduced as part of an organisational strategy or approach rather
than as an ad hoc workplace activity. However, it must be acknowledged that these
responses are from employers not employees and, as such, the conclusions are
qualified by their reliance on management opinions and the findings must be
considered against this background.
Since most evidence on AWAs processes and outcomes has been based on
isolated case studies or a small example of agreements,2 the advantage of this
survey is that it explores management strategies and reviews the views of
employers on the processes and outcomes of introducing AWAs within organisations. It could be argued that employers’ strategic aims and objectives of introducing AWAs may influence their potential outcomes and underpin the
effectiveness of such arrangements. The research did not intend to assess the
quality of such arrangements or the appropriateness of AWAs for employees.
However, notwithstanding the limitations of this research method, it could be
argued that there is a central role for surveys of managers in the study of AWAs.
As such, the first step in examining AWAs is to ask managers whether there has
been an attempt to adopt certain practices associated with it. Only when it has
been established that these practices are in place can a further and more detailed
investigation be made to explore the manner in which they operate. The views
of employees will be important, if not critical, for validating employer responses.
As such, the findings may provide the basis for comparison with other responses
from employees or their representatives.
SURVEY
FINDINGS
The respondents to the survey broadly reflect the general size and industry
distribution of employers with AWAs. In the survey, some 35 per cent of
organisations had 19 employees or less, with nearly half of those organisations
employing between one and five employees. Most of the responses came
from organisations employing between 100 or more employees, which represents
some 37 per cent of respondents.3 The respondents to the survey reflect
the general size distribution of employers with AWAs. Nearly half of the
organisations were located in four industries: (i) transport and storage
(15 per cent); (ii) manufacturing (13 per cent); (iii) health and community
services (13 per cent); and (iv) accommodation, cafes and restaurants (eight
per cent).
With regard to daily operating hours, there was a high proportion of
businesses operating between eight and 11 hours (45 per cent), and between
17 and 24 hours (29 per cent) a day. This may indicate that businesses have utilised
AWAs to increase flexibility and change working time arrangements, and to
overcome the award’s restraints, such as those concerning hours of work and
penalties. These findings highlight two possible strategies by employers:
First, employers may endeavour to reduce administration cost and time by
reducing complex arrangements for overtime and shiftwork patterns. Second,
employers may be formalising pre-existing informal arrangements regarding
working time.
AUSTRALIAN WORKPLACE AGREEMENTS
MANAGEMENT
OBJECTIVES FOR INTRODUCING
119
AWAS
The rationale for the introduction of AWAs has been to establish working
time provisions that better suit the needs of the organisation and employees.
In addition, it is suggested by the Employment Advocate that such agreements
can reduce the complex provisions often contained in awards and have the
potential to align the expectations of the organisation with the expectations
of employees by giving employees an opportunity to have a direct input into
determining their pay and conditions (Hamberger 2001). Other reasons stated
by the Employment Advocate for the introduction AWAs include encouraging
a more cooperative approach, formalising existing arrangements, reducing thirdparty intervention and avoiding ‘roping-in’ to a larger industrial relations agenda
(Hamberger 2000; 2001).
From the employers’ perspective, the survey findings seem to confirm these
views. Almost half of the respondents stated that the main reason for introducing
AWAs was to increase flexibility of hours (45 per cent). Other significant reasons
included the simplification of employment conditions (42 per cent) and the
improvement of employee-management relations (36 per cent). Low on the list
were direct cost considerations (such as containment of labour costs [18 per cent],
and reduced administration costs [12 per cent]), industrial relations issues
(limitations of collective bargaining and/or agreements [16 per cent]) and
competitive product market pressures (matching arrangements of competitors
[seven per cent]).
MANAGEMENT
PERCEPTIONS OF OUTCOMES FROM
AWAS
Notwithstanding that these responses are from employers not employees, it
could be argued that employers’ strategic aims and objectives for using AWAs
may greatly influence potential outcomes. However, it is worth adding that selfreporting of behaviour in a variety of contexts is methodologically fraught.
In addition, the nature of the causal relationship between the introduction of
AWAs and actual outcomes may be complex and problematical.4
Nevertheless, the AWA survey findings give some indication as to whether
employers have been successful in achieving their objectives through the use
of AWAs. These findings align very closely with the stated reasons for the
implementation of AWAs. As an example, two of three employers (66 per cent)
indicated that the ability to introduce change had improved, compared to just
one per cent who said it had got worse. Respondents to the survey stated that
this was a primary attraction of AWAs because collective arrangements often
involve lengthy discussions and negotiations before an agreement can be
concluded, thus taking considerable time.
Over 60 per cent of respondents reported that management–employee relations
and labour productivity had improved or greatly improved due to the introduction
of AWAs. Employee commitment had improved or greatly improved by a similar
margin and employee turnover had fallen in almost a third of the firms surveyed.
Even in relation to administrative overheads—arguably one area that deters some
employers from introducing AWAs—over twice as many respondents felt that
120
THE JOURNAL
OF
I N D U S T R I A L R E L AT I O N S
March 2004
AWAs had improved or greatly improved their situation than had worsened it.
Although this would be expected, in one area—union relations—there was a
slightly larger proportion of employers who thought they had got worse than
improved. Significantly, however, four of five respondents thought they had not
changed.5 These findings seem to be supported by the National Institute of
Labour Studies (NILS) survey findings (Wooden 1999a; 1999b), which reported
increases in profitability, labour productivity and quality; and an improvement
in management–employee relations; the ability to introduce change; job security
and workplace safety. The impact and outcomes of AWAs as found in our study
are shown in Table 1.
HIGH
PERFORMANCE MANAGEMENT
An analysis of the AWIRS (Morehead et al. 1997) data indicates that ‘individualistic’ employers are more likely to use Human Resource Management (HRM)
strategies encompassing performance-based financial incentives, such as profit
sharing, bonus schemes and performance-related pay. Evidence on whether these
employers are likely to use other consultative HRM techniques, which emphasise
broader employee participation in decision-making such as Joint Consultative
Committees (JCCs), task forces, autonomous work groups and quality circles, is
less clear.
The AWA survey findings would seem to support previous research. The vast
majority of respondents established AWAs through discussions between managers
and employees (83 per cent), or regular formal meetings between managers and
Table 1
Impact and outcomes from AWAs (%)
Worse
Workplace profitability
Labour productivity
Output quality
Employee skill levels
Management–employee relations
Ability to implement change
Employee job security
Employee turnover
Union relations
Employee commitment
Administrative overheads
Performance compared to others
in industry
Workplace safety
No change Improved
Greatly
improved
1
1
1
1
3
1
2
1
13
1
15