Further IR reform: approach with caution

Analysis

Further IR reform: approach with caution

Further changes to the Fair Work Act are unlikely to produce a net benefit unless achieving stability is a core reason for making them. This was a recurring theme in several sessions at the 2013 Labour Law Conference, held in Sydney on 22 July 2013.

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Instead of asking what needs to be changed in the Fair Work Act, we should be asking what we need to do to achieve and maintain stability in the workplace relations system. Further changes are unlikely to produce a net benefit unless achieving stability is a core reason for making them. This was a recurring theme in several sessions at the 2013 Labour Law Conference, held by the Workplace Research Centre (WRC) and Sydney Law School in Sydney on 22 July 2013.

Keynote presenter Geoffrey Giudice, former President of both Fair Work Australia and the Australian Industrial Relations Commission, and now a Consultant at Ashurst Australia, outlined the history of changes to federal workplace relations legislation since 1993, and noted that no other developed country has seen as many changes to its system over the same time period. He added that there are significant drawbacks to making any changes, and combined with other obstacles they make achieving stability very difficult.

What has changed?

Giudice listed the following major changes to the legislation since 1993:
  1. Use of the Corporations power, which has eliminated inequalities and inconsistencies between state systems and employment conditions and made the award system fairer and easier to manage.
  2. The Act is generally more prescriptive, in terms of functions and the powers of each party.
  3. Increased emphasis on individual rights and remedies, the latest example being the anti-bullying provisions to commence on 1 January 2014. Enterprise bargaining is now open to individual employees, not just union members.
  4. Registered organisations are less dominant parties, because the Modern Award system is not dependent on them and because individual employees have direct access to the system.
  5. Decreased reliance of compulsory arbitration, combined with reduced tribunal powers.
The case against further reform
 
Is there a need for further reform? Giudice said yes, as needs will always be evolving, but he urged great caution because several drawbacks arise when reform is attempted:
    • It costs a lot of money. Costs include consultation processes, lobbying, public relations/education/advertising campaigns, implementation costs (eg changes to public sector services, administration and staffing), compliance costs and various non-economic costs (such as managers and HR practitioners having to adapt to the changes).
    • It creates a distraction from more productive activities by employers and employees.
    • Many issues are not new, just rehashed versions of old ones that do not achieve enduring solutions. Examples include unfair dismissal, penalty rates, right of entry and individual contracts versus collective agreements. Each of these fluctuates according to the ideology of the government at the time, but they become political footballs and have what Giudice called a ‘pendulum effect’.
    • Policy formation often fails to serve the social and economic objectives. The debate becomes too simplistic and politicised.
Obstacles to achieving stability

In addition to the above problems, there are some ongoing issues that work against achieving a stable system:
    • The alignment of political parties with interest groups, mainly the peak bodies for unions or employer associations. This is exacerbated by the latter organisations frequently being the sources of Members of Parliament.
    • Many people in the system find it hard to function without an adversarial mindest — there is a predisposition to disagree with the other side.
    • Policy formulation is based around policy differentiation, in order to attract voters unhappy with the current system. The perceived drawbacks of the other side’s position are distorted and exaggerated, with sloganeering and political pointscoring obscuring the real issues and leading to acrimony.
    • The use of social media such as Twitter means that it is now harder to communicate ‘official’ messages effectively, which is a challenge for unions and employer associations.
Improving the policy-making process
 
Although there are significant differences between the main stakeholders in the workplace relations system, Giudice said that there is now basic agreement over the core provisions of the system. If the political influences and ‘dispute culture’ can be overcome, it should be possible to focus on common interests instead of extremes.
 
For this reason, care is needed when deciding the terms of reference and people appointed to further reviews of the legislation. Giudice suggested that the most recent review of the Fair Work Act was too limited and focused on technical amendments, and a broader, longer-term review would be more useful.
 
Problems with Productivity Commission review
 
Giudice criticised the Opposition’s policy to have the Fair Work Act reviewed by the Productivity Commission. The parties to the system should be able to influence the review’s terms of reference and be represented at it. If not, the outcome of the review is unlikely to have their broad-based support and gaining ‘buy-in’ for the recommendations could prove difficult.
 
He quoted the British Low Pay Commission’s annual reviews, which produce mediated outcomes each time, as a good example of how enquiries and reviews should work. He also said that the consultation processes used to draft the Fair Work Act had worked well generally.
 
Narcissism of small differences and labour law reform
 
Some of Giudice’s comments were echoed by Richard Bunting, Partner at Ashurst. Adapting the words in the above heading from a quote by Freud, he said that the parties in the system have much in common, but they prefer to exaggerate superficial differences in order to justify themselves, and mutual suspicion often results. The fact that the Opposition’s recently announced workplace relations policy proposes only minor changes to the Act, at least during its first term of office, suggests that the basic features of the Act are now ‘settled’. However, workplace relations law generally follows developments, it does not lead them.
 
Bunting added that a ‘stable’ workplace relations system should include the following features:
    • Agreement and discipline on the big-picture issues such as enterprise bargaining.
    • Generally a one-size fits all approach, but with some ‘wriggle room’ features (which the former State systems used to provide) and some adaptations to suit the needs of smaller businesses.
    • Industrial action is allowed to occur.
    • Recognition of the rising influence of individuals at the expense of union influence — so, allowing provision for individual agreements, at least for more senior employees.
    • The role of unions is still recognised — although the ‘right’ degree of recognition has not yet been determined. 
Further information
 
More information about the conference is available from the WRC.
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