Salary disputes would be settled on a school-by-school or a hospital-by-hospital basis under a new proposal by the president of the Industrial Relations Commission of NSW.
Justice Michael Walton, who gave the opening address at the Industrial Relations Society of NSW annual convention on Friday, said regulation of the labour market could no longer rely on a 20th-century industrial relations system.
The challenge for policy makers today was how to adapt industrial relations to the modern workplace, he said.
One way would be to resolve industrial relations disputes at a local rather than statewide level. This would allow individual institutions to resolve their own salary disputes.
Justice Walton said a similar approach had been taken in the US public education system in Massachusetts, following a period of conflict between public sector unions and the government over collective bargaining rights and education reform.
"Their approach was to move away from the traditional adversarial structures and processes of collective bargaining and grievance resolution, embedded in systems based on the standard employment contract, to a process characterised by shared responsibility between individual schools, teachers and unions for outcomes involving a collaborative approach to be achieved by interested based bargaining at a local level," he said.
"Regulation must adapt to reflect the contemporary labour market, as it is completely different from the labour market which gave rise to existing systems of regulation and the standard employment contract."
The NSW government has already given local health districts and individual schools greater control of their own budgets.
But Steve Turner, the assistant general secretary of the NSW Public Service Association, said the proposals would be devastating for workers because they would destroy pay equity and career paths.
"It would introduce pay inequity across the public sector, where similar jobs in different workplaces could end up on very different dollar values," he said.
"The idea of resolving disputes as close as possible to the area of the dispute, where it is about occupational health and safety for example, it is a good concept.
"But that is different to negotiations for pay and conditions that need to be consistent between and across different departments or different schools."
The Secretary of Unions NSW, Mark Lennon, said unions and employers regularly resolve workplace disputes at the workplace level.
"However, we'd be most sceptical of any change that removed an avenue of appeal beyond the workplace," he said.
"It's important that a robust, independent umpire is maintained because it can take the heat out of a workplace dispute and give workers an objective, unbiased avenue of appeal."
The NSW Minister for Industrial Relations, Andrew Constance, said : "As part of the NSW Government’s reforms to health and education we have empowered schools and hospitals to make decisions at a local level – and it’s at that level where employers and employees attempt to resolve their issues."
A spokesman for the Department of Education said it had "effective practices to resolve disputes at the local level".
"When this is not possible, disputes are escalated to a senior officer of the department," he said.
"This means that action will continue to resolve the dispute while schools and principals are free to work on the delivery of educational services to students and the operations of schools."
The NSW opposition told the conference held in the Blue Mountains on Friday that it would rebuild the NSW Industrial Relations Commission, which has been diminished by the Coalition government.
The opposition spokesman for industrial relations, Adam Searle, said the court's role should be broadened to include matters dealt with by other jurisdictions including the workers' compensation commission.
"There should be a single court/tribunal to deal with the world of work," Mr Searle said.
"Most of what now comprises the occupational and regulatory division of the [NSW Civil and Administrative] tribunal could comfortably sit with the Industrial Relations Commission."
Mr Searle said a future Labor government would also repeal the "harsh and unfair" changes the Coalition government made to the workers' compensation scheme in 2012. The Coalition slashed benefits to injured workers to rein in a looming budget deficit. Labor would also return work safety prosecutions to the industrial court.