Killing with Kindness

The Australian workplace relations framework, with its complexity and excessive employee entitlements, will not deliver real wage increases, improved productivity, or job security.

Workplace relations systems are dynamic, responding to pressures in the labour market, the economy, and politics. The Australian experience since the 1970s has been one of periodic substantial change, influenced by whether the Coalition or the Australian Labor Party (ALP) prevails politically.

The Albanese government has grounded its legislative agenda in the protection of its union mates. Years of reform, started by the Hawke Government, have been reversed. In 2026 we have a workplace relations framework that is a return to the 1970-80s model of complex rules, regulations, and disproportionate union influence. Crucial aspects of employer-employee relations are outsourced to tribunals and courts.

Union officials are emboldened. Strikes are more frequent, with teachers, council workers, miners, ABC employees and bus drivers amongst recent examples. BHP operations are on track to accommodate 1,400 union right of entry requests in 2026.

The system is ill-equipped to meet the demands of 2026 and beyond. Without change in workplace relations settings, we will struggle in the years ahead. We face significant challenges if we are to reverse the fall in our living standards and grow the economy. If changes are not made, they will be forced upon us by a brutal correction in economic policy settings.

THE FACTS

Some facts about what is happening in the labour market are not canvassed in popular commentary and are ignored by governments.

Trade union membership as a proportion of the workforce has steadily declined to negligible levels today. Trade unions represent only eight per cent of private sector employees and 13 per cent of the total employee workforce. The assumption that trade union leaders speak on behalf of all or even the majority of workers is wrong. An organisation shunned by 92 per cent of its target audience should question its relevance.

The Australian workforce of 14.7 million is much more than ongoing employees working regular hours in a traditional employment relationship. The union-ALP dogma wrongly assumes that ongoing regular employment is the aspiration of all Australian workers.

The best outcomes occur when employers and employees engage constructively.

There are 2.4 million casual employees. Most of these willingly choose casual employment, with Australian Bureau of Statistics (ABS) surveys indicating 73 per cent prefer casual work.

In addition, 1.1 million workers are independent contractors. Workers engaged on fixed term contracts number over 450,000.

The workforce in a modern economy is continuously evolving. A relatively new work mode is gig employment, covering a range of endeavours from uber drivers, delivery workers, tradies, to IT experts.

People have embraced the flexibility and opportunity offered by these new work arrangements. Most value their independence and shun union membership. Union leadership responds defensively by highlighting isolated cases of exploitation and demanding the ALP introduce restrictive regulations to limit the attraction and growth of flexible work arrangements.

THE IMPORTANCE OF ENGAGEMENT

The best outcomes in terms of wages, job security and productivity occur when employers and employees engage constructively. The employer signs on to deliver secure jobs, career opportunities, and fair and improving pay and conditions. Employees understand the operating challenges of a business and its vulnerabilities to competition and change. They commit to embrace innovation and work productively.

In contrast, the complex and highly regulated Australian system constrains positive engagement. Union representatives have a conflict mentality and deliberately discourage positive engagement by employees with their employer. Disputes are defaulted to a tribunal for resolution.

COMPLEXITY

Australia has among the most complex workplace relations system in the world. It is rigid, multi-layered, and enables tribunal and court interference in a large range of workplace decisions that affects the interests of employers and employees.

It is deeply regrettable that politicians have lacked the courage to resist union campaigns to ever-expand legislative interference in workplace relations.

Following are what I consider to be the most pressing problems with our existing workplace arrangements, and the solutions I believe need to be implemented.

FREEDOM OF ASSOCIATION

A fundamental right guaranteed by the Fair Work Act 2009 (Cth) is the freedom to choose whether or not to join a union. An employee cannot be compelled or coerced to join a union or remain a member. Closed shops, where only union members are hired, are prohibited. An employee cannot be penalised for choosing not to engage in union industrial action. The majority of employees, 92 per cent of private sector employees, exercise their right not to join a union.

However, in many workplaces the freedom of association right is not upheld. The construction industry is the stand-out example. Most large construction sites operate as closed shops. The Construction, Forestry and Maritime Employees Union (CFMEU) has been aggressive in mandating union membership as a condition of employment on-site. Non-union members are subjected to vicious abuse and threats. Many head contractors either support the CFMEU’s stance or refuse to support employees and their subcontractors who want to exercise their right not to join. And following the abolition of the Australian Building and Construction Commission (ABCC), proceedings against such contraventions have disappeared.

Unions in other industries also adopt aggressive recruitment practices. It is common for enterprise agreements to contain clauses whereby the employer supports encouraging union membership. In contrast, most agreements are silent on an employee’s legislative right not to join a union.

The Victorian public sector, notwithstanding its political impartiality principles, has taken union encouragement to extraordinary lengths. Victorian Public Sector executives and supervisors are required to adopt a positive and supportive role, rather than merely tolerate union recruitment and representation. The personal views of executives and supervisors are not to be used to discourage workers from union membership. Passive acceptance by agencies of membership recruitment is not sufficient.

A model enterprise agreement clause for the Victorian Public Service decrees that employers must ensure union representatives are granted the opportunity to discuss union membership with new employees during working hours. Unions are invited to address workers at all inductions. A membership application form and information on the relevant unions must be provided to all workers soon after commencement.

The solution is straightforward. Employers must ensure employees are informed of their right to choose not to join a union. Union propaganda that is inaccurate must be challenged by employers and corrected. Employer and industry associations could even consider running an occasional campaign promoting employees’ right to choose. Unions do not have to be the only source of workplace advice on freedom of association.

EXCESSIVE LEAVE RIGHTS

Australia, like other OECD economies, is a high-pay jurisdiction. But what sets Australia apart from other economies is a recent explosion in leave entitlements. Traditionally leave entitlements were annual, sick, long service, maternity, and bereavement leave—along with public holidays. Most employers also grant special leave for significant private events such as moving houses, urgent house repairs, or care for a critically ill family member.

The Victorian Public Service Enterprise Agreement 2024 sets out an astonishing 42 types of leave.

This is no longer the case for large private employers and the public sector. For example, leave entitlements for bank and consulting firm employees now include religion, lifestyle, sporting activities, gender affirmation, preventative health, compassionate, and first nations leave. Some firms permit carers leave to extend to pets. So, if their pet goldfish or budgerigar is ill, an employee can take 2 days paid carers leave.

Once again, the Victorian public sector is an outlier. The Victorian Public Service Enterprise Agreement 2024 sets out an astonishing 42 types of leave. Most of the entitlements are for paid leave.

Reproductive health and wellbeing, gender affirmation, surrogacy, grandparent care of grandchildren, foster and kinship, rehabilitation from alcohol and drug abuse, sporting event participation, infectious disease, and cultural and ceremonial leave types are just some on the menu.

Unions will relentlessly seek to extend these leave arrangements to small and medium businesses. The ACTU is now campaigning to lift annual leave to 5 weeks a year, and 6 weeks for shift workers.

Employers must resist any expansion in leave rights. Although it is difficult industrially to reduce or remove employee entitlements, employers offering excessive leave should take up the challenge. Leave eligibility conditions should be enforced with rigour. The Coalition should expose this folly and support change.

While expansion of leave types has a short-term attraction, it has adverse consequences in the long-term. An excessive leave burden will drive jobs offshore or encourage the use of artificial intelligence to displace uncompetitive labour arrangements.

EMPLOYEE WELFARE

An employer’s primary responsibility for the welfare of their employees has basically been to provide a safe working environment. An employee’s private health and welfare was their responsibility.

This separation of responsibilities is now becoming blurred. Employers, sometimes willingly, offer employees flu shots, general mental health support, heart, diabetes and skin tests, gym discounts, personal finance webinars, addiction counselling, and access to recovery programs. Employees have won a right to disconnect from employer contact after hours, and indulgent working from home rights are now entrenched across many workplaces. Victoria’s Allan government expects to enshrine new work from home entitlements, which will come into effect on 1 September.

A factor behind the change in the attitudes of employers is the substantial increase in workers’ mental health compensation cases. The increase is placing stress on the workers’ compensation and health and safety systems. As a result, employer premiums are rising. Employers believe preventative measures may ameliorate their compensation exposure, often without recognising the risks of relieving employees of their responsibilities for their own health and welfare.

Most of these entitlements have been provided through employer benevolence rather than industrial relations instruments. Employers should review the range of employee health and welfare obligations they provide, and the introduction of new welfare initiatives should be carefully considered. In some instances, employees enjoying working from home, extensive leave entitlements, and disconnection rights are hardly ever seen in the office. While the benefits of employee assistance may be considerable, there can be significant impacts on a firm’s competitiveness. Over-indulgence represents a folly if the firm’s viability is jeopardised.

TRADE UNION DELEGATES

A clear objective of the Albanese government’s workplace relations agenda has been to prop up union relevance in the face of negligible membership numbers. Elaborate and expanded rights for trade union delegates in the workplace has been the result.

Delegates are entitled to communicate with union members and employees about their workplace interests and to have access to the workplace and workplace facilities. Delegates are also entitled to supposedly “reasonable” access to paid time during normal working hours, for training on their role as a delegate. This right is not available if the employer has 15 or fewer employees.

Workplace delegates must not hold up or prevent the normal performance of work or interfere with workers exercising their right to freedom of association.

Employers have the right to make final decisions for their business. They should be aggressive in counteracting any false or misleading information emanating from a delegate. And they must never surrender the right to communicate directly with their employees. It is a serious error when communication channels to employees are dominated by trade union delegates.

The Coalition must adopt policies that wind back delegates’ rights to use employer facilities and employees’ paid time for training.

THE CONSTRUCTION INDUSTRY

The lawlessness and corruption that permeates the construction industry is well documented. The strong influence of criminal elements is a most disturbing development.

The CFMEU seeks to control the supply and use of labour across the industry. Union membership and CFMEU-sanctioned agreements are mandatory to win work. Ministers in federal and state ALP governments claiming that they were unaware of the extent and the cost of unlawful conduct defies belief. People with only a casual connection to the industry knew this to be the case. But for media exposure of the extent of the corruption, nothing would have been done by ALP governments.

So astonishing and regular have the disclosures become, the public may, paradoxically, fail to grasp the enormity and cost of the corrupt conduct. The industry is seen as rogue and beyond redemption.

The reality is that many people and organisations are affected. Subcontractors and employees are targeted with abuse and coercion, livelihoods are threatened, if not ruined. The industry’s clients, including governments, see costs balloon as substantial financial and completion overruns are common.

The federal and state governments have now implemented a variety of responses to the recent shocking disclosures, including appointing an administrator to run the CFMEU. The most promising development has been the appointment of a Commission of Inquiry by the Queensland Government. The Inquiry involves a thorough investigation and has already been instrumental in uncovering a report highlighting the enormous cost of corruption on Victorian government projects. CFMEU influence over ministers and bureaucrats is being investigated. Queensland government inspectors have given evidence that the CFMEU turned government agencies into puppets that drove staff to breaking point. But the industry has already been the subject of numerous inquiries, including royal commissions.

Over-indulgence represents a folly if the firm’s viability is jeopardised.

The CFMEU will only behave when it fears the consequences of breaking the law. A regulator such as the ABCC with extensive powers and high penalties is essential. Effective engagement with other law enforcement bodies such as the police and crime commissions is needed.

An enforceable industry code of conduct for contractors must exist. Failure to comply should result in suspension or banning from government projects. Clients of the industry, both government and private firms, must support contractors who conform with the law and the code of conduct. If contractors incur the wrath of the CFMEU and are subject to industrial action, then clients must stand with them. Too often clients shift all the risks to the contractor. In Victoria, there is evidence that the government not only failed to support contractors but instructed them to comply with CFMEU demands.

A MULTI-LAYERED MESS

The Australian workplace relations system is a multi-layered and complex mess. The principal federal act of well over 1,000 pages and 800 sections reflects its history of piecemeal additions being made during every session of the Parliament.

Typically, unions identify a grievance that allegedly involves the exploitation of workers. Cabinets are told rectification is necessary and a union public relations campaign is instigated. Ministers seem to lack the fortitude to ask how many are affected and how many employers exploit workers.

The reality is that almost all employers want to treat their workers in a lawful and fair manner. In every workplace relations system, there are employers that do the wrong thing. System wide solutions are not required.

The complexity means that many of the country’s largest employers in retail, airlines, mining, and even the Department of Employment and Industrial Relations, the overseer of the system, have underpaid staff. The latest large entity to come under attention is Kmart.

These bodies fail even though they have significant payroll expertise. How do small and medium sized businesses cope? Many take the route of lowest risk and, as a result, have less than ideal engagement with staff about their joint challenges and opportunities. Productivity flatlines and the attraction to invest declines.

An overhaul of the Fair Work Act 2009 (Cth) is required. The ALP is incapable of this, so it must be up to the Coalition. Also, employer and industry association support would be necessary. They should be more assertive in highlighting examples of the damage that is being done to Australian competitiveness and growth.

In a broad structural sense, industry awards should be abolished. Australia, like other countries, should have a system based on national minimum standards with collective and individual agreements operating at the workplace level.

It is at once paradoxical but entirely predictable that a workplace relations system so complex, and so heavily weighted in favour of employees, is endangering the jobs of the very people it is supposed to protect. Australians deserve better.

John Lloyd had a distinguished career as a public servant at both federal and state levels. Notably, he was appointed the inaugural Australian Building and Construction Commissioner in September 2005. In 2014 he was appointed Australian Public Service Commissioner.

This article from the Winter 2026 edition of the IPA Review is written by former Australian Public Service Commissioner John Lloyd.