Rudd's Industrial Apocalypse

Fair Work legislation restores many trade union privileges abolished under Howard's Work Choices legislation.

So Gerard Henderson in today’s SMH. Henderson clearly implies that, under the government’s IR laws, the union movement is about to barge back through the door so to speak. The largely unregulated and, by implication in the comparison, more responsible WorkChoices will have all its good work undone. Australia’s economy will suffer and jobs will, of course, be lost.

This is to believe that Australia’s economic performance (specifically the unemployment rate) over the last several years is a result of the visionary deregulation of “Howard’s Work Choices legislation”. That the ability of organisations to erode work and pay conditions – by the use of that labour market and economic panacea the AWA – and to terminate “at will” under the removal of “unfair dismissal” protection has been a driver of employment and economic activity.

Whilst there is little doubt that the intent of the AWA was to provide the mechanism for such undermining of conditions, the take up was always limited and then, when used, serially abused (as the - at the time - ever hard to lay hands on statistics indicate). Recall that Howard wanted no safety net built into this system.

In respect to unfair dismissal, the ability to terminate has never equated to the propensity to employ. In any case many “small businesses” employed under common law contracts and, in the “industrial” arena (distribution for example) under the casual and limited tenure contract arrangements permitted under awards and agreements.

Henderson clearly believes that under Fair Work Australia the above “flexibility” enjoyed under Work Choices will be replaced by the straightjacket of union “privileges”.

Two of Rudd's labour market initiatives are capable of being quite counterproductive in this time of economic downturn. Reintroduction of unfair dismissal laws on small business is a real disincentive for employers to take on staff. And the Government's call for Fair Work Australia to modernise awards in the retail sector - which employs many part-time and casual staff - could raise penalty rates and, consequently, significantly increase the cost of employment. Both initiatives would be of concern at the best of economic times.

Really? Mr Henderson hasn’t been keeping up with the Australian Industrial Relations Commission and its ongoing process of award modernisation. The object of this process is to pare down the great number of industrial awards in this country and, in the process, remove much union “demarcation” producing fewer “Modern Awards”. Modern Awards, according to the legislation, “must be simple to understand and easy to apply, and must reduce the regulatory burden on business”. As well, these awards will include a “flexibility clause” which clause, in summary, “will enable an employer and an individual employee to agree on arrangements to meet the genuine individual needs of the employer and the employee”.

As one can well imagine, the union movement has had much to say on these matters. Individual unions and the ACTU have made many submissions on the forms of these new awards and, more importantly, the flexibility clause. In the main the AIRC has dismissed such submissions as not complying with the intent of the legislation – particularly with respect to the flexibility clause. In this regard unions have suggested that agreements made under this clause be able to apply collectively. The Commission roundly rejected this:

The use of terms such as “individual employee” and “individual needs” and “the individual employee” leave no room for doubt on the issue. For this reason the model clause should not provide for agreements between an employer and a majority of employees.

But back to Henderson’s fretting over Modern Awards and the assertion that they “could raise penalty rates and, consequently, significantly increase the cost of employment”. Whilst that is a possibility, the AIRC has, to date, refused to alter such provisions which already apply in this regard. Indeed it is rolling these into “industry sector” awards and leaving such matters to the relevant tribunals. Perversely, for Henderson, the Modern Award Flexibility Clause can allow for a reduction in these matters.

The purpose of a model flexibility provision is to permit a reduction in one or more minimum award entitlements as part of an agreement which meets the genuine individual needs of the employer and the employee without disadvantaging the individual employee.

The specific clauses that this provision can vary are listed in clause one of the Commission’s “Model Clause”:

An employer and an individual employee may agree to vary the application of certain terms of this award to meet the genuine individual needs of the employer and the individual employee. The terms the employer and the individual employee may agree to vary the application of are those concerning:

(a) arrangements for when work is performed;
(b) overtime rates;
(c) penalty rates;
(d) allowances; and
(e) leave loading.

Looky there! The very matters Henderson mentions.