MYOB's exclusive care
sector partner

How Fair Work has Changed the Employee / Employer Dynamic


Anyone who has been involved in running a business in Australia will know there has been a major re-regulation of the labour market. This occurred in 2009 through the introduction of the Fair Work Act.

The FW Act is responsible for a drastic change in dynamics between employers and employees. This had made it undeniable harder for employers… making decisions that affect employees is more risky than ever and the penalty of poor processes and planning is conflict with unions and litigation in court.

Let’s have a look at some of the things the Fairwork Act has brought with it.

.

.

The Fairwork Act has undeniably changed the dynamics between employers and employees. Some would say the industrial relations system is now highly geared towards protecting employees to the detriment of employers. The landscape has become quite adversarial – opposed, conflicted and in some cases hostile. Whereas what we should be aiming for is a consensus environment where our IR system takes views from both sides, makes compromises and works to ensure the best possible outcomes for all parties involved in the workplace.

Let’s have a look at some of the things the Fairwork Act has brought with it!

.

Firstly, collective bargaining.

Collective bargaining has become virtually mandatory for employers in Australia and that collective bargaining pretty much involves union representations. This collective bargaining arrangement almost mandates that unions be involved where they have not been involved for many years.. In many cases the collective bargaining requirement also drag businesses into complex and costly litigation before the Industrial Tribunal or Fair Work Commission and the courts.

.

Secondly, union entry rules.

Along with collective bargaining, the union entry rules are paving the way for increased union involvement. Previously, a union official had to have a connection to your workplace (i.e being a party to an agreement with your workplace or having members in your workplace) before they could have access to your business premises. Now all that needs to be shown is that the union is legally entitled to enrol members in your business. This has been taken one step further where businesses which have operations in a remote location may also be required to pay for the transportation of the union official to the location where your workplace is and provide them with overnight accommodation.

.

Thirdly, general protections provisions.

The new general protection provisions make almost any decision that you make regarding your employees reviewable by the Federal Court. That drags employers into potential litigation every time they make a decision that could be said to adversely affect their employees. And rather than being innocent until proven guilty the employer is actually considered guilty until they are able to show that the reasons they made the decision were not unlawful reasons. This requires businesses to become involved in costly and time consuming litigation before the courts. This is far worse than the sort of litigation being conducted before the Industrial Tribunals and leaves businesses in a position where they won’t recover the costs of being involved in such legal circumstances.

.

And finally, the statistics.

The FW Act was introduced in 2009 so let’s take a look at some pre-FW and post-FW Act statistics:

according to the ABS, in 2008 there were 135 disputes that resulted in a strike and 49,700 working days lost. Fast forward to March 2013 where disputes reached 218 with 289,500 working days being lost.
statistics from the Fair Work Commission show a significant increase in other forms of industrial action since 2009, such as termination of employment, adverse action and unfair dismissal. These claims have doubled over the last five years! (interestingly the most significant increases in these claims have occurred at workplaces with union representation).
The stats seem to suggest that the current industrial relations system (which encourages union involvement where unions have not been involved prior) is achieving neither a harmonious nor a conflict-free environment.

So what can businesses do?

Is the Fairwork Act causing more or less friction? The short answer is “yes”. What all the above suggests is that our industrial relations system is not encouraging an environment of consensus but rather an adversarial scenario that pits employees against employers. The increased involvement of unions is likely contributing to that.

The upcoming election may bring with it a new government which might or might not try to work towards changing the industrial relations system into a more consensus-based system. This would be preferable for a number of reasons most importantly because it’s vital that we encourage all parties to work together to provide a base of sustainable productivity that Australia will require to navigate what could be some tough economic times ahead.

The thing is the system isn’t going to change any time soon so businesses will remain on the back foot and as such they need to:

  • become intimately knowledgeable of the current (and upcoming 01 Jan 2014) FW Act rules and policies.
  • review their current practices and be sure that all their processes are in line with the legislation.
  • undertake lots of planning and forecasting, identify the risks and get good advice.

.

In the end mitigating risks is vital for businesses… the alternative is costly and adversarial disputes with unions or the courts.