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Ai Group's Opening Statement to Senate Committee Inquiry into 3 Workplace Relations Bills

Ai Group welcomes the opportunity to appear at the hearing today. We have filed written submissions on each of the 3 Bills, setting out our views on the proposed legislative amendments.

We strongly support the Fair Work Amendment (Repeal of 4 Yearly Reviews and Other Measures) Bill. The Bill contains modest but vital reforms of benefit to employers, employees and the whole community.

The 4 Yearly Review of Awards is now into its fourth year with no end in sight. Unless the Bill is passed, the whole process is required to start again on 1 January next year. There is very wide support from employer and union representatives for abolishing 4 Yearly Reviews of Awards. The introduction of the Bill into Parliament follows a joint approach to the Government from Ai Group, ACCI and the ACTU – as set out in our submission on the Bill.

The amendments in the Bill will not prevent awards being kept up to date. The changes will simply stop an open invitation being issued every 4 years for parties to make a large number of claims, that consume the resources of the Commission, employer representatives and unions for the next 4 or 5 years.

The enterprise bargaining amendments in the Bill are equally sensible. The Bill would give the Fair Work Commission discretion to overlook minor procedural defects in the enterprise agreement making process, so long as employees are not disadvantaged. A large number of technical problems are currently occurring that are inflicting great costs and frustration on all parties, including on Members of the Commission who often feel that they have no option other than to reject enterprise agreements for even the most miniscule deviations from the Act.

With regard to the Fair Work Amendment (Corrupting Benefits) Bill, we support the policy intent of the Bill, but some important changes need to be made to the Bill to ensure fairness to employers, employees, registered organisations, and the officers and employees of registered organisations.

In our written submission we have raised some common scenarios where employer representatives legitimately interact with union officials, but which do not appear to be covered by any of the exclusions in the Bill.

The Schedule of the Bill which deals with disclosure during enterprise bargaining is particularly important. These provisions will shine a light on the vast amounts of money that various unions are receiving from income protection insurance and other products that they seek to have specified in enterprise agreements. Often these products are much more expensive for the employer and provide less generous benefits to the employees than other products freely available in the market. When enterprise agreements are being negotiated on employees’ behalf by a union, as pointed out by both the Cole and Heydon Royal Commissions, the employees are entitled to know what benefits their union is getting from the terms of the agreement, particularly given the fact that the union may be organising industrial action in pursuit of the proposed agreement.

The problems in the Corrupting Benefits Bill can be readily resolved with some sensible amendments, as proposed by Ai Group.

With regard to the Fair Work Amendment (Protecting Vulnerable Workers) Bill, as stated in our written submission, Ai Group does not condone the conduct of the relatively small number of employers who deliberately underpay their employees, and we support appropriate laws to deter and punish such conduct.

However, we do not support the Bill as currently drafted. In our view, the Bill, as drafted, would discourage investment in franchise businesses and lead to reduced employment. Franchising is currently growing rapidly in Australia. The legislative amendments would put a hand-break on that growth, and potentially lead to a decline in franchising. Franchising enables thousands of people to establish their own small businesses, and employ many thousands of other Australians. The franchise business model needs to be encouraged, not deterred.

If the Bill is to proceed, we propose that the whole of Division 4A (regarding franchisor entities and holding companies) be deleted. The existing accessorial liability provisions in section 550 of the Fair Work Act already apply to franchisors (as held by the Federal Court in the Yogurberry Case). If the applicability of section 550 to franchisors needs reinforcement, a simple legislative note could be included in section 550 drawing attention to this.

In our written submission, we have proposed a few other amendments to the Bill to improve fairness for employers and employees.

We would be happy to endeavour to answer any questions that the Committee may have.

Stephen Smith, Head of National Workplace Relations, Australian Industry Group

Ai Group’s full written submissions to the three Bills before the Senate Committee Inquiry are available on our website.  

Media Enquiries: Tony Melville – 0419 190 347