Statement by Heather Ridout
Chief Executive Australian Industry Group

"Today marks the first year of operation of the Fair Work Act and, a year on, the law is still evolving and far from settled. Many employers are uneasy about the law and ongoing union attempts to stretch its boundaries, while they are also finding compliance very challenging,” Ai Group Chief Executive Heather Ridout said today.

"As well, a very large number of decisions have been made by Fair Work Australia (FWA) under the new laws and it has been necessary for Ai Group to intervene in a large number of Full Bench cases dealing with critical principles to ensure that the laws work as intended, for example, limiting union right of entry.

"Today also marks the date when businesses will need to begin phasing in changed penalties, loadings and wage rates in modern awards, and the date when the annual wage review decision of FWA takes effect.

"Many employers tell us that they have a long way to go in becoming fully compliant with the Fair Work Act and modern awards. It is also clear from surveying our members that employers are unconvinced that the bargaining laws promote productivity and flexibility.

"Ai Group has seen a significant recent increase in applications to FWA for ballots to authorise industrial action and this is cause for concern.

"The bargaining process is proving to be challenging with: 

• Unions attempting to stretch the boundaries of what can be lawfully included in enterprise agreements; 
• Union claims for restrictive provisions which would impede competitiveness and efficiency, for example restrictions on the engagement of contractors and labour hire, rather than provisions which would improve productivity; 
• The refusal by unions to allow individual flexibility arrangements to be made which provide meaningful flexibility to individual employees and employers; and
• Rising wage expectations of employees and unions.

 "The renegotiation of many enterprise agreements was delayed while businesses dealt with the Global Financial Crisis and negotiations are now underway in a large number of workplaces.

"All workplace relations systems need to be continually monitored and evaluated, including Australia’s Fair Work system. Where changes are identified which would make the system operate more effectively then such changes should be made. The transfer of business laws are in this category. As currently enacted, these provisions are operating against the interests of both employers and employees. Some sensible changes are warranted.

"Ai Group’s overall approach to the Fair Work Act has been to educate employers, monitor developments and intervene where necessary to protect the interests of industry.

"Ai Group has pursued appeals in our own right, or intervened in proceedings initiated by others, in a large number of Full Bench cases dealing with critical aspects of the Fair Work Act, including the following: 

• An appeal against the decision of Commissioner Donna McKenna to reject an enterprise agreement negotiated between McDonald’s Restaurants and the SDA, covering 80,000 employees. Ai Group was concerned that most employers who negotiate an enterprise agreement would not be able to meet the extremely onerous procedural requirements and approach to applying the no disadvantage test adopted by the Commissioner. (Result: decision overturned).
• An appeal against a decision of Senior Deputy President Hamberger which held that an enterprise agreement clause requiring all contractors and labour hire providers used by Airport Fuel Services (a Caltex operation) to have an enterprise agreement with the TWU, could be the subject of protected industrial action. (Result: Decision overturned).
• An appeal, filed by Ai Group, against the decision of Commissioner John Ryan to approve an agreement applicable to Dunlop Foams containing an allegedly unlawful term relating to union right of entry. In his decision, Commissioner Ryan interpreted the right of entry and unlawful term provisions in the Fair Work Act in a manner which will cause problems for industry. (Result: Decision overturned).
• An appeal against the decision of Commissioner John Ryan in a case involving TriMas in which the Commissioner interpreted the provisions of the Act, which require a flexibility term to be included in all enterprise agreements, in a very narrow manner. (Result: Decision overturned).
• Full Bench proceedings relating to applications by the Metropolitan Fire and Emergency Services Board and the UFUA for scope orders to determine the scope of bargaining and whether the Board should be required to bargain for an agreement covering both operational employees and managers. (Result: The scope sought by the employer was upheld).
• An appeal against the decision of Commissioner Greg Smith to reject an agreement negotiated between Woolworths and the SDA because the dispute settlement clause did not include compulsory arbitration. (Result: Decision overturned).
• A case involving Abigroup in which the powers of FWA to issue an order cancelling or delaying a ballot to approve a proposed enterprise agreement were under consideration. (Result: The matter was settled between the parties before a final decision was made. However, a favourable decision for employers was made in a subsequent Full Bench case relating to Tahmoor Coal).

"With regard to the implementation of modern awards, a Full Bench FWA decision last Friday will give employers some welcome relief. In response to an application by Ai Group, the Full Bench clarified that employers are generally entitled to absorb modern award entitlements into over-award payments.

"The terrain for workplace relations is only going to get trickier over the period ahead as the economy picks up, and skill shortages re-assert themselves," Mrs Ridout said.


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