Historical development

Institutional logics are defined as, “…socially constructed, historical patterns of material practices, assumptions, values, beliefs and rules…” (Thornton and Ocasio, 1999: 804; emphasis added), highlighting the historically contingent nature and strength of

different logics at any one time. Accordingly, it is helpful to trace how approaches to the regulation of the employment relationship (necessarily political in focus) in the UK and Australia have developed over time, what Dickens (2008: 4) refers to as, “…baggage from the past”. This baggage provides useful insights into the values that have shaped contemporary approaches to state regulation of the employment relationship in each country.

5.1.2.1 Historical development - UK

The UK in the 1960-1970s had arguably adopted a pluralist model and approach to employment relations, concerned with achieving a balance between the interests of employers and employees through strong labour protections and provision for employee representation (Budd and Bhave, 2008; Deakin et al, 2007). However, this approach changed with election of the right-wing Conservative Thatcher government in 1979 and its commitment to neo-liberalism and free-market competition (Smith and Morton, 2006). Given this ideological perspective (Budd and Bhave, 2008) the Conservative government made many changes to employment-related regulation, anti-union legislation was introduced and employment protections were increasingly restricted if not removed as they were seen as a burden to business (Dickens, 2008). The focus was on de-regulation, prioritisation of ‘flexibility’ in management of labour and the increasing individualisation of the employment relationship (Berridge, 1992; Poole et al, 2005). The UK government was more concerned with perceived efficiency rather than equity and voice. The Conservative government remained in power until 1997, and over this almost twenty year period it is argued Conservative policies shifted employer attitudes through promotion of the idea of an enterprise culture (Godard, 2002) and primacy of shareholder value (Marshall et al, 2009). Poole et al (2005: 119) also refer to the decline in trade unions over the period 1980-2000 as, “…one of the most dramatic” changes to have impacted management of organisations in the UK. At the same time the Conservative government was in power, ideas about the role and function of HRM were also shifting to increase focus on its strategic, business-focused, value-add potential.

The election of a Labour Blair government (‘New Labour’) in 1997 was seen to lead to an upturn in employment related regulation, which Deakin et al (2007: 145) refer to as

a, “…limited revival” of labour protections. One reason for this upturn was New Labour’s acceptance of the European Union (EU) Charter of Fundamental Social Rights of Workers, and the inclusion of EU labour law into the UK legal system (Deakin et al, 2017). However, Ewing (2008) argues that the new regulatory restraints were an ‘illusion’ characterised by various exceptions and exclusions; for example, Goss and Adam-Smith (2001) argue New Labour was reluctant to restrict labour market flexibility when it transposed the EU 1993 Working Time Directive into the UK, and made full use of available derogations allowing employees to ‘opt out’ of restrictions on maximum weekly working hours. Similarly, Poole et al (2005) argue the election of New Labour did not dramatically alter opinion regarding the role that government should play in relation to the economy and industry. While Dickens and Hall (2006) argue the values of New Labour did differently influence the shape and framework of UK employment law, the extent to which the party supported principles of social justice and fairness was qualified by the extent to which those principles supported a flexible labour market, business interests and economic efficiency. Budd and Bhave (2008) argue that by the turn of the millennium the neo-liberal paradigm had fully taken hold in the UK, which is associated with an ‘egoist’ approach to employment relations based on a values system that sees labour as a resource and with efficiency the main state/ government objective. The potential impact and influence prioritisation of such goals at a societal level may have had on HRM practice can be seen in the ‘business case’ for diversity (see Green et al, 2018). However, promotion of legislative requirements in this way may conversely risk creating a business case against compliance if it is not considered to be in the business interest (Dickens, 1999; Dickens and Hall, 2005).

The Conservatives took back power in 2015 (they were part of a Coalition government with the Liberal Democrats from 2010 to 2015), and have continued to focus on how government can promote a flexible and efficient labour market through, for example, its campaign to “tackle employment law red tape” (Department for Business Innovation and Skills (DBIS) et al, 2011). Perceived problems with the system of employment regulation and the ability for disgruntled employees to make claims to an employment tribunal were raised in 2011 by the then UK Conservative Lord Chancellor, George Osborne. Osborne referred to the, “…burdensome effect” of the employment tribunal system and the rights of business not to be subject to, “…vexatious claims and

unreasonable costs” (CIPD, 2011: 7). From July 2013 a new system of fees was introduced, requiring claimants to pay a fee in order to make a claim to an employment tribunal. The fees ranged from £390 to £1,200 and their introduction led to a “dramatic and persistent fall” in the number of claims made with a reduction in claims of between 66 to 70 percent (R v Lord Chancellor, 2017: 12). The legality of these fees was successfully challenged by Unison, a UK union, who pursued the matter to the UK’s highest court (Unison, 2017). The Supreme Court found that the low paid were amongst those most unlikely to make a claim under the fees regime, as any award of compensation is related to earnings (R v Lord Chancellor, 2017), meaning their claims were of lower value and the fees levied proportionately greater. In declaring the fees regime unlawful the Supreme Court emphasised the importance of the rule of law and the ability for people to access courts and tribunals in order to enforce their legal rights as, “…without such access, laws are liable to become a dead letter” (R v Lord Chancellor, 2017: 20). The Supreme Court also emphasised how important it is for employees to be able to enforce their rights, to ensure employers do not always prevail and that they respect employment rights. That the Supreme Court saw the need to make such statements in its judgment is arguably indicative of the general attitude taken towards employment rights by the Conservative UK government and potential impact this was having on compliance within organisations. (The imbalance of power between employers and employees is also linked to the use of NDAs to silence complainants in cases of harassment and discrimination (WEC, 2019). The detrimental impact the fees regime and reduction in enforcement has had on employer attitudes toward employment rights and legal risk has also been alluded to on the CIPD website (Wynn-Evans and McGrandle, 2015) and strongly suggested in the CIPD magazine (Kirton, 2017).

5.1.2.2 Historical development - Australia

The manner in which Australian labour/employment law has developed is quite different to the UK experience. In the early twentieth century Australia introduced an innovative system for the compulsory conciliation and arbitration of industrial disputes. If a dispute existed between a union and an employer regarding employment conditions and wages the dispute could be referred to an impartial tribunal with power to make an industrial award stipulating the wages and conditions that should apply (AIRC, no date;

Creighton, 2007). This system persisted for most of the twentieth century (Anderson et al, 2011; Mitchell et al, 2010), has been described as Australia’s principal form of labour regulation over that period (Mitchell et al, 2010), and also meant that unions maintained a “major role” (Creighton, 2007: 92) and involvement in shaping labour regulation (Naugthon and Pittard, 2013). Naugthon and Pittard (2013) also argue that principles concerned with the ‘public interest’ and ‘protection of the weak’ expressly undergirded the conciliation and arbitration system, with these terms permeating discussion of how the interests of capital and labour should be balanced up to the present day and visible in the most recent iteration of Australian employment legislation.

One consequence of this system is a debate about whether it is appropriate for Australia to be included in the list of liberal market economies set out in the varieties of capitalism literature (see Hall and Soskice, 2001). Marshall et al (2009) define the liberal market model as one that favours capital and competition, where the interests of shareholders are prioritised over those of the workforce. They argue that while it could be argued that Australia has more recently shifted toward a liberal market model, it has not historically followed the same pattern and has more similarities with the co- ordinated model of capitalism that takes a more detailed and protective approach to labour regulation. Indeed, Godard (2002) excludes Australia from the group of liberal market economies on the basis of its centralised wage regulation. Exposure to different values systems and for different periods of time could also impact employment practices and how HR practitioners perceive and approach employment regulation.

Australia had a Labour government from 1983 to 1996, almost mirroring the period that the Conservative government was in power in the UK. The first move away from the centralised system of wage/conditions regulation was taken by a Labour government with introduction of the Industrial Relations Reform Act 1993. This legislation allowed employers, employees and unions to directly settle disputes through enterprise bargaining at the level of the workplace without having to go to the tribunal/commission (Creighton, 2007). However, the legislation also introduced more comprehensive employment protections and rights to take account of the less centralised system (AIRC, no date), such as more uniform protection against unfair dismissal and extension of rights and protections regarding industrial action (Mitchell et al, 2010).

In 1996 a Liberal-National Coalition government gained power (akin to the Conservative party in the UK) and enabled employers to offer individual contracts, known as Australian Workplace Agreements (AWAs), to employees. An AWA enabled an employer and individual employee to contract out of application of an industrial award, provided the AWA did not disadvantage the employee when compared to the benefits contained in the award (van Barneveld, 2006). Following re-election in 2004, the Howard Liberal-Coalition government sought to make further changes to the industrial relations and employment regime through the Workplace Relations Amendment (Work Choices) Act 2005 (Cth) (known as ‘Work Choices’) (O’Neill and Kuruppu, 2007). Work Choices introduced what have been referred to as the most far- reaching changes to the industrial relations system for a century (AIRC, no date). These changes included replacing the no-disadvantage test for AWAs with only five minimum conditions, which van Barneveld (2006) refers to as removal of an important safety net of employment conditions. Work Choices also exempted employers with one hundred employees or less from the requirement to fairly dismiss employees, reduced the number of matters that could be covered in awards and constrained the power of unions (Creighton, 2007). However, Work Choices also proved to be extremely unpopular. The vitriol directed towards the legislation and the Howard government can be seen in the Australian Council of Trade Unions (ACTU) campaign against it (see discussion below), in the academic literature of the time (for example, Sheldon and Juror, 2006), and in the defeat of the Howard government in the federal election of 2007 (O’Neill and Kuruppu, 2007).

When Labour regained power in November 2007 it was seen to have a clear mandate to abolish Work Choices. Interim steps were taken to prevent employers from entering into new AWAs (O’Neill, 2012) and the Work Choices legislation was then abolished and replaced by the Fair Work Act 2009 (Cth) (FWA). Amongst other things, the FWA reintroduced protection from unfair dismissal, placed a stronger emphasis on enterprise bargaining (rather than individual contracts) and set out ten minimum terms and conditions of employment that apply to all employees - the National Employment Standards. In 2013 Labour lost the general election and was replaced by a Liberal Coalition government, which remains in power. Despite pressure from business groups

to weaken worker and union protections contained in the FWA, Forsyth et al (2017) argues the current government’s failure to make these amendments stems from a fear of making what may be unpopular changes, and a union-led scare campaign about return to a Work Choices era.

The historical background set out above helps illustrate how the state logic regarding regulation of the employment relationship and how the demands of efficiency, equity and voice should be balanced differs between the UK and Australia. It also helps explain differences in content and emphasis of employment rights and entitlements in both countries. However, before turning to discussion of these rights, it is important to explain the nature of the common-law legal system shared by both the UK and Australia.