Moves by Australian universities and technical colleges to outsource the provision of services such as payroll, finance, cleaning and maintenance are likely to cost the institutions more than they expect to save.
The full bench of the Federal Court ruled last month that under the Workplace Relations Act, government departments, agencies and possibly private companies could not use outsourcing to cut pay and conditions via competitive tendering and that award rates must apply.
As a result, academics and staff affected by universities putting the provision of services out to tender to private companies may be able to claim thousands of dollars in compensation. Universities have increasingly followed government departments and private firms in sub-contracting many areas of their work to outside groups.
Trade unions are to run an Australia-wide campaign to recover millions of dollars for workers who have suffered loss of wages and conditions after their jobs were outsourced. Thousands of federal, state and local government employees made redundant or re-employed by outsourcing companies at lesser rates are expected to make claims for back-pay.
A spokesman for the Australian Council of Trade Unions said: "The whole basis of contracting out and using labour-hire companies has been built on the premise of cheap labour. This decision has sounded a clear warning to the federal government that cutting wages and conditions is not an option."
The National Tertiary Education Union said the court decision would have a particular impact on blue-collar workers in universities - maintenance, grounds, cleaning and related staff - and potentially for other groups such as employees in mailrooms, finance and payroll sections.
"General staff in all these areas have been subject to contracting out exercises in various universities," said NTEU general secretary Grahame McCulloch. "There has been a universal trend to contracting out across the higher education sector although the pattern is not uniform."
Mr McCulloch said the court ruling could also have implications for some academic activities. The union knew of instances where the jobs of academics had been contracted out with the intention of reducing salary costs.
"The Federal Court ruling brings into question any arrangement where contracting out has left those workers in a university facing a reduction in pay or entitlements after a contractor has been brought in to do basically the same work in the same area," he said. "The court ruled that is illegal and it could give rise to claims for back-pay. We are taking legal advice on what options our members can take if they are in that sort of situation."