Joondalup-based industrial relations consultancy Workplace Professionals has closed its doors after 14 years in business, a direct result, according to founder Tony Thompson, of the federal government’s fairness test for Australian Workplace Agreements.
Mr Thompson, who will take up a position in commercial property management, said the fairness test had created a lot of uncertainty for employers and risk for his agency.
“The penalties for getting it wrong are so significant, we didn’t want to expose our clients to penalties or back pay because there are no clear guidelines over what will pass or not pass the fairness test,” he said.
“Because it’s so complicated and complex, we’ve told employers they’re better off sticking with the award because we can’t give them certainty.”
Mr Thompson said it was taking the federal government’s Workplace Authority three or four months to assess AWAs and advise employers on the outcome.
This was too long, he said, particularly for the small business clients who made up the majority of the firm’s business.
“If it doesn’t pass, employers are liable for up to three or four months’ back pay, and most small businesses don’t have that sort of cash reserve,” Mr Thompson told WA Business News.
“If you ring the Workplace Authority and say, ‘tell me in simple words how to pass the fairness test’, they’re not able to. We’re not complaining about it but we’re saying [closing our doors] is the natural effect of the legislation.”
Figures released by the Workplace Authority last week showed that, since the fairness test was introduced in May, 26,833 AWAs had failed the test on initial application.
This represented about 15 per cent of all AWAs lodged during the period.
Of those that failed, about 60 per cent were rejected due to insufficient information or were deemed to be incomplete.
Employers have a window of 14 days after an AWA is declined in which to amend the application or have it cancelled.
If the AWA fails, employees are entitled to back pay for the period.
Mr Thompson said the fairness test was a deterrent for businesses wanting to introduce AWAs.
“It’s the small businesses that have really been put back to the award system the federal government worked to get rid of,” he said.
“If the fairness test hadn’t been introduced, we’d still be doing workplace agreements.”
According to the Workplace Authority, there were 850,000 AWAs in operation in October.
