Inquiry: AWU targets redundancy, sham contracts


Inquiry: AWU targets redundancy, sham contracts

In its submission to the Productivity Commission inquiry into Australia’s workplace relations system, the Australian Workers Union has targeted redundancy and sham contracting.


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In its submission to the Productivity Commission inquiry into Australia’s workplace relations system, the Australian Workers Union has argued for continuation of some aspects of the system – eg current bargaining processes – and changes to others, particularly redundancy and sham contracting.

The AWU argues the system is skewed in favour of employers and the increasingly casual workforce allows employers a high degree of flexibility. Casual employment has remained high in the Australian economy for the past 20 years and has generally fluctuated from 22% to 25%. The union points to this as an example of how employers can take advantage of a flexible workforce.

Safety net is fair

The union is in favour of the current safety net in Australia’s wage setting system, saying it strikes a fair balance between the interests of employers and employees.


Redundancy provisions are allegedly being abused according to the union. For example, an employee is not entitled to redundancy where the termination is due to the “ordinary and customary turnover of labour” (OCTL).

The union noted that the concept of OCTL is not new and existed in common law before it was enshrined in workplace relations legislation.

However, the union argues employers are now claiming dismissals as OCTL situations when genuine redundancy is occurring, so employees are denied redundancy benefits.

Long service leave

There are eight legislative frameworks relating to long service leave operating across the various Australian jurisdictions and the union wants a national one.

Current bargaining

The AWU asserts that mounting evidence demonstrates the current bargaining and industrial framework is economically and socially responsible, and right for Australia.

The union says the industrial relations legislation is not, and cannot, become the driving force of productivity. A multi-agency approach to tackling these issues will be needed.

Flexibility agreements

It is alleged many employers use IFAs (three-quarters of them being employer-generated) to formalise previously informal/ illegal practices.

The AWU asks that the inquiry urgently looks into these findings and assesses what can be done to ensure employers are not forcing workers to accept IFAs. It says these practices lack scrutiny, with many of the agreements made behind closed doors (particularly in non-unionised workplaces), and the inquiry must consider how they can be better regulated.

Sham contracting

It is essential the obligations imposed on employers be clear, particularly because s357(1) –Misrepresenting employment as independent contracting arrangement –  is a civil penalty provision.

Unions have to prove employers were reckless in making sham contracting arrangements. The absence of a clear definition of the term “reckless” means employers and employees cannot be sure of their rights and obligations under s357, in the union’s view.

Further information

See the AWU’s submission here

See also: WorkplaceInfo's redundancy overview provides an overall picture of how the redundancy provisions operate as well as providing details on ordinary and customary turnover of labour.
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