New IR system: opportunities…if you use them wisely

Analysis

New IR system: opportunities…if you use them wisely

We are still awaiting 'the devil in the detail' of the Federal Government’s new workplace relations legislation, expected in the next month or two.

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We are still awaiting 'the devil in the detail' of the Federal Government’s new workplace relations legislation, expected in the next month or two. Meanwhile, the 'propaganda war' continues as the various players attempt to rally support for their positions. Nevertheless the new legislation should provide opportunities for employers to come up with some creative contractual arrangements with employees.

A lot of technical issues remain unclear at this stage. Two examples of unresolved technical issues are:

  1. With the proposal to exempt companies with less than 100 employees from coverage by 'unfair dismissal' provisions, will it be possible (and attractive) for a company with say 290 employees to split itself into three entities and gain exemption?
  2. What impact will federal changes have on the 'unfair contract' provisions that currently exist in New South Wales and Queensland industrial relations legislation?

What can be said at this stage is that the new legislation will provide opportunities for employers to come up with more innovative and more customised contractual arrangements with employees within a broad framework.

A challenge will be to avoid the temptation for a 'quick hit' because certain employee entitlements may no longer be mandatory.

Maintain trust

Employers may have fewer constraints on what they can do, for example with the planned removal of the 'no disadvantage' test for Australian Workplace Agreements, but they cannot afford to be draconian.

Well-documented and publicised skills and 'talent' shortages mean that such approaches are likely to rebound on them later on. Even if employers are opportunistic only in areas where labour supply is favourable for them, the overall reputation of the business will suffer and this may make it hard to attract high-quality employees in areas of shortages.

While the new legislation is still before Parliament, and at least in the early stages of its operation, Opposition parties, unions and other opponents of the legislation are likely to focus on any employers that disadvantage employees and widely publicise the individual cases. Expect some bad publicity if you are perceived to be opportunistic.

Maintaining trust with employees may be a challenge when the general purpose of the proposed legislation is to have a more 'economic' focus than before – as shown, for example, by the details of the proposed new Fair Pay Commission. Remember that the new legislation provides a framework for opportunities, not a prescription to make changes.

Transitional arrangements

Transitional arrangements will have to exist for quite some time – for example the proposed 'task force' that will be set up to review award provisions will have 12 months to complete that review. Court challenges to various parts of the legislation may occur.

Overall, some commentators are predicting up to three years of uncertainty before these issues run their course and the new system settles down. As regards your own employees, many will be on contractual arrangements that are not due to expire until some time after the legislation commences.

So what to do?

As noted above, maintain trust while you examine carefully and constructively the possibilities created by the legislation. In practical terms, you could consider the following steps:

  • If there are certain policies and entitlements that you do not intend to touch, say so right up front. Make a point of saying what you plan NOT to do. It will stop rumours circulating and may counter any negative publicity that other parties, such as unions, may attempt to create.
  • Make a list of any entitlements that it will no longer be mandatory to provide. Examples include the 'unfair dismissal' provisions if your company has less than 100 employees, and various entitlements that are likely to be removed from awards. It is likely that employees and their representatives will enquire what will happen to these entitlements, and you should have your response ready when they do.
  • Employees may attempt to retain those entitlements by other means. For example, they may request that termination procedures/protections and redundancy pay provisions be inserted into certified agreements, Australian Workplace Agreements or other employment contracts. Again, research your position and have your response ready.
  • Make sure you are aware of the perceived value of various entitlements and conditions to your employees. You can obtain feedback via climate surveys, performance review discussions, employee focus groups, general workforce surveys (such as those on work/life balance issues), etc. In particular, assess the link between the entitlement/condition and employee retention, turnover and productivity. If the link is strong, you might find the cost saving of removing the entitlement/condition is more than offset by the consequences of doing so.
  • While some critics of the proposed new system claim it will tip the balance too far in favour of employers, avoid the temptation this may provide and look for 'win/win' approaches that will benefit employees as well as the business. This means genuine bargaining – listening to employees’ needs and attempting to accommodate them.
  • You may have some line managers who don’t want to rock the boat and will be reluctant to abandon employees’ current arrangements. Consult them over any changes you plan to make and attempt to 'sell' them the benefits of making those changes in advance.
  • Don’t be loose with your use of words like 'flexibility'. If that word is merely a euphemism for less job security and cost-cutting, employees and unions will quickly see through it and your credibility will suffer.

The bottom line? Remember that your employees are people, rather than 'labour costs'. When the new legislation arrives, examine it with that philosophy in mind, hasten slowly, assess and respond to any opposition, and look for constructive opportunities to make improvements.

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