The industrial relations framework and workplace negotiations: HSC Legal Studies

What this dot point is asking

Regulation of the workplace is the second part of the Workplace option of the Legal Studies Stage 6 Syllabus (2009). This page covers industrial relations: the state and federal framework and negotiations between employers and employees, and the skills of examining the legal framework for workplace law and assessing the role of the legal system in regulating the workplace.

The rest of the regulation of the workplace is on dispute resolution and workplace institutions (courts, tribunals, government organisations, unions, employer associations, NGOs and the media) and remuneration.

This material was examined directly in 2024, when Question 30(a) asked students to analyse the role of state and federal governments in responding to the rights of employees. NESA's feedback rewarded answers that explicitly distinguished the two levels, named the correct institutions and legislation at each level, and explored the relationship between them.

The answer

The constitutional basis

The Commonwealth has no general power over employment. It has built a national system from several heads of power in s 51 of the Constitution:

Under s 109, a valid Commonwealth law overrides an inconsistent state law. But the Fair Work Act expressly leaves room for state laws on work health and safety, workers compensation, discrimination, long service leave and some other matters.

The federal framework

The Fair Work Act 2009 (Cth) is the centre of the national system. It sets the NES, provides for modern awards and enterprise agreements, protects employees from unfair dismissal and adverse action, regulates industrial action and right of entry, and creates two key institutions:

• the Fair Work Commission (FWC), an independent tribunal that makes and varies awards, conducts the Annual Wage Review, approves agreements, supervises bargaining and industrial action, and hears unfair dismissal and other disputes; and
• the Fair Work Ombudsman (FWO), the regulator that educates, investigates, issues compliance notices and prosecutes breaches, including referring the wage theft offence (from 1 January 2025).

Other federal laws and bodies protect employees in specific areas: the Sex Discrimination Act 1984, Racial Discrimination Act 1975, Disability Discrimination Act 1992 and Age Discrimination Act 2004, administered by the Australian Human Rights Commission; the Workplace Gender Equality Act 2012 and its agency (WGEA), which since 2024 publishes employer gender pay gaps; the Paid Parental Leave Act 2010; superannuation guarantee law; and the Work Health and Safety Act 2011 (Cth) for Commonwealth workplaces. The Federal Court and the Federal Circuit and Family Court enforce the Fair Work Act.

The federal government also acts through policy and funding: it makes submissions to the Annual Wage Review, funded wage increases for aged care and early childhood workers, and legislates reforms such as Closing Loopholes.

The NSW framework

When NSW referred its power from 1 January 2010 (Industrial Relations (Commonwealth Powers) Act 2009 (NSW)), most private sector employees moved to the national system. The NSW system under the Industrial Relations Act 1996 (NSW) now mainly covers NSW public sector employees (such as nurses, teachers, police and doctors in public hospitals) and local government employees.

• The Industrial Relations Commission of NSW (IRC) makes and varies state awards, sets public sector pay, conciliates and arbitrates disputes, and can order industrial action to stop.
• The Industrial Court of NSW was re-established from 1 July 2024 by the Industrial Relations Amendment Act 2023 (NSW), which also abolished the former government's cap on public sector wage rises. The Court is a superior court of record that hears serious industrial and safety matters.
• The Industrial Relations and Other Legislation Amendment (Workplace Protections) Act 2025 (NSW) (assent 3 July 2025) gave the IRC power to deal with workplace bullying and sexual harassment of state system employees, raised the Industrial Court's small claims limit from $10,000 to $100,000, and let unions bring certain WHS proceedings.

NSW law also applies to all NSW workplaces, whichever system covers the employee, in four areas the Fair Work Act leaves to the states:

The state and federal relationship

Cooperation

The system is an example of cooperative federalism. NSW's referral created a mostly national system, reducing the confusion of overlapping awards. The states and Commonwealth adopted model work health and safety laws (in NSW from 2012), so safety duties are largely harmonised, and all jurisdictions banned engineered stone from 1 July 2024.

Overlap and gaps

A NSW employee who is discriminated against can complain under federal or state law but must choose one forum. Different rules for state and national system employees can confuse workers. Some reforms are state-led and uneven: NSW introduced industrial manslaughter in 2024, while Victoria's work from home Bill (2026) would apply only there.

Government as employer

In the NSW system, the government is both the employer and the lawmaker, which creates tension. The IRC's independence is therefore important. In NSW Nurses and Midwives' Association v Health Secretary (decision of 16 April 2026), the IRC awarded increases over three years from 1 July 2025 of 16 per cent for registered nurses and midwives, 18 per cent for enrolled nurses and 28 per cent for assistants in nursing, finding that nursing had been undervalued "principally because it involves the exercise of caring or interpersonal skills that women were considered to have a natural capacity to perform". The union had sought 35 per cent.

Negotiations between employers and employees

The law structures negotiation at three levels.

1. Individual negotiation. Employees negotiate their own contract (usually only realistic for skilled or senior workers), agree to individual flexibility arrangements, and make statutory requests: for flexible working arrangements (s 65), extended parental leave (s 76) or conversion to permanent work. Since 6 June 2023, an employer must respond to a flexible work request in writing within 21 days and discuss it genuinely, and the FWC can review a refusal; in Chandler v Westpac Banking Corporation [2025] FWC 3115, the FWC ordered Westpac to grant a work from home request it had refused without genuine engagement.

2. Enterprise bargaining (single employer). This is the main form of collective negotiation.

1. Starting bargaining. The employer agrees to bargain, or the FWC makes a majority support determination; for a replacement agreement, employees can now initiate bargaining in writing.
2. Representation. The employer notifies employees of their right to appoint a bargaining representative; a union member is represented by their union by default.
3. Good faith bargaining (s 228). Representatives must attend meetings, disclose relevant information in a timely way, respond to proposals, give genuine consideration, not act capriciously or unfairly, and recognise other representatives. The FWC can make bargaining orders.
4. Industrial action. Employees can take protected industrial action (strikes, work bans) if approved in an FWC-ordered protected action ballot and after written notice; employers can respond with lockouts. Protected action is immune from most legal liability. The FWC can suspend or terminate action that threatens life, safety, health or welfare, or significant damage to the economy (s 424). Unprotected action can be stopped by orders and penalised.
5. Agreement and approval. A majority of employees who vote must approve the agreement, and the FWC approves it if it was genuinely agreed, passes the better off overall test (BOOT) and complies with the NES.

3. Multi-employer bargaining. The Secure Jobs, Better Pay Act 2022 expanded bargaining across several employers, aimed at low-paid, female-dominated sectors where single-employer bargaining had failed:

• Supported bargaining, for sectors such as early childhood education, aged care and disability care. The FWC authorised supported bargaining for early childhood services in September 2023, and on 10 December 2024 it approved the Early Childhood Education and Care Multi-Employer Agreement 2024-2026, delivering government-funded wage rises.
• Single interest employer agreements, for employers with common interests, such as franchisees.
• Cooperative workplace agreements, which are voluntary.

When bargaining fails: intractable bargaining. If bargaining is deadlocked, the FWC can make an intractable bargaining declaration and then a binding workplace determination. The first determination, TWU v Cleanaway (12 June 2024), set pay increases for employees at a Cleanaway waste services site after negotiations stalled over hours of work, weekend penalty rates and pay. Critics argue this returns to arbitration and discourages genuine bargaining; supporters say it stops endless disputes.

NSW public sector negotiations. In the state system, the IRC arbitrates when bargaining fails. When NSW doctors struck from 8 to 10 April 2025, the government said the union was acting in breach of IRC orders. An interim agreement in February 2026 gave 3.5 per cent from 1 July 2024 and a further 3.5 per cent from 1 July 2025, with maximum shift lengths and minimum rest periods, while the IRC continued to arbitrate other claims.

Assessing the role of the legal system in regulating the workplace

Judgement. The legal system plays a central and largely effective role in regulating the workplace. It sets enforceable minimums, channels negotiation into a structured process that rewards cooperation, and gives both employers and employees independent tribunals. Since 2022 it has leaned towards collective protection of low-paid and female-dominated sectors. Its limits are the complexity of a divided federal system, the decline of unions, which makes bargaining less accessible for many workers, and the fact that rights depend on compliance and enforcement, discussed on remuneration.

In one sentence

The Commonwealth regulates most workplaces through the Fair Work Act 2009 (Cth) using its corporations power and NSW's 2010 referral, while NSW regulates its public sector through the Industrial Relations Act 1996 (NSW) and keeps its own safety, compensation, discrimination and long service leave laws, and within this framework the law structures negotiation through enterprise and multi-employer bargaining, protected action and arbitration when talks fail.

Try this

Q1. Outline the state and federal framework for industrial relations in NSW. (5 marks)

• What the marker wants. The constitutional basis, the national system and NSW referral, the NSW system and its coverage, and the areas NSW still regulates.

Q2. Explain how the law encourages cooperation in enterprise bargaining. (6 marks)

• What the marker wants. Good faith bargaining, the vote and FWC approval, the BOOT, supported bargaining, and a limit.

Q3. Analyse the role of the NSW Industrial Relations Commission in achieving justice for employees. (8 marks)

• What the marker wants. Its jurisdiction, the nurses decision (2026), its orders in the doctors' dispute (2025), its new bullying and harassment powers (2025), and a judgement.