09/07/2009 - 00:00

IR changes herald challenges and new cost pressures

09/07/2009 - 00:00


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A new era of industrial relations has begun, but many believe the system takes Australia back 20 years.

THE life of employers has suddenly got a whole lot more complicated.

That is the view of many in the industrial relations sector as business starts dealing with the new legislation and bureaucracy of Fair Work Australia.

The sweeping changes, yet another set that have swept IR over the past decade or so, will require much more of business in terms of record keeping and monitoring of a host of new rules that either came in last week or will arrive in six months time with new awards.

The key changes are: the reintroduction of unfair dismissal rules with significantly more onus on the employer with very limited exemption; the return of collective bargaining and the strong hand dealt to unions; and new awards from January 1, which are meant to modernise working arrangements, underpinned by 10 National Employment Standards.

Already fatigued by a long march of regulatory changes, including the GST and a never-ending rise of red tape, business is bracing itself for another long period of challenges as business and employees come to grip with the rule changes and unions attempt to reassert the authority they have lost over the past two decades.

Almost everyone on the employer side of the equation has a tale to tell.

These are not anecdotes about workplace events in the past week but simply scenarios they can see playing out from myriad new rules they claim will make employing people more challenging than any time in the recent past.

"This is a revamped IR system from the late 1980s," said Master Builders Association construction director Kim Richardson, an experienced player in the toughest IR environment around, the building game.

Mr Richardson believes the new laws simply hand back power to unions, which represent less than 20 per cent of the workforce, a number that was in decline even before the Liberal government of John Howard introduced the now-dismembered WorkChoices system.

Like many at industry advocacy level, Mr Richardson concedes that some of the changes the Labor federal government has brought in were well intentioned. But even there, Mr Richardson fears the outcome is vastly different from the policy.

"I think the National Employment Standards are heading in the right direction; I don't have a problem with that, it makes eminent sense," he said.

But Mr Richardson said there were numerous examples of a simple system becoming very complicated for business.

"We don't have a lot of flexibility in the system that we were hoping to have, and that we were promised," he said.

Of course the building industry is special, and federal Employment and Workplace Relations Minister Julia Gillard has been at pains to show that the thuggery of the past won't be tolerated.

However, few in industry believe that, especially with watering down of laws that made unions responsible for the actions of their employees, such as the Construction Forestry Mining & Energy Union assistant secretary Joe McDonald, who was recently found guilty on trespassing charges.

The Australian Building and Construction Commission last week started new legal proceedings against Mr McDonald for encouraging workers to stop work at a CBD construction site last month.

But the more confronting end of unionism is only part of the picture.

The new legislation returns to them powers in the workplace and will put them at the negotiating table more often than for the past decade.

Under the new rules, only one employee needs to request union representation and they become a party to any collective bargaining.

Furthermore, employees need to explicitly state who represents them or the union becomes the default position.

For many in industry, this has a two-fold impact.

Firstly it breaks down the direct link between the employer and the employee. Secondly, once at the table the union will meddle, whether it's needed or not, to justify a role for itself

Strategic Human Resources principal consultant and director Colin Gibson said it was too early to tell how profound this return of union power would be, but he expected significant impact.

"This has effectively inserted the unions into relationships where they have not, in many cases, been present for many years or forever," Mr Gibson said.

"The main implications are for negative effects on productivity."

Mr Gibson said this often comes as a result of the introduction of militancy.

"When you have a party whose main role is to demonstrate they have a role, the most fertile ground is one where it can arrange class warfare between worker and boss," he said.

However, Mr Gibson said just how far this would go was unknown as both unions and employers entered a new landscape.

The Australian Mines and Metals Association underscores this issue. The industry group is one that is concerned about the implications for the economy if unions seek to test the scope of new laws and, in case of more militant unions, what they can get away with.

Another area where the new laws are likely to be tested is in the field of unfair dismissal.

Many in business fear the return of claims that ultimately resulted in businesses paying $5,000 and $7,000 to make the problem go away.

No-one knows what the going rate will be but most expect a rise in claims because the onus of proof has shifted significantly across to the employer, whose requirement to keep paper trails will be costly.

And instead of there being exemptions for business with fewer than 15 employees - initially by full-time equivalent and then by headcount - small and micro businesses appear to have included after all.

The Council of Small Business of Australia has claimed that the government reneged on its agreement to exclude small business by changing just one word in the procedures.

What previously read as "may be required" now reads as "will be required to provide evidence of compliance with the Code if the employee makes a claim for unfair dismissal to Fair Work Australia, including evidence that a warning has been given (except in cases of summary dismissal).

"Evidence may include a completed checklist, copies of written warning(s), a statement of termination or signed witness statements."

The council's CEO, Jaye Radisich, accused the government of acting with extreme dishonour.

"The one word that has been covertly changed in the code after months of consultation and negotiation, will cause a significant red-tape and procedural burden to small businesses - ultimately causing a real dollar cost," Ms Radisich said in a statement. "Small business owners are fair and reasonable people.

"They are willing to work within whatever system they're confronted with, but they will not react well to the wool being pulled over their eyes."

Chamber of Commerce and Industry WA workplace relations director Marcia Kuhne said the government had lost credibility in the way it had made last-minute changes to the exemption for small business.

"That is quite mischievous by the government, it is not very honest," Ms Kuhne said.

The chamber's IR expert believes that, even without the last-minute changes, the unfair dismissal laws will cause significant problems for business.

One issue is that the onus of responsibility has significantly shifted to the employer when it comes to facing claims from former employees.

"Already the employer is open to contesting from the employee, now they are required to provide evidence," Ms Kuhne said.

This issue has already provoked a response in small business.

Another minefield that will emerge from January 1 is the so-called modern awards that will be introduced, underpinned by 10 untouchable rules under the National Employment Standards.

While some awards are still being reworked, many significant ones have been completed and business can expect changes that are far from simple and give employees significant new entitlements.

Employers will again be rule-bound, rather than having flexibility.

"There will be many cases where there are additional costs on employers," Ms Kuhne said.

"Not just direct costs such as wages, but indirect costs as well."

UnionsWA acting secretary Simone McGurk believes employers may be overstating the impact of the new laws.

Ms McGurk said the laws were not markedly different from what was there before WorkChoices era.

She said she did not believe unions had gained unprecedented power in the workplace, denying that union involvement as the default representative of employees in the collective bargaining process was a significant change.

"I have been doing this for 20 years," Ms McGurk said.

"Because collective bargaining is about improving wages and conditions I have not heard employees, even if they are not union members, complaining about that.

"In the end the agreement has to be agreed by employees."

Ms McGurk said the unfair dismissal rules for businesses with less than 15 employees were not onerous, representing little more than some box ticking, which should be easily accomplished by employers.

"It is quite straight forward for small business in particular," she said.

The union boss had some sympathy for the fact that there were costs associated with changes, notably as those relating to award modernisation, but she felt that was an unavoidable consequence of upgrading the former system.

"I don't know how you get around that," Ms McGurk said.


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