Because with greater productivity should come greater profit levels and increased hiring and better working conditions. Employees will find that there is a broader choice and range of roles and employers will need to continue to ‘win the war for the best talent’.
The Productivity Commission today released its preliminary findings which we have reviewed and will share the points of most interest and relevance to our clients. Essentially, this is a draft report with recommendations covering “a broad-ranging assessment of Australia’s workplace relations (WR) framework, considering current laws, institutions and practices. It uses an economy wide approach, looking at possible reforms that, where merited, are likely to enhance the welfare of Australians as a whole.”
Here are the points of interest as we see them – the Productivity Commission has found that:
- Too many SMEs are coming unstuck around procedural awareness – “The Fair Work Act 2009 (Cth) and sometimes the FWC can give too much weight to procedure and too little to substance, leading to compliance costs and, in some cases, poor outcomes such as an employee may engage in serious misconduct but may receive considerable compensation under unfair dismissal provisions due to procedural lapses by an employer.”
In essence, this refers to where an employee may be terminated for poor performance or misconduct but, in fact, may receive compensation because of a technical failure on the part of the employer. An example being, say, an employee was not offered a support person and, as a result, the termination was deemed unfair despite appalling behaviour on the part of the employee.
- Modern Awards are here to stay – “Awards are an Australian idiosyncrasy with some undesirable inconsistencies and rigidities, but they are an important safety net and a useful benchmark for many employers. The FWC should address specified troublesome hot spots on a thematic basis, rather than completely replace them.”
So Awards sound like they are still in but there may be some minor tweaking required.
- A win! Sunday penalty rates are out – “Penalty rates have a legitimate role in compensating employees for working long hours or at unsociable times. They should be maintained. However, Sunday penalty rates for cafes, hospitality, entertainment, restaurants and retailing should be aligned with Saturday rates.”
This will be a welcomed change in the hospitality industry in particular. The reality is that society is changing, as are patterns of work and our penalty rates should reflect this. Many of my team work late at night not because of penalty rates but because it suits them and they are well remunerated.
- The BOOT Test is here to stay – “Enterprise bargaining generally works well, although it is often ill‑suited to smaller enterprises. However, the ‘better off overall test’ used to assess whether an agreement leaves employees better off compared with the Award can sometimes be applied mechanically, losing some benefits of flexibility for employees and employers. Switching to a no‑disadvantage test with guidelines about the use of the test would encourage win‑win options. The same test should be used for individual arrangements.”
The BOOT test in SMEs is most commonly used in a transfer of business scenario but I believe is not commonly known or used effectively.
- EBAs are cost prohibitive – “There is scope for a new form of agreement — the ‘enterprise contract’ — to fill the gap between enterprise agreements and individual arrangements. This would offer many of the advantages of enterprise agreements, without the complexities, making them particularly suitable for smaller businesses. Any risks to employees would be assuaged through a comprehensive set of protections, including the right to revert to the award.”
I believe this to be a positive change that should allow SMEs to build an employment relationship that works for the business and also attracts employees. EBAs can be quite costly and time consuming for SMEs
- Sham Contracting is still a target – “It seems to be too easy under the current test for an employer to escape prosecution for sham contracting. Recalibrating the test may be justified.”
The Productivity Commission is still looking to ensure that “independent contractors” who are really permanent employees masquerading as independent contractors (sham contracting) by employers to avoid entitlements are still frowned upon.
Don’t get too excited yet, these findings are open for comment until September 2015 and then will need to be drafted into legislation but overall I think that it is moving in the right direction.
What do you think? Any nice surprises for you here?