Macrossans Lawyers Brisbane law firm

AHRI Breakfast - 8 August 2007

By Belinda Weir

This paper outlines the two alternative industrial relations policies of the major political parties and to hypothesise on the state of the industrial landscape post-election 2007.

The reality of the Howard Government's Industrial Relations

If the Liberal/National Coalition succeeds in retaining government, the current industrial relations legislation is likely to remain in force, with little change.

The current law contains the following features:

1. The Fairness Test - significant amendments to the previous "WorkChoices" amendments which apply to all industrial agreements lodged from 7 May 2007. Of relevance will be the assessments of agreements with reference to this test by the Workplace Authority (previously the Office of the Employment Advocate) and also whether the test will be retained if the Howard Government is re-elected.
2. The Australian Fair Pay and Conditions Standard ("AFPCS") - a guaranteed five minimum conditions which apply to all employees as a guaranteed minimum standard. The AFPCS can be overridden by terms and conditions in an agreement that are more favourable.
3. An emphasis on individual agreement making, with AWAs taking precedence over any collective agreements. Agreements operate from lodgment and any deficiencies are corrected post-assessment, with the agreement lapsing if "fairness" (as assessed by the Workplace Authority) is not met, and compensation paid for the intervening period.
4. Reduced ability for unions to take a role in the negotiation and enforcement of industrial arrangements due to restrictions on industrial action and right of entry. Additional restrictions on the content of agreements through the operation of "prohibited content" provisions of the legislation.
5. Restrictions on the ability of employees to claim unfair dismissal in a low cost, expedient fashion. Such claims must now proceed through alternative avenues (e.g. breach of contract claims) or through a series of "jurisdictional" hoops - e.g. "genuine operational reasons", more than 100 employees etc.
6. Ongoing rationalisation of awards to reduce the number of awards that apply to various job categories.
7. Ongoing role for state legislation in certain defined areas - e.g. workers' compensation, long service leave, discrimination, occupational health and safety - but for how long?
8. Retaining the Australian Building and Construction Commission ("ABCC") to deal with industrial issues arising specifically from the building industry.

Some Issues to Consider

When implementing the fairness test, will account be taken of the intangible value placed on non-monetary compensation by individual workers? For instance, a non-monetary incentive of an additional weeks' holiday may mean more to a worker with family commitments than a person with particular "workaholic" tendencies. A laptop computer may have an intangible benefit of greater value to a 19 year old than to a 59 year old.

Award simplification and rationalization process appears to have stalled - what progress will be made to reduce the number of awards that continue to apply in some instances until 2009?

If the Howard Government is re-elected, will the fairness test continue to apply? Will there be 'three types' of agreements - pre-fairness test, fairness test and post-election? If so, when is business best placed to develop and implement new agreements?

Rudd's Proposal - a Marriage of Interests

Some alteration of the existing regime is likely if the Rudd Labor party achieves government. Of course, legislative change will not be rapid (although it is likely to be fast-tracked).

The most obvious changes are likely to be:

1. The establishment of "Fair Work Australia" - a "one stop shop" for employees, employers and unions in relation to work conditions, disputes, agreement vetting and enforcement. There may be a constitutional challenge to this body's operation if administrative and judicial functions are vested in the same place, as such concepts potentially breach the doctrine of separation of powers.
2. Reinstatement of an unfair dismissal jurisdiction - a low cost resolution process arguably with even fewer procedural requirements than the previously existing regime, said to have the ability to reinstate persons expediently when dismissals have been unfair. In reality, the same compensation remedy will likely continue to apply in the majority of cases.
3. Establishment of a Fair Dismissal Code to provide guidance to business about how to terminate employees "fairly" - potentially to operate as an advisory standard on termination.
4. Abolition of AWAs (in the main) with precedence given to collective enterprise agreements. The mining sector may be in a position to retain some arrangements on the strength of the profitability of the sector and the pressure brought to bear by industry on the newly elected government.
5. A re-enlivened role for unions, with restoration of some (if not all) of the prohibited content aspects of agreements. Possibility of a less restrictive and less punitive approach to union action.
6. Movement towards a uniform national industrial relations system. A Labor government would initially seek referral of the power to regulate employment in non-constitutional corporations (e.g. partnerships, sole traders) from the State Governments. It is likely that public sector employees would remain (for the moment) in the relevant State systems.
7. A safety net consisting of 10 National Employment Standards including hours of work, parental leave, flexible work for parents, annual leave, personal/carers'/compassionate leave, community service leave, public holidays, the "Fair Work Information Statement", Termination of Employment and Redundancy and Long Service Leave.
8. Additional standards for particular occupations in award regulated roles imported from a simplified series of awards.

Industry Response - the ACCI Position

The ACCI opposes the fairness test and considers it re-introduces the "red-tape" of the previous "no disadvantage" test.

Additionally, industry considers that the fairness test potentially introduces awards (through the operation of the "designated award" provisions) to enterprises that were previously "award free".

ACCI opposes the creation of Fair Work Australia, advocates for the increasing use of AWAs and will resist the restoration of the unfair dismissal jurisdiction.

What do the Unions Think?

The ACTU considers the fairness test "window dressing" only and insists that despite appearances, fairness can only be restored to workplaces through the election of a Labor Government. The unions rely on the 2.5 million employees already on AWAs and Agreements that are not subject to the fairness test. (That is, those agreements lodged between 27 March 2006 and 7 May 2007).

The ability of an enterprise to be exempted from the fairness test due to particular business demands (e.g. financial uncertainty, regionally based businesses, environmental conditions) causes the ACTU particular concern.

The particular challenge for the union movement (irrespective of an election outcome) will be the strategies undertaken to address declining membership in most sectors and particular negative perceptions in some industries (e.g. mining and construction).

What does it mean for HR?

If you work in an industry where talent shortage is an issue, where unions have not had a particular influence and the Howard Government is re-elected, you have and will have the potential to negotiate arrangements that meet employer and employee demands for flexibility (if such interests exist). You need to know what your business imperatives are, and also what the demands of your employees are - be prepared to negotiate novel and unusual employment arrangements.

Similar challenges and opportunities will arise out of a Rudd Government's election - and you may find yourself visiting "Fair Work Australia" if you attempt to reduce wages and conditions unfairly.

If your workforce is highly unionized, is it better to try to lock down industrial arrangements now prior to any potential upswing in the role available to unions post-election? Can you afford to risk your workforce's resistance to such steps?

Dealing with employee uncertainty is the real risk for business in the lead-up and aftermath of an election - irrespective of the outcome.

During a skills shortage, if an employer is perceived as adopting an approach that disadvantages workers (irrespective of the reality); the risk is that employees will vote with their feet.

Business can respond to this risk by strategically positioning itself - where do you want to be at this time next year? How are you going to get there?

Which industrial arrangements suit your enterprise? What are your current arrangements? Could you be doing things differently/more efficiently? Which proposed industrial regime makes more sense for you? Can you afford to wait? Should you wait?

Once you've made a decision - how do you communicate this in a way designed to maximise the potential for your business and minimise the detriment?