Comment on potential changes to Fair Work Act

Statement by Heather Ridout
Chief Executive Australian Industry Group

"There are areas in the Fair Work Act where it has been demonstrably shown that amendments are required.

"While we are not seeking wholesale changes the next government will need to keep an open mind to amending the act in a number of areas including:

"The transfer of business laws are operating against the interests of employers and employees and some sensible changes are needed, including restoring the High Court's "character of the business" test which was extinguished by the Fair Work Act. After 12 months of operation, it is very clear that the laws are acting to deter employers who take on outsourced work from employing any employees of their client. This is not sensible when in many cases the new employer, the old employer and the employee all want the employee to transfer. The laws are creating a lose-lose-lose scenario.

"In the 2010 Federal Budget, the Government announced that the superannuation guarantee (SG) rate would increase from 9% to 12%, and company tax would be cut from 30% to 28%. The Government’s decision to halve the announced decrease in the company tax rate (29%) but proceed with the SG increases will result in a big bill for industry. This decision makes it imperative that a systematic trade-off be implemented for the SG increase through the following changes to the Fair Work Act:

During each Annual Wage Review between 2013 and 2020 (ie. the period of time over which the SG increase will be phased-in through 0.25% instalments), Fair Work Australia should be required to determine the level of wage increase that is appropriate and then discount that increase by 0.25%;

The Fair Work Act should state that in working out whether an employee bargaining representative is “genuinely trying to reach agreement” a relevant factor is whether the bargaining representative is demonstrating a preparedness to take into account the SG increases which the employer will be required to pay before the nominal expiry date of the proposed agreement. Under the Act, a party must be "genuinely trying to reach agreement" if it wishes to apply for a ballot to authorise industrial action.

"Flexibility terms in enterprise agreements are currently not achieving the apparent policy intent of the Government. Individual flexibility arrangements need to give individual employees and employers a genuine opportunity to agree on arrangements which depart from the relevant enterprise agreement, subject to the employee being better off overall. Unions are routinely refusing to sign agreements unless the flexibility term allows little or no flexibility. To address this problem, a specific flexibility term should be set out in the Act and deemed to be a term of all enterprise agreements,” Mrs Ridout said.