Business lines up to whack Act

SEVERAL key issues and concerns with the Fair Work Act have come to light as a review of the federal legislation gets under way.

A review panel was appointed late last year to determine whether the Act, which took effect from 1 July 2009, is operating as intended.

More than 200 submissions have been lodged with the review thus far. Among them are claims that the Act has made it difficult for businesses to operate, failed to improve the unfair dismissal process, inhibited the country’s productivity, and restricted the power of employers.

Industry bodies, such as Master Builders Australia, have said the intent to improve the unfair dismissal process, one of the main prompts for introducing the changes, remained ‘aspirational’.

It said while the Act initially attempted to speed up the process by reducing the time period to lodge claims from 21 to seven days, that was ‘immediately undermined’ when an amendment increased the period to 14 days.

It also said the framework to give small businesses assistance in responding to claims lacked clarity and was not providing for those typically considered small; the Act defines a ‘small’ business as one with fewer than 15 employees, but MBA said this should be increased to 20.

The Australian Hotels Association said the new dismissal scheme was making the process more difficult for small operators.

“The increase in administrative costs faced by firms, especially smaller ones, by the introduction of the new unfair dismissal system may reach a level that jeopardises productivity growth and redeployment of labour,” the association said.

MBA also said the Qantas dispute, in which staff were locked out and planes grounded, was proof the Act had tilted the balance of power away from employers when it came to making enterprise agreements.

In contrast to the options unions had for industrial action – strikes, bans, limitations, and other techniques such as wearing different uniforms or making unauthorised announcements – MBA said the only power at employers’ disposal was essentially to lock workers out.

In addition, it said while unions were able to work together to negotiate agreements, such action by employers would be considered anti-competitive.

“Master Builders views this as a dramatic boosting of union power, which has worked against more productive agreement-making as illustrated in the Qantas dispute,” it said in its submission.

The Restaurant and Catering Industry Association of Australia said the Act had improved employee protections and entitlements, but failed to provide flexibility and acknowledge the special needs of smaller to medium-sized businesses.

Its main concern was that the National Employment Standard, and the standardisation of weekly hours, did not suit the hospitality sector, which was not employing students who could only work weekends because of high hourly wages dictated in the Act.

“Many people are willing to work for a rate that is less than the high hourly penalty rates prescribed by modern awards on weekends and should be allowed to waive these rates on individual agreements,” it said.

The Civil Contractors Federation also said the modern award framework was an issue.

“The experience of our smaller members is that the Act is complex, the interaction with the new modern award confusing and that they lack the flexibility to organise their employment in a way that both suits them and their workforce,” the federation said.

The power given to unions by mandated involvement in establishing ‘greenfield’ agreements has also been widely criticised.

The Australian Mines and Metals Association’s national legal affairs manager Amanda Cochrane said 11.5 per cent of relevant companies had experienced delays in projects starting because of the requirement.

Woodside Energy said it experienced such delays when making agreements for the construction of its Pluto LNG Project.

The company claimed it had successfully established an agreement directly with contractors prior to the Act coming into force, but negotiations for a new agreement with the Construction Forestry Mining and Energy Union were significantly delayed and resulted in industrial action.

The Australian Petroleum Production and Exploration Association chief executive David Byers also voiced opposition to the requirement. He said it exposed employers to unreasonable union demands, affected the state’s productivity, and put expected investment of $330 billion to 2020 in jeopardy.

“Investment of this magnitude can only proceed if Australia is able to show a track record of international competitiveness in project cost and timing,” Mr Byers said in a statement.

“However, the Act currently adds to the costs of project developments – developments that involve billions of dollars of investment and thousands of jobs.”

The Chamber of Commerce and Industry WA agreed, with manager of industrial relations policy Marcia Kuhne saying the Act had created a more ‘acrimonious and drawn-out’ industrial climate.

“There are too many rules, too much regulation in relation to what needs to be done in all different aspects of the system. From agreement making, to unfair dismissals, to right of entry to general protections, there are so many different rules and regulations in every aspect it is difficult for employers to manage,” she said.

Ms Kuhne cited data from the Australian Bureau of Statistics indicating the number of days lost to disputes almost doubled in 2011 – from 126,600 in 2010 to 241,500 last year.

But the same data also showed the number of disputes remained relatively constant since the Act’s introduction in 2009, with only a 23 per cent increase in the number of days lost due to disputes.

The total number of working days lost is actually currently lower than the 379,000 recorded in 2004.

But Ms Kuhne said the severity of disputes had increased and the Act was generally perceived as onerous and made it difficult to run an economic and profitable business.

One mining company claimed it had opted to outsource work internationally because employing from within Australia had become too difficult.

“That is symptomatic of what our members are saying to us about the impact of the legislation, that it is inflexible, very costly, and it is hard to adapt to the current system,” Ms Kuhne said.

She also said the building and construction sectors were experiencing a higher level of illegal activity with the imminent disbanding of the Australian Building and Construction Commission.

 “We think that is happening because the unions have more confidence because they have more rights under the Fair Work Act, and they are confident because they know the regulator is about to be abolished,” Ms Kuhne said.

The Act also gives unions the right to enter a worksite if it has only one member employed on site, which Woodside said had resulted in a proliferation of right-of-entry notices, causing significant inconvenience and expense.

It cited the four-month period between when the Act came into force in July 2009 and the end of October 2009 when it received 217 notices from unions wanting to enter the Pluto LNG site.

Ms Kuhne said the Act had generally created an unbalanced system where employees were given the majority of the power.

“(The review) needs to strike a balance between employer and employee that takes into account business affordability and productivity,” she said.

The review panel is to report its findings to the government by the end of May.