AFEI Employers Adviser Article


AFEI Submission to the Productivity Commission Inquiry

into the Workplace Relations Framework

Published: 28 April 2015


The Australian Government asked the Productivity Commission to undertake a public inquiry to examine the performance of the workplace relations framework and indentify improvements to it. The inquiry has commenced and received over 200 submissions to date. 

Although the review may be seen as a significant step in the government’s formulation of a new industrial relations policy agenda going into the next federal election, one of the responsible ministers, Minister for Employment the Hon. Senator Eric Abetz has already dampened some enthusiasm amongst employers by indicating the government would not pursue changes to penalty rates in modern awards, even if recommended by the Productivity Commission (i.e. this will be left to the Fair Work Commission (FWC)).

Nonetheless, AFEI has made a comprehensive submission to the Productivity Commission Review in which we argue that the workplace regulation framework is in need of reform.   Amendments to the current legislative scheme are unlikely to cure its fundamental shortcomings or the interventionist and unbalanced operation of the FWC. This now includes FWC's involvement in the minute details of individual workplace human resource management. We have to get to the point where managing the business, including managing workplace complaint and dispute, is done by the business itself, not by a third party. Unless it is clear that rewriting the FWC powers and roles can move us back to this fundamental reality about the appropriate way to run a business and deal with its internal domestic issues, there would seem to be no other avenue available than to dismantle the current framework.

Any new legislative scheme should focus on the need for Australian employers to be efficient and competitive and not intended as an instrument primarily for embedding and expanding employee rights and entitlements or as a vehicle for social reform. It is time to depart from regulation which is the product of the past century and has at its core the concepts of collectivism, third party intervention in workplace relations and compulsory arbitration.

In arguing for reform, AFEI made submissions for a new regulatory scheme which call for:

  • Genuine minimum standards for a limited number of key employment conditions, decoupled from awards and award review processes, which are more flexible and less prescriptive and capable of being varied to suit the differing labour markets across States and regions. A new system should be simpler, more certain, with a limited number of genuine minimum employment standards which take proper account of our economic and market circumstances and allow common law contracts.
  • The minimum wage concept, the method of its determination and the setting of minimum award rates to be the subject of an in depth review with the objective of removing the automatic link between changes in the minimum wage and award rates, and focussing on actual conditions at the industry and firm level (which may differ across regions and within industries) when setting award rates.
  • The entire cumbersome award framework should be examined with a view to its removal and the introduction of a simpler, flexible and more certain scheme. We do not support award amalgamation driven by the objectives of fewer awards and greater uniformity of conditions for employees for its own sake (no doubt set at the highest common denominator). Employers need a great deal more independence and ability to set wages which meet their specific circumstances than the current system allows.
  • A bargaining framework which supports employers and employees having genuine choice as to their preferred employment arrangements; being able to negotiate agreements, both enterprise and individual, or have contracts of employment, without third party involvement. In any legislative framework regulating bargaining, the central focus must be the productivity and efficient operation of the enterprise. In particular, it should not be the role or function of the FWC to decide what is a productivity gain or in the best interests of the enterprise. This should always remain the decision of the employer.
  • The general protections provisions, unfair dismissal regime and the FWA bullying jurisdiction are unbalanced and are in need of review and significant reform. They have encouraged speculative claims and forum shopping as employee (and applicant lawyer) awareness of these provisions widens.  The bullying jurisdiction should be removed from any workplace regulatory framework.  

The AFEI submission to the Productivity Commission may be viewed here.



More information:
Call the AFEI Hotline on 02 9264 2000 with your  queries.

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