Fair Work Amendments a Game of Cat and Mouse

4th March 2014

When it comes to reform of Australian employment regulation, we are witnessing a political game of cat and mouse before the real debate happens in 2015 and 2016. The proposed amendments of the Fair Work Amendment Bill 2014 are an example of the pusillanimous nature of the game.

The raft of amendments proposed in the Bill are largely drawn from and recommended by the panel that authored the report “Towards More Productive and Equitable Workplaces. An evaluation of the Fair Work legislation” You may recall that the report was commissioned by the Minister for Employment and Workplace Relations at the time, Bill Shorten, as a post-implementation review of the fair work legislation required by the Australian government’s regulation impact analysis rules.

The review panel spent a lot of time and energy examining the concept of fairness but was seriously deficient in consideration of the financial imposts and systemic rigidities inhibiting workplace flexibility and productivity. The result was a bunch of ad hoc changes and recommendations that tendered to impose greater complexity in the management of employees’ for businesses.

Lest you think me overly cynical, here a few examples to illustrate my point.

Firstly, the Fair Work Amendment Bill 2014 proposes a requirement that employers must not refuse a request from an employee to extend a period of unpaid parental leave (on reasonable business grounds) unless that employer has given the employee a reasonable opportunity to discuss the request. Notwithstanding the fact that the review panel did not uncover any evidence that the current rights and obligations were defective, the government wants to impose a further obligation for employer and employee to talk to each other about it. Most employers will simply grant the extension anyway, but for those that have a genuine business reason for denying the request, they will have to schedule and document in the employment records any telephone and face to face discussion with the employee to satisfy this additional requirement.

Secondly, individual flexibility arrangements (IFA) are one of the few means for small business to legitimately introduce flexibility (for award covered employees) into the hours of work and the manner in which wages are structured to encourage productivity and streamline payroll systems. But IFA’s are largely ignored because they cannot be offered to prospective employees as a condition of accepting the job. Consequently, employers that pay wages that roll-up penalties, overtime and leave loading in an over-award payment for ordinary hours of work are most likely breaking the law unless they have an IFA made after the employee starts work. This fundamentally flawed system is not addressed in the Bill. Instead, the Bill requires flexibility terms that force employees to write an essay on why their IFA genuinely satisfies their needs and leaves them better off overall. The IFA should be a simple measure to accommodate the genuine interests of the employer and employee.

The Bill exempts voluntary transfers of employees between related entities from the rules regulating transfer of business. This seemingly innocuous change has been introduced at the behest of Qantas airways because they reckon they have to apply to the Fair Work Commission for an order every time they transfer employees from Qantas to Jetstar. If Qantas is the template for employee relations regulation in Australia then we are all in trouble. The amendment, if passed into law, will have an even more perverse outcome as businesses will quickly understand that the way to overcome the inflexibility of the transfer of business rules will be to transfer employees of an acquired business (with an unfavourable enterprise agreement) to a related entity pending ‘voluntary’ transfer to the another entity under terms and conditions of employment more favourable to the new employer. The government should tackle the inherently inefficient rules inhibiting more innovative and efficient businesses from taking over unproductive businesses and better utilising their staff.

The Bill does however, provide some gems for big business. Businesses undertaking major projects and investments in new enterprises will have a right to choose which unions they will bargain with and limits bargaining to three months, after which the business can file for approval of the greenfield enterprise agreement, whether agreed or not! However, I suspect the game of cat and mouse will continue to be played out in the Fair Work Commission which will have the job of determining whether green fields enterprise agreements contain pay and conditions consistent with prevailing pay and conditions within the relevant industry for the equivalent type of work. The task of deciding what constitutes the ‘prevailing pay and conditions’ of an industry should tie up the Commission for a few more months before the agreement is given the green light or another agreement made with the unions.

Finally, union officials wishing to visit prospective members employed in Australian businesses that do not have an enterprise agreement in place nor current members at a particular workplace, are going to have to prove that they have been invited into the workplace with permits issued by the Fair Work Commission. Once again the Fair Work Commission gets a job to issue an ‘invitation certificate’ which supposedly certifies that the Commission is satisfied that the union has actually been invited to attend the workplace by a prospective member. I can’t wait for the form prescribing the content of the invitation certificate! More’s the point, I look forward to 2015 when the games should end and the real debate on workplace reforms commences.