How the Fair Work IR rules need to change

After the Coalition’s election driven “no change” policy, workplace relations is easing back into the national policy debate. Much is being written and said in 20-20 hindsight, or maybe with the campaign shackles released, about the need for the Opposition to distinguish itself from the government on workplace relations policy. SME’s will be glad to hear the change of tune as it raises at least some prospect of changes to the least employer-friendly aspects of the Fair Work Act.

So what should small and medium business focus on as areas for change? Here’s an assessment of four areas which lead to the most contention and therefore the most cost.

Unfair Dismissals

This is a no-brainer. The simple fact is that the Fair Work Act has not made “go-away money” go away. Employers are still forking out for the privilege of not being faced with the time consuming and costly defence of a claim. Reinstating a regime of excluding any claim against employers with less than a certain number of employees, be it 15, 20 or 100, seems the most likely policy outcome.

However, a review of some of the fundamentals would not go astray. The reality is that arbitrary thresholds barely dented the momentum of the increase in the number of claims. Similarly the Small Business Fair Dismissal Code has led to more legal argument about whether the code applies or not, and if it does, whether it has been complied with.

The Code wasn’t a bad policy idea, but the fact that you still have to go to a member of FWA to have these issues determined undermines its very purpose. One example of a useful change for small business would be to enable conciliators, or other officers of FWA to have broader discretion to make binding decisions about the application of the Code, with less formality. And that’s a theme you could apply to the whole jurisdiction: despite the best efforts of the legislators, there is still an inordinate focus on process; both that followed by the employer and that engaged in by the tribunal, once a claim is made.

Enterprise Bargaining

FWA is to be congratulated for undertaking approval of agreements without requiring a formal hearing every time. However, the legislation itself still falls short. There is something slightly comical about the thought of union officials trolling the daily list of applications for approval of agreements to see if they can attach themselves to a workplace they’ve never heard of. There is room in the system for non-union agreements and employees should have a genuine choice about whether they want union representation or not.

That change would also require a change to the good faith bargaining rules and the rules which result in a union being appointed the “default” bargaining representative for employees.

Small and medium businesses are probably less concerned about individual statutory agreements, as the resources that go into having them approved sometimes beggar the benefits. The current rules, which enable union agreements to virtually eliminate the prospect that individual employees can agree minor variations to their work schedules or conditions which suit them best, seem contrary to the broader imperative toward more flexible workplaces. Extending the capacity for individual flexibilities within the scope of award or enterprise agreement rules is a must.

General Protections

The full impact of the “general protections” and “anti-discrimination” provisions of the Fair Work Act are yet to be tested. One senses, though, that the requirement that employers, or unions for that matter, accused of unlawful conduct have to prove that they were not guilty of that conduct, would in almost any other area of the law lead to howls of outrage.

The pre-Rudd provisions requiring that the prohibited reasons were the dominant motivator of the employers conduct were a reasonable compromise to give effect to the intent of these provisions.

Modern Awards and Minimum Entitlements

Question: Where does an employer get a definitive answer about their obligations under a modern award? Answer: In the Federal Magistrates’ Court after they’ve been prosecuted for non-compliance.

One of the biggest beefs that small and medium employers have got is that it is so damned hard to find out what their legal obligations are. All they can rely on is a range of opinions: the opinions of the various helplines, employer associations, or lawyers and other paid advisers. What you cannot do is get a quick and simple determination of entitlements in circumstances where the award is unclear. There has got to be scope for employers to go to someone, who can make a quick ruling which protects an employer acting in good faith from being found to be in breach of the law, even if the ruling is subjected to a later successful challenge before Fair Work Australia or the courts.

No doubt there are a range of other areas in which the law could be reviewed to give SME’s greater clarity; the issues identified here seem to be what experience is telling us are the most common and most pressing. If you run an SME, start lobbying.


This article was originally published on SmartCompany.com.au where Peter is a regular contributor.

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