The Abbott Government has put workplace relations front and centre of its first term reform agenda. Here’s our guide to the issues that will dominate the industrial relations landscape in 2014-15.
The coming year will see the Government continue to pursue its workplace reform agenda as set out in the 2013 “Policy to Improve the Fair Work Laws”. The policy outlined the Coalition’s proposed changes to the Fair Work Act and construction industry legislation, its flagship paid parental leave scheme and plans to have the Productivity Commission undertake an extensive review of the legislation in the Coalition’s first term of government.
The Productivity Commission Review will provide the central focus for the debate over workplace policy in the lead-up to the next federal election. In the meantime, the Government faces challenges getting a number of IR reform bills through the Senate.
Changes to the Fair Work Act
The key changes to the FW Act contained in the Government’s Fair Work Amendment Bill 2014 are:
Simpler processes for greenfields agreements for genuine new businesses, projects or undertakings. The amendments respond to employer concerns that unions exercise veto powers over these agreements (particularly on large resources and construction projects), adding to project costs and causing delays. Greenfields agreements would be made subject to the good faith bargaining rules, and employers could seek Fair Work Commission approval of a proposed agreement if no deal is reached after three months of negotiations.
Providing employers with easier access to individual flexibility arrangements which can be used to vary award or agreement conditions relating to hours of work, overtime, penalty rates, allowances and leave loading. IFAs would be terminable unilaterally after 13 weeks (rather than 5 weeks at present), and non-monetary benefits could be considered in assessing the fairness of an IFA.
New restrictions on union rights of entry onto employers’ premises, including a requirement that entry for purposes of holding meetings with members or prospective members would depend on a union being covered by an enterprise agreement applicable to work performed at the workplace; or the union being invited into the workplace by a member or prospective member. Recent FW Act amendments requiring employers to facilitate union access to remote worksites, and designating lunchrooms as the default location for workplace union meetings, would be repealed.
Preventing unions from taking protected industrial action in support of claims for a new enterprise agreement before bargaining has actually commenced.
Amendments to clarify certain National Employment Standards entitlements, simplify the process for FWC dismissal of unmeritorious unfair dismissal claims, and facilitate easier transfers of business between associated entities.
Construction Industry Legislation and National Code
The Building and Construction Industry (Improving Productivity) Bill 2013 seeks to restore the rule of law and a tougher compliance regime in this highly adversarial sector. The Australian Building and Construction Commission will be re-established with its former investigative and enforcement powers. The Bill also expands the scope of the construction legislation to include the transport or supply of goods to building sites and offshore resources platforms; and introduces significant new limits on unlawful industrial action in the building industry (including a new prohibition on unlawful picketing).
In April this year, the Government released its proposed Building and Construction Industry (Fair and Lawful Building Sites) Code. The new national Code includes a wide range of prohibitions on enterprise agreement content, which will apply to agreements made on and from 24 April 2014.
Paid Parental Leave
The Government’s proposed PPL scheme is scheduled to commence on 1 July 2015. It offers the primary carer of a new-born child 26 weeks’ pay at the employee’s actual wage (subject to a cap of $100,000 per annum). In comparison, the current PPL scheme provides 18 weeks’ leave at the national minimum wage.
However no legislation has yet been introduced into Parliament, and at present the future of the PPL scheme is uncertain as the Government seeks support from the cross-bench senators for the 2014-15 federal Budget.
What will the Senate do?
The Coalition Government’s prospects of passing legislation have improved since 1 July 2014. Instead of Labor and the Greens being able to combine to block proposed laws, the Government now needs the support of six out of the new Senate’s eight independent and minor party senators to secure the passage of legislation.
Although it is very difficult to be confident we anticipate majority support for the Government’s amendments to the Fair Work Act and the Building and Construction Bill. However, almost all of the cross-bench senators have publicly opposed the expanded PPL scheme.
Other workplace reforms
Once the Fair Work Amendment Bill 2014 is passed by Parliament, the Government will focus on the remaining measures in its 2013 workplace relations policy. These include:
expanding limits on the taking of protected industrial action: it will have to be preceded by genuine and meaningful discussions over a proposed enterprise agreement – and will only be permitted in support of sensible and realistic claims; and
requiring the FWC to ensure, when considering whether to approve an agreement, that productivity issues have been considered in the agreement negotiations.
Pressure will no doubt build on the Government to introduce further reforms to the FW Act. Employers will increase their lobbying over amendments to address the burden of award penalty rates; the central role of unions in enterprise bargaining; and the growing numbers of unfair dismissal and general protections claims. However, further major changes are unlikely until the Productivity Commission concludes its review of the workplace relations framework.
Productivity Commission Review of the Workplace Relations Framework
The Government’s draft terms of reference for the PC Review, leaked to the media earlier this year, indicate the Commission will investigate and make recommendations on a wide range of matters, including:
the effects of the FW Act (and associated legislation) on the wellbeing, productivity and competitiveness of Australia and its people;
the impact of the current workplace relations framework on matters such as employment levels, the ability of business and the labour market to respond appropriately to changing economic conditions, and the ability of employers to flexibly manage and engage with their employees;
how Australia’s workplace laws could be improved to maximise outcomes for all stakeholders, ensuring appropriate protections for workers, the need for businesses to be able to grow and prosper, and the need to reduce unnecessary regulation.
Almost six months has elapsed since these draft terms of reference were leaked and yet the PC Review has not yet commenced. The Government has rejected suggestions that it has delayed the Review in order to focus on “selling” the 2014-15 Budget; and has repeated its commitment to completing the review in time to take any recommendations to the federal election in 2016.
Once the PC Review does get underway, it will become a major focus of the IR reform debate in Australia over the next 12-18 months. Given the Productivity Commission’s apparent openness to labour market reform, its Review is likely to result in more far-reaching recommendations than the 2012 FW Act Review.
That said, employers will need to make detailed submissions to the PC Review and contribute to the public debate which occurs alongside it, to make out the case for substantive changes to the current workplace relations system.
Overall, the Government is being very careful in its first term of office not to intrude upon the individual rights of workers in a way that could invite a “return to Work Choices” scare campaign by unions and the federal Opposition. The Coalition’s main focus is to clamp down on illegitimate union activity, currently the focus of the Royal Commission on Trade Union Governance and Corruption.
The Government has also put forward several measures to keep its employer constituency satisfied for the time being. However, pressure for more substantive legislative reforms will build as the next federal election draws nearer. The IR debate will play out with the upcoming Productivity Commission review as its main focus in 2014-15.