Western Australian businesses are still struggling to understand what the new IR laws mean for them.
SINCE January 1, the most significant change to the country’s industrial relations landscape has been implemented by the Rudd government, under the banner of Fair Work Australia.
In particular, the changes include a new award safety net and a new set of default employee entitlements contained in the National Employment Standards.
Corporate employers that have not adapted to the reforms run the risk of prosecution by the federal regulator, the Fair Work Ombudsman, for the recovery of large civil penalties of up to $33,000 for each breach by businesses, while fines of up to $6,600 can be imposed on sole traders or managers.
The penalties exist despite whether employers know of the changes to the legislation or not.
At a recent WA Business News boardroom roundtable, businesses, lobby groups, and IR consultants alike agreed that a high degree of angst and confusion exists with businesses over the new workplace laws.
Adding to the complexity of the situation is the dual state and federal workplace relations systems that many WA businesses operate in.
“Small business in particular is at a disadvantage because they don’t have the resources to deal with the legislation because it’s very complex,” Raykon Group WA general manager Glenn Hutchinson told the roundtable.
Mr Hutchinson said his Burswood-based workplace relations and management consultancy firm was increasingly assisting businesses with staff rosters because the legislation was too difficult for company owners to deal with.
“The legislation itself is complex and is compounded by the fact there’s preceding (WorkChoices) legislation to that, and small businesses don’t have the capacity to deal with it,” he said.
“The capacity of small business to be able to pay, particularly for legal services, can be costly, and they don’t have the capacity in many cases.
“So it’s up to organisations like the Chamber of Commerce and Industry and to a lesser extent ourselves to provide information that small business has to pay for.”
Dual IR system
The WA industrial relations laws, including the Industrial Relations Act 1979 and the Minimum Conditions of Employment Act 1993, apply primarily to organisations that are not constitutional corporations, such as sole traders and partnerships.
In WA, a constitutional corporation – a business that undertakes trading activities, or is a foreign or financial corporation – is covered by the federal system.
Other than WA, all other Australian states have referred their IR powers to the federal government.
Premier Colin Barnett has indicated the government will not refer its powers to the Commonwealth, meaning it is crucial for WA businesses that are constitutional corporations to comply with the law and correctly pay new terms and conditions of employment to their employees.
“The Small Business Development Corporation is frightened by the lack of knowledge and understanding about the dual system that some WA businesses are facing,” SBDC acting managing director Jacky Finlayson said.
“There are a lot of businesses out there that are frightened and unaware of how the changes impact them.
“Having a state and federal system has created confusion; it comes back to what we will gain by maintaining a separate system, and I think it’s fairly marginal.
“It has changed the risk profile of businesses and we’ve seen a lot of businesses that were happy to continue on as sole traders, moving into an incorporated status and moving into a federal system.
“They have had to change their entire business model.”
Chamber of Commerce and Industry WA chief executive James Pearson said the organisation had received a “remarkable increase” in the number of calls for help regarding industrial relations from members since the Fair Work Act first came into law last year.
“We’re strongly in favour of a single, unified federal industrial relations system,” Mr Pearson told the WA Business News roundtable.
“In WA we’ve become somewhat of a battleground because we’re the state that’s growing the fastest out of the downturn, we’re the state that creates wealth for the economy, we’re the state with a focus on employment, we’re the state where the unions are using their new rights and are looking to get a bigger piece of the action.
“I’d like to see an industrial relations system in Australia that doesn’t interfere with that key relationship between employer and employee, that provides genuine flexibility that a modern sophisticated economy requires.
“First, we need to repair what’s wrong with current IR laws, and then we need to have a proper debate about what is the IR system that we need.
“It swung one way, but it swung too far back the other way… the problem is not just unions, the problem is large organised groups of workers are prepared to take illegal industrial action.
“I think now we need to have the debate to work out what the Australian economy needs in the 21st century.
“(Workers) know that the bias of the new legislation has gone so far towards the unions, they don’t seriously expect, I’m sure, to be significantly penalised (for illegal strikes).”
Since former prime minister John Howard’s WorkChoices legislation was abolished, a stronger presence of unions in the workplace has seen union membership increase by 5 per cent in the past year.
The latest figures from the Australian Bureau of Statistics show that 82,200 workers became members of a trade union in their main job in 2009, a 1 per cent increase from the previous year.
More than 73,000 employees were reported as members of a trade union in their second job, which took the national total of trade union membership to 1.9 million – up from 1.8 million in 2008.
Australian Mines and Metals Association director workplace policy Geoff Bull told the forum while the AMMA supported a single national IR system, the legislation granted trade unions too much influence.
“Australia now has a huge risk attached to it,” he said, adding the increasing incidences of industrial action would deter foreign investors.
“It seems to be an act put in place to assist the trade union movement to get back and entrench itself in the workplace, and that in our mind, is not necessarily a good thing.
“If we let our workplace go back to the old days when unions ran rampant, we will see ourselves in a situation where investment does disappear.”
Mr Bull said the illegal strikes that plagued Woodside Petroleum’s $13 billion Pluto liquefied natural gas plant in Karratha earlier this year highlighted the impact of the new IR legislation and the increased powers it gave unions.
Workers at the project in January went on an eight-day strike over accommodation arrangements at their camp in the state’s North West.
The unions, led by the CFMEU and the Communications, Electrical and Plumbing Union, were disgruntled over Woodside wanting to introduce a “motelling” scheme where workers would be shifted to different self-contained units, or dongas, whenever they were flown to site under the fly-in, fly-out roster system.
Workers illegally walked off the multi-billion-dollar LNG site until the Federal Court intervened and instructed Woodside to meet with union representatives.
That strike followed industrial action on Pluto from December to January, when lengthy disputes threatened to escalate project costs and cause the completion date to balloon out, which Woodside has flagged for late 2010.
Mr Pearson said while the “belligerence of unions” was concerning business groups in WA, those who previously had not dealt with unions, such as small businesses, were becoming severely impacted by the Fair Work legislation.
Ms Finlayson agreed, saying recent SBDC polling suggested there was confusion in the small business sector about dealing with unions, and the rules around unfair dismissal.
“I think policy setting should recognise the role of the SME sector in generating and sustaining employment and that the IR system needs to reflect the flexibility and the clarity required for small and medium businesses to get on with employing people,” she said.
“The government needs to get out of the way of that relationship and allow business to get on with it.”
Motor Trade Association of WA industrial relations manager Rod Gifford used the WA Business News forum to call on a period of consolidation in IR from government.
“We went through the previous government’s WorkChoices legislation, and as practitioners we came to terms and were able to provide advice, but then it changed to the present coverage, and again as practitioners we’ve come to terms with that and we advise companies accordingly,” he told the roundtable.
“Some of us are wondering now towards the end of this year because of the federal election we’ve got coming, whether there is going to be a change of government again and if there is, whether there’s going to be a refocus back to the WorkChoices era.
“There is a view then, that it would somewhat be nice if we consolidated because in Western Australia a transition from essentially a state system to centrally a federal system would be quite a significant transition for companies to be dealing with and advising on.”