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Australian Industry Group releases IR reform paper ahead of roundtables

"The Australian Industry Group has released a policy paper setting out employer workplace relations reform priorities within the five areas identified by Prime Minister Scott Morrison and Attorney-General Christian Porter as being the focus of the reform process. Ai Group looks forward to contributing to the working groups set up by the Federal Government and to making a constructive contribution to the reform process," Innes Willox, Chief Executive of the national employer association Ai Group, said today.

"The policy paper argues that it is time for a fresh approach to be taken on industrial relations reform; an approach that boosts productivity, grows jobs, encourages investment and restores economic growth. These policy proposals have been developed after extensive consultation with our members.

"There are key issues that need to be addressed in each of the five areas.

  1.      Award simplification

"Australia’s award system is far too complex. There are 121 modern industry and occupational awards, containing tens of thousands of pages of detailed requirements and more than 1,000 minimum wage rates. Given the complexity, it is not surprising that many employers have made payroll errors and underpayments. The level of complexity is operating as barrier to employers taking on more employees, due to the cost of compliance and the risks associated with underpayments. Matters that are mainly dealt with in legislation (e.g. leave entitlements) should be removed from awards to reduce confusion for employers and employees.

"When the Fair Work Act was implemented, Individual Flexibility Arrangements (IFAs) were intended to be a key part of the award system but they have not yet delivered the flexibility to employers and employees that was envisaged. Amendments should be made to the Act to implement a new structure for IFAs under modern awards, including:

  • IFAs made under modern awards should be subject to a global No Disadvantage Test against the terms of the relevant award;
  • Employee preferences for particular work arrangements should be able to be taken into account for the purposes of the No Disadvantage Test;
  • IFAs should be able to be agreed upon by an employee as part of an offer of employment;
  • The types of flexibility available under an IFA should be set out in the Act;
  • Employers and employees should have the option of lodging IFAs with a new statutory office holder – the Individual Flexibility Arrangement Commissioner – for approval. Upon formal approval, the employer and employee would achieve certainty that their IFA was valid.
  1.      Enterprise agreement-making

"Australia's enterprise agreement system is in need of major repair. In the 1990s enterprise bargaining delivered major productivity improvements to employers and generous wage increases to employees. Win-win outcomes were common and when agreements were reached, the Australian Industrial Relations Commission (now the Fair Work Commission) approved the agreements quickly with a minimum of fuss, paperwork or technicalities. Winding the clock forward 20 years, the enterprise bargaining system has become a minefield of technicalities, delays and frustrations. It is little wonder that so many employers and employees have given up on enterprise bargaining. The current system provides no incentive for employers and employees to negotiate agreements that lead to higher wage increases in return for agreed measures to improve productivity.

The current unworkable Better Off Overall Test needs to be replaced with a simple global No Disadvantage Test like the one that operated very successfully for 15 years prior to the introduction of the Fair Work Act. Other changes are also needed to ensure that agreements are approved by the Commission promptly without excessive technicalities.

  1.      Casual employment

"The major uncertainties caused by the recent Federal Court's decision in WorkPac v Rossato need to be addressed. Casual employees make up 20 per cent of the workforce (a level that has not increased for over 20 years). There are around 2.6 million casuals and around 1.6 million of them work regular shifts. Forcing employers and employees who are happy with their current arrangements to undertake a major reorganisation of rosters for no reason other than to attempt to implement an unworkable approach is not sensible. If the current risks of 'double dipping' claims by casuals are not urgently addressed, hundreds of thousands of casuals will lose their jobs when the JobKeeper scheme ends in a few months’ time. The Fair Work Act needs to be amended to include a simple definition of a 'casual employee’' If an employee is engaged as a casual and is paid a casual loading, the employee should not be allowed to turn around later and claim annual leave and other entitlements that the casual loading has been paid in lieu of. That is not fair.

  1.      Compliance and enforcement

Ai Group supports and encourages lawful workplace practices by all parties and does not support any deliberate underpayment of wages or other entitlements. Most businesses devote substantial time and resources to ensuring that they pay their employees correctly. When payroll errors are discovered, businesses typically correct these errors promptly and back-pay the relevant employees. Most instances of incorrect payment are a result of payroll errors due to the complexity of Australia’s award system and workplace relations laws. Employers should not be labelled 'thieves' for such errors. The expression 'wage theft' is not appropriate. Ai Group strongly opposes the introduction of criminal penalties for wage underpayments.

  1.      Greenfields agreements for new enterprises

"Greenfields agreements for projects should be able to continue for the life of the project even if this is longer than the current 4-year limit on the nominal term of an enterprise agreement.

"A more productive, flexible and fair workplace relations system – for employees and employers – can and must be achieved. The economic recovery depends upon it," Mr Willox said.

Ai Group Policy Paper

Media enquiries: Tony Melville – 0419 190 347