An Uneasy Conjunction: Opting Out and the Arbitration System

Abstract

Since the enactment of the Conciliation and Arbitration Act in 1904 the federal tribunal system has provided opting out mechanisms enabling parties to enter into their own bargaining arrangements outside the formal tribunal system. Thus, in theory, there has been the potential for a two-stemmed system: a tribunal or arbitation stream and a bargaining stream. The co-existence of an arbitration stream that is required to provide general industrial standards in the public interest, and of a bargaining stream that may enable parties to circumvent those standards, has created tensions that have been resolved in favour of the formal system. Historically, opting out provisions have been highly circumscribed and have not resulted in the development of a separate bargaining stream. This paper examines the operations of the opting out provisions of the Industrial Relations Act 1988. It suggests that the Act perpetuates the tensions inherent in the two-streamed approach. It also suggests that the Act has enabled the Australian Industrial Relations Commission to curtail the parties' capacity to opt out. The paper suggests changes that are needed if the legislation is to provide for genuine opting out and the development of a genuine bargaining stream.