To date, the focus on the impact of the Federal Government’s proposed Industrial Relations changes has rested firmly on how WorkChoices will impact employees. This includes the negative impact that the changes may have upon working conditions for employees, such as the removal of certain award conditions, the downgrading of the Federal Commission’s role in fixing minimum wages, and the fact that the Fair Pay and Conditions Standard (underpinning Workchoices agreements) is limited to five minimum conditions.
Little attention, has been given to how employers will be impacted by the Workplace Relations Amendment (Work Choices) Bill, introduced to the House of Representatives on 2 November 2005. This may have been a result of the assumption that employers will be better off under the WorkChoices regime. While this may be the case, the extent to which businesses will benefit is likely to vary substantially, depending on the level of understanding and enthusiasm in adopting the WorkChoices changes into their employment agreements, systems and processes.
This article outlines three of the key changes proposed by the reforms and will demonstrate how by fully comprehending what these changes offer, employers will be able to maximise the benefits to be reaped under the WorkChoices legislation.
Changing the nature of employment agreements
Australian Workplace Agreements (AWAs) were first introduced by the Howard Government in 1996, and for the first time an “individual" contractual arrangement was given statutory force in the Australian industrial relations system. The significance of AWAs has always been that this statutory agreement can overrule Federal and State awards. It is arguable that the Federal Government has been intent on moving workers covered by Awards and Enterprise Bargaining Agreements (EBAs) onto individually negotiated AWAs for some time, and it has utilised this mechanism in certain areas of public sector employment. Under WorkChoices, this shift towards individualised employment agreements is likely to become far more substantial.
What will change?
Current enterprise bargaining agreements (EBAs) will continue until their normal expiry date, however they are not able to be varied or extended. Moreover employers will be able to negotiate collective WorkChoice Agreements (WCAs) or offer AWAs to employees at any time prior to the expiry of existing EBAs. The new WorkChoices agreements merely have to satisfy the five statutory minima in the Fair Pay and Conditions Standard rather than the existing “no disadvantage" test (ie a comparison with the underlying award). Removal of the ‘no disadvantage test’ means that these new AWAs and WCAs do not have to provide employees the same standards as they received previously, and they are not limited by the inflexibility of existing award conditions.
How can employers benefit?
AWAs and WCAs offer employers the opportunity to break away from the restrictive nature of Awards and EBAs. New employment agreements will enable the accommodation of flexibility through bargaining away conditions currently protected under Awards (such as leave loading, overtime and shift allowances).
The flexibility afforded to both employers and employees under these individually-negotiated agreements will allow Australian business to more accurately meet its needs without being hindered by rigid “one-size-fits all" awards. Employees are able to benefit from this flexibility too, and tailor their agreement to suit their individual circumstances. This will arguably result in higher motivation of employees, leading to a better company culture, and reduced absenteeism.
Removal of the ‘no disadvantage test’ affords businesses greater freedom when negotiating agreements with employees, as employers are no longer required to demonstrate that the agreement does not disadvantage employees on “an overall basis" when compared with the underlying award. The Government’s position is that this is likely to result in increased profitability and flexibility for businesses, as it will be possible to tailor agreements to suit their particular needs and requirements. Consequently employment agreements will be a means to maximise business potential, rather than a hindrance as they have been previously.
New unfair dismissal laws
The changes to the unfair dismissal laws are substantial, and will provide for greater protection to all Australian businesses, particularly those employing fewer than 101 employees.
What will change?
The ‘probationary period,’ in which dismissed employees do not have access to unfair dismissal remedies, will be expanded from 3 months to 6 months. This applies to all businesses, regardless of the number of employees. Unfair dismissal will not be available in cases where the reason for the termination is the “operations requirements of the business" (ie redundancy).
Further as has been widely discussed in the media, there will be no remedy for unfair dismissal for employees whose employer has 100 or fewer employees.
How can employers benefit?
The limits on access to unfair dismissal remedies are likely to mean that employers will have a greater ability to dismiss employees without the threat of unfair dismissal claims being made against the company.
As a result, employers will have greater certainty when dismissing employees and substantially reduced costs through no longer being required to defend or settle unfair dismissal claims. The savings to be made here, particularly by small to medium sized companies are huge.
However employers must note that the decrease in unfair dismissal claims is likely to result in an increase in common law claims (for example where an employee has been dismissed for breaching company policy), and also claims of unlawful termination. This includes termination on the basis of, sex, race, pregnancy or religion; being a union member; absence from work due to injury or illness; and for refusing to negotiate in relation to an AWA.
As a result, it is imperative that legal advice be sought prior to any termination, to ensure that the employer does not leave itself exposed to an unlawful termination claim, or to some claim based on a breach of the individual’s employment contract.
Reduced employee industrial action power
Many of the powers that unions and employees currently enjoy when negotiating collective employment agreements will be taken away or reduced under the WorkChoices legislation.
What will change?
Under the proposed legislation, “protected" industrial action (ie the ability to engage in industrial action during the negotiation phase prior to an agreement being made), will be far more difficult for employees to undertake. Action will not be protected if it is found to constitute pattern bargaining (ie a common set of claims at more than one workplace), and the ability to engage in protected action will be more complex and difficult than at present.
If industrial action is not protected action, the Australian Industrial Relations Commission (AIRC) will be required to order that it stop within 48 hours of an employer’s s127 application being made. This is instead of the present position where the AIRC may order that unlawful industrial action cease.
Further, it will be possible for employers to terminate or suspend statutory bargaining periods (when protected industrial action may be taken) on a much easier basis and a far wider range of grounds. For example, if a customer or other third party applies for the termination of the industrial action, or where action is taken by a union or union member on behalf of employees who are not union members.
How can employers benefit?
The result of these changes is that employers will regain some of the bargaining power previously in the hands of employees and unions. The ability of unions to engage in effective industrial action against employers will be reduced, with the result that business are likely to achieve significant cost savings from not having to defend industrial action and being engaged in complex and difficult bargaining disputes.
Conclusion
Unions, employee groups and the media have well and truly decided that WorkChoices is a step forward for Australian businesses and a step back for Australian workers. This is not necessarily the case. However, Australian businesses do stand to benefit substantially from the Federal Government’s reforms. The extent to which businesses will reap the millions of dollars of savings, through adapting their agreements, dismissal processes, and bargaining strategies, is up to each business. Is your business prepared?
