The court was created in 1904 by the Conciliation and Arbitration Act 1904, an Act of the Parliament of Australia. Its functions were to hear and arbitrate industrial disputes, and to make awards. It also had the judicial functions of interpreting and enforcing awards, and to hear other criminal and civil cases relating to industrial relations law. The court's first President was High Court Justice Richard O'Connor.
The early role of the Commonwealth Court of Conciliation and Arbitration was clear. It resolved industrial disputes which extended beyond the limits of any one state. In practice this became a system of 'paper disputes' where a union or other employee organisation would write to a group of employers and demand certain terms and conditions (a log of claims, or log of demand). The Employers would then reject part or all of the demands creating an industrial dispute. This dispute would then be arbitrated on, the result of the arbitration was an Industrial Award.
The court was initially less important than the various State commissions, which had jurisdiction over all disputes which occurred within states. The court's workload was so low that it only made six awards in the first five years after it was created. One of these early awards was the famous Harvester Judgment, delivered by H.B. Higgins, which first introduced the concept of the living wage (also known as a basic wage). Another of its early acts was to set the standard working week at 48 hours.
However through a sequence of High Court authorities over the first twenty years of Federation, it became clear that by this process, the Commonwealth Court of Conciliation and Arbitration could exercise broad jurisdiction over a wide range of industries. However, it could not create an industry wide award, rather all of the employers who were to be bound by the Award had to be personally involved in the dispute. (which in practice meant that a log of claims needed to be served on them).
The court was reformed in 1926 following amendments to the Conciliation and Arbitration Act. The changes included replacing the President with a Chief Judge alongside other judges, and ensuring that all cases involving the basic or living wage would be heard by a full bench of the court. The changes also allowed for the appointment of Conciliation Commissioners, with a role similar to mediators.
The Conciliation and Arbitration Act has always been controversial and highly political. This is not surprising as it establishes the minimum wage regulator. The Commonwealth Court of Conciliation and Arbitration was almost dismantled by Prime Minister Stanley Melbourne Bruce in 1929. However William Morris Hughes crossed the floor and the legislation was voted down. The move proved politically unpopular and Stanley Melbourne Bruce became the first Prime Minister to lose his own seat in a Federal Election. (His party also lost the election). Subsequently no Prime Minister attempted to remove the wage setting powers of the Australian Industrial Relations Commission, until John Howard in 2006 with the enactment of the WorkChoices reforms.
In 1930, the court reduced the standard working week to forty four hours, down from forty eight. During the Great Depression, the court reduced wages by 10%. In 1947, the working week was reduced again, to forty hours.
The court was changed again in 1947 to increase the role of the Commissioners, leaving the judges to conduct the judicial work, and a select few matters of arbitration including the basic wage and the minimum wage for women.
Throughout its time the Commission created Awards which covered a whole raft of industries. These Awards with Awards made by Industrial Relations Commissions of the respective six states of Australia acted as the unique system of minimum wage setting in Australia. The Commission also registered a large number of trade unions to assist in the Award formation process.
The Commission is famous for its cases on equal work and equal pay, as well as decisions on unfair dismissal, and redundancy pay.
One issue which dogged the Commission was that of what "pertained to the relationship between employer and employee". This had been a question of importance, since the Constitution required the Commission settle industrial disputes. These disputes were later categorised as a "dispute about matters which pertained to the relationship between employer and employee." The question continued to surface and in 2004 the High Court of Australia in the case of Electrolux v AWU applied the question (which had historically been applied to Awards) to Enterprise Bargaining Agreements. This led to around 6 months of industrial confusion until the Australian Industrial Relations Commission handed down the landmark decision of the Schefenacker, the Murray Bridge and the La Trobe University certified agreements (‘the three certified agreements case’) . It was seen by many as fitting that the last significant decision made by the Australian Industrial Relations Commission was to conclusively determine which matter did or did not pertain.
Throughout the years from 1904 to 2006 the Australian Industrial Relations Commission created Awards which set the minimum terms and conditions of employment for people who worked for certain employers. A standard Award would have approximately 20-30 conditions and would be around 40 pages in length. The Awards were periodically reviewed.
The Australian Industrial Relations Commission would also certify enterprise bargaining agreements. These agreements were negotiation collective contracts commonly between a union (as representative of the employees on the site) and an employer of a site.
The Australian Industrial Relations Commission also registered trade unions and dealt with demarcation disputes between unions.
Finally the Australian Industrial Relations Commission dealt with unfair dismissal application.
In 2006, under the WorkChoices laws effected at the end of 2005 the role of the AIRC has been redefined. Its wage setting powers have largely been transferred to the Australian Fair Pay Commission. The AIRC's primary role will be award "modernisation", limited dispute settling powers and hearing unfair dismissal applications.
Under the Rudd Labor Government, the AIRC will become a division within Fair Work Australia in January 2010.