FAIR WORK ACT REVIEW 2012

Transcription

1 FAIR WORK ACT REVIEW 2012 EXECUTIVE SUMMARY OF CONCLUSIONS AND RECOMMENDATIONS BY THE AUSTRALIAN CHAMBER OF COMMERCE AND INDUSTRY ACCI s submission to the Fair Work Act review is extensive. It includes multiple conclusions and recommendations. The principal conclusions and recommendations are listed below. This is not an exhaustive list. A full copy of ACCI s submission can be found at The submission lists all recommendations in consolidated form. 1. The decision of the Rudd government in 2008 to exempt the Fair Work Bill from a regulatory impact assessment was a major error that is now being manifest in the range of issues of concern associated with the application of these laws in the economy and its workplaces. 2. The parliament s unwillingness to make appropriate amendments to the Fair Work Bills in 2008 and 2009, including rejection of most of the then proposals from the business community (including ACCI s 200 suggested amendments) has contributed to cost and uncertainty, and problems of implementation.

2 Fairness, Competitiveness and Productivity 3. The continuing growth of service industries, the impact of globalisation and the structural adjustments and transitions occurring in the domestic economy, compel an industrial relations framework that is flexible and adaptable. In key respects, the fair work system fails this benchmark. 4. The fair work laws impose higher costs and provide businesses with inadequate flexibility and adaptability. Thus, the Australian labour market is more exposed than it was during the 2008 global financial crisis, should global conditions turn against us. The capacity to retain jobs in the wake of harsh conditions has been diminished. 5. The fair work laws are not contributing to an enhancement of productivity, competitiveness or efficiency, as had been promised. 6. For many categories of employers, the fair work laws are not operating fairly, and nor for some category of workers. Business seeks its fair dose of fairness from the regulation of workplace relations. Low levels of employer confidence in the laws suggest this balance is lacking. The laws have been particularly unfair on: businesses making large investments requiring certainty in workplace arrangements and labour costs; businesses compelled to bargain on union demands where a majority of their workers eschew the union; and on employers in service industries formerly regulated by State instruments but who now face arbitrarily imposed new costs, blunt transitions and one size fits all rules. 7. The fair work system has, so far, evidenced a highly collectivist, centralised and one size fits all character of workplace regulation

3 inimical to best practice workplace-based relations and outcomes. This is at odds with the needs of the domestic economy, especially its uneven and complex nature in the wake of the global financial crisis. It is also at odds with the very low levels of unionisation in the private sector (14%). 8. Under the fair work system, both in its statutory form and in the way it has been applied, Australian employers face one of the highest cost and centralised regulatory frameworks in the industrialised world. 9. The areas of change proposed by ACCI to the fair work laws do not constitute a return to WorkChoices. In many respects they seek to access flexibilities that were available in the ten years preceding WorkChoices, flexibilities introduced into the labour market by the Keating and Howard governments in their early years. 10. The fair work system, in its provisions and in its application, has elements contrary to key expectations and promises made by government to industry when the laws were first proposed and made. 11. The issues of concern with the fair work system raised by employers, including small business, arise in an environment of continuing increases in unrelated regulatory burdens and risks, including those from outside the industrial system. The cumulative effect of labour market re-regulation on the overall doing of business, especially where impacts are unfair or unintended, is a critical issue for policy makers to recognise and ameliorate. The Case for Change

4 12. The case for amendment of the fair work system is real and based on actual business experience, not speculation or policy theory. A diverse mix of business owners, business leaders, human resource professionals, industrial practitioners and independent commentators have, over the past year, identified shortcomings requiring amendment. 13. Some elements of the system are working satisfactorily. However key elements require significant change. Without change the system will not be durable. National Standards 14. ACCI continues to support the national character of the system and the national employment standards (NES) provided national laws and standards decentralise decisions over wages and conditions (beyond a simple safety net) to enterprises, their employees and their representative unions. Some aspects of the NES, however, need amendment. 15. The NES on annual leave, as now being interpreted, wrongly forces employers to generally pay annual leave loading on termination pay even if awards and agreements say the contrary and even if tribunals have decided the contrary. This is at direct odds with the government s intention and the initial advice of its inspectorate. The failure by the government to have remedied this issue despite knowing of the problem for over a year is grossly unfair to the nation s employers. 16. The small business exemption from redundancy obligations under the NES needs to be amended to ensure that awards do not undermine the exemption.

5 17. NES provisions dealing with leave require greater flexibility, including the rights to negotiate the cashing out of part of accrued balances. Awards 18. In key areas, the modern industrial awards are neither modern nor do they fulfill their purpose of being a simple safety net that provides scope for workplace bargaining. 19. While the reduction in the number of modern awards is welcome, a more robust phase of award review is required on an industry by industry basis directed at assessing each modern award against contemporary business, trading and labour force realties and conditions. 20. A merit based review of penalty rates and loadings in service industries should be conducted on an industry by industry basis, and scope should exist for incorporating such payments into base rates of pay on an enterprise basis, within the framework of a no disadvantage test. The current award review system and the current agreement making rules need to be adapted to enable these proposals to be implemented. Wages 21. Award wage rises under the fair work system have been high, and in excess of productivity rates or growth rates in award reliant sectors of the economy. 22. The equal remuneration provisions of the new laws have been applied in the community sector in a way that has exposed the private sector to comparative wage claims and arbitration between

6 public and private sector wage rates. This is a dangerous development for the economy, and one that was not intended by government, nor one which had previously applied. It should be halted before speculative union claims are made in other sectors. Individual Agreements 23. Individual flexibility agreements require significant amendment, within the framework of a no-disadvantage test. They have failed to deliver the individual tailoring promised, and failed to deliver the flexibility promised. As a substitute for the former AWA system, they have been grossly inadequate. Their efficacy is, however, capable of being established, at least in part, if significant amendments are made. 24. The bargaining system, with its exclusively collectivist focus, has the effect of disenfranchising the over 90% of workplaces that have no union membership and where staff do not conduct workplace relations on a collectivist basis. A workable system of individual agreement making is required. Bargaining 25. The bargaining system has expanded union rights into matters beyond wages and working conditions. As such, the state has moved beyond the remit of regulating a properly structured safety net or system of workplace relations, and provided legal protection and legal rights to unions and tribunals over matters properly within the domain of management. This trend should be reversed as it is a drag on efficiency, a slow burn on the economy and a source of disputation.

7 26. The scope for effective start up agreements on major projects is almost non-existent without trade union consent. This is wrong in principle, and a constraint on investment and growth. Provision is required for effective greenfield agreements. Strikes and Threats of Strikes 27. The system has seen an increase in the threat of legally-protected industrial action by trade unions, as well as a trend to more strikes in the last half of The threat of protected industrial action has adverse economic consequences, including undermining the quality of wage settlements and the capacity to secure productivity trade-offs in those settlements. 28. Agreements made under threats of protected industrial action and the risk of arbitration or third party interference do not reflect a mutual win-win outcome where gains and trade offs are equalised between employers and unions. The system tends to produce least-worst agreement making, not productivity enhancing agreement making. 29. By expanding the range of matters over which a union can demand an agreement and then linking that to the right to strike, the fair work system has expanded the right to strike. The government promised that the fair work laws would not expand the right to strike. Former constraints on the right to strike need to be reinstated. 30. The agreement making system, as interpreted and applied, gives unions the right to by-pass good faith bargaining, and threaten protected strike action at an early stage in making demands. This is at odds with government promises about how the good faith bargaining provisions would operate. The system needs to be

8 amended to provide that protected strike action can only be a final resort in intractable disputes. Transfer of Business 31. The transfer of business provisions have been applied in a way that has removed incentives for an incoming employer to retain former staff when taking over a business, especially a business requiring changes to working conditions. The former rules, which had been set by the High Court, should be reinstated. Unfair Dismissals 32. The unfair dismissal laws have seen the reemergence of go away money in cases where dismissal is justified but where the cost and time associated with defending a claim is uneconomic. Though the fair dismissal code applying in smaller businesses has had some ameliorating effect, the reemergence of this trend is a disincentive to the hiring of permanent staff. Tighter criteria for claims and more rigorous processes should be introduced to set aside this trend. 33. The unfair dismissal laws have not done away with the problem of dismissals justified on the merits being set aside by tribunals on the grounds of procedural defects. The government promised the system would focus more on merits than process. Amendments are required to rectify this problem. General Protections 34. The general protection provisions of the fair work laws are one of the most concerning aspects of the new system, and one requiring significant amendment and tightening to prevent them being

9 abused and misused by speculative litigators and employees disaffected with a management decision. They are already being abused and misused, and risk becoming a de facto unfair dismissal type fiasco and lawyers picnic. 35. Under the new general protection provisions, staff members who are trade union officials have been given greater protection from adverse management decisions than ordinary staff. This is unfair and discriminatory, and breaches proper notions of fairness and freedom of association. The interpretations of the law which have given it this effect were unintended, and should be reversed by legislative action. Right of Entry 36. The fair work system has been applied and interpreted in a manner that has expanded trade union right of entry in workplaces. This is contrary to express government undertakings before the laws were enacted. The former right of entry laws should be substituted. Penalties 37. The penalties for inadvertent non compliance with awards or workplace legislation need to be revised as they apply an indiscriminate approach to breaches and can be particularly excessive to those small businesses without dedicated human resource capacity. Superannuation Levy 38. The fair work system needs amendment to facilitate a genuine wage trade-off associated with the proposed increase in the employer superannuation levy from 9% of payroll to 12% - a levy

10 ABCC increase strongly opposed by ACCI and currently with no funding basis. 39. For employers in the building and construction industry, the potential abolition of the Australian Building and Construction Commission, the industry s industrial relations watch-dog, is one of those additional risks which is both avoidable and at odds with the recommendations of a nationally conducted Royal Commission. It is opposed and should be recommended against.