Sweeping changes proposed to workplace relations system

by Miklos Bolza05 Aug 2015
Reduced penalty rates for selected industries, changes to unfair dismissal, and a brand new form of small business agreement are among the various recommendations found in a draft report by the Productivity Commission (PC) about proposed changes to Australia’s workplace relations system.
Unfair dismissal claims
There are also a number of changes proposed to unfair dismissal. For instance, the PC suggests employees should only be compensated if they have been dismissed without prior evidence of poor performance or misconduct.
They also suggest education, counselling or financial penalties (rather than employee damages) for employers who make procedural errors, saying that “procedural errors alone are not sufficient to award compensation or restore employment in what would otherwise be regarded as a valid dismissal”.
Additionally, “[the] emphasis on reinstatement as the primary goal of the unfair dismissal provisions should be removed. Good legislation should not give primacy to a goal that is rarely achieved and not necessarily even in the interests of the parties involved”.
Penalty rates
“Sunday penalty rates that are not part of overtime or shift work should be set at Saturday rates for the hospitality, entertainment, retail, restaurants and cafe industries,” the PC writes. They predict these changes will increase business opening hours and provide better job opportunities in these sectors.
On casual workers, the Committee states that “weekend penalty rates for casuals in these industries should be set so that they provide neutral incentives to employ casuals over permanent employees”.
If accepted, the above penalty rate changes would be introduced with one year of advanced notice.
Public holidays
The draft report recommends that “[the] Fair Work Commission should, as a part of the current four yearly review of modern awards … [incorporate] terms that permit an employer and an employee to agree to substitute a public holiday for an alternative day into all modern awards.”
The paper also suggests that employers not be required to pay additional leave or penalty rates for newly-created state and territory public holidays with existing holidays exempt from this provision.
Leave entitlements
The PC wants to see whether “there are any grounds for extending the existing 20 days of paid annual leave in the National Employment Standards, with a cash out option for any additional leave where that suits the employer and employee”.
The report also includes proposed changes which could allow “casual workers to be able to exchange part of their loading for additional entitlements (for example personal or carer’s leave) if they so wish”. The Committee has yet to examine whether such an allowance would be worthwhile.
Enterprise bargaining
The Committee also recommends that the Fair Work Commission (FWC) be offered “wider discretion” to approve an enterprise bargaining agreement as long as employees were not placed at a disadvantage because of the missing requirement. It is also advised that these agreements be written such that they do not “restrict the terms of individual flexibility arrangements”.
The scrapping of the better off overall test (BOOT) is also recommended with the report suggesting a no-disadvantage test (NDT) which should be “applied across a like class (or series of classes) of employees for an enterprise agreement”. Guidelines on the application of this new test will be formulated and provided by the FWC later.
The report also covers greenfield agreements, saying that if an employer and the unions do not come to an agreement after three months of negotiation, the employer should be able to either go to the FWC as a “last offer” arbitrator (on either the employer’s or the union’s terms) or submit their own greenfield arrangement for approval (subject to the NDT) if they are unwilling to continue the negotiations further.
Enterprise contracts
A new form of agreement, which the PC calls an Enterprise Contract, has been put forward that “[fills] the gap between enterprise agreements and individual arrangements” and allows employers to “vary an award for entire classes of employees … or for a group of particular employees, without having to negotiate with each party individually or to form an enterprise agreement”. Enterprise Contracts would be less complex than enterprise agreements while still offering similar levels of employee protection. This change is unlikely to affect most HR practitioners however as it would mainly be used by small businesses.
Further review
As this is a draft report, the Productivity Commission has invited those interested to examine the paper and make a written comment via their website. The final date of these online submissions is 18 September with public hearings due to be held around the country from 4-21 September.  The final report will then be forwarded to the Australian government in November.
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