Is WorkChoices really dead? Or just pining?


Is WorkChoices really dead? Or just pining?

WorkChoices had to go because some aspects of it undoubtedly resulted in exploitation of some employees, according to a keynote speaker at a recent conference. However, with its heavy focus on small business issues, the incoming Rudd Government was forced to make a compromise regarding the extent of changes it wanted to make.


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WorkChoices had to go because some aspects of it undoubtedly resulted in exploitation of some employees, according to a keynote speaker at a recent conference. However, with its heavy focus on small business issues, the incoming Rudd Government was forced to make a compromise regarding the extent of changes it wanted to make.
The result is that most of the key elements of WorkChoices have been continued in the Fair Work Act, albeit sometimes in modified forms. Note: there are some review periods built into the legislation, and this means that future amendments to it are likely.
Pending the possible changes, there are steps that businesses should take to ensure they remain competitive, according to the presenter, Anthony Powter, at the 2009 Informa Australia Limited Workplace Relations Summit, held in Sydney on 30–31 March 2009. Powter, senior counsel at Carroll & O’Dea, also identified a few 'time bombs' in the Act and evaluated whether it will increase business costs.
Main problems with WorkChoices
The fairness test introduced in 2007 was the main cause of problems with WorkChoices, according to Powter. It was unworkable and created a huge backlog in the approval process for agreements. The BOOT (better off overall test) will not make a great difference to this, and will probably operate in the same way as the pre-WorkChoices no-disdvantage test. However, much fewer individual agreements under the new Act, plus some administrative changes, should reduce the delays.
Exploitation occurred mainly through the misuse of Australian Workplace Agreements (AWAs). If one of the parties was not in a strong bargaining position and/or lacked good bargaining skills, particularly an employee, a lopsided AWA was often the result, and the delay in getting it approved or rejected (see above) meant the parties had to live with the disadvantage. This is one of the justifications used for the new Act’s return to an emphasis on collective, rather than individual bargaining.
Some 'time bombs' in Fair Work Act?
Powter described the award modernisation process as creating a potential time bomb. Agreements will be affected if they have provisions that they are to read in conjunction with an award. The question arises as to whether the modern award as from 1 January 2010 or the previous award or NAPSA should apply to this. If it is a state award/NAPSA, this is likely to add to business costs as state award provisions tend to be more generous than federal provisions.
Some big unions seek to have a provision in agreements that the agreement should be 'read in conjunction with the [name of] award as at [specified date]'.
Modern awards are to be reviewed after two years in operation (ie by 2012), and further amendments are possible then — very likely in fact because of the huge complexity of the modernisation process. Powter believes this will become a big issue, and employers should assess its implications and be prepared.
Will business costs increase?
As noted above, award modernisation may lead to some hidden costs, eg by adding provisions such as higher penalty rates or loadings that are not in current agreements. In general, costs are likely to increase for low-paid employees whose pay and conditions are at or close to the current minima.
More businesses will revert to being covered by the 'unfair dismissal' provisions, and Powter predicted increased litigation in this area. He suggested that some 'ambulance chaser' legal firms might look for new business in this area. On the positive side, however, he added that most businesses are much better at performance management of employees than they were when federal 'unfair dismissal' provisions first appeared 15 years ago, and this is mainly because they forced employers to improve their practices in this area.
Another positive aspect is that the gradual and staggered nature of introducing the Fair Work changes (in contrast to WorkChoices) provides employers with plenty of time to review their arrangements and comply.
There are also some implications for employees who have work visas, for example with the Minimum Salary Level formula and certain employment benefits and conditions. Where this applies, employers may need to seek specialist advice.
Taking steps to remain competitive
Powter suggested that businesses can take the following proactive steps:
  • Implement flexible work arrangements with genuine consultation and without being exploitive. You can use the flexibility clauses in agreements to introduce significant changes without creating a redundancy situation. Powter provided an example of a quarry where employees wanted early start and finish times. Their union opposed the initiative because it feared flow-on effects in other companies. The employer was able to implement what the employees wanted via a non-union collective agreement. This is an example of using the available tools to benefit both the business and employees.
  • Be proactive about resolving conflicts informally. This will help to build up mutual trust and confidence that will have long-term benefits. As noted in other Summit sessions, if employees are treated well, they are less likely to rely on outside assistance. As an aside, Powter believes that the Australian Industrial Relations Commission lost some of its dispute resolution expertise during the time of WorkChoices, another incentive to sort things out on-site if you can.
  • Avoid 'quick chop' redundancies in tough times. Experience suggests they often backfire badly six to nine months later. Also be wary that 'nasty' redundancies or dismissals often have bad implications longer-term. If other employees perceive that the employer has been procedurally fair, they tend not to stand up for the dismissed employee.
  • Keep up to date. For example, check the implications of the National Employment Standards (NES) due to commence on 1 January 2010. For example, many employees will then have more generous redundancy entitlements. Keep monitoring for changes and their implications, eg modern awards are still evolving and will be reviewed after two years. Be aware of review periods applying to any other statutes and entitlements, and ensure managers are notified of them.
  • Because of the extent and pace of changes, Powter advised against negotiating lengthy agreements, such as five-year terms. They increase the risk that you may overlook something.
Further information
Further information about the Workplace Relations Summit is available from Informa.
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