The labour accord 2.0: more scorched earth or a consensus-based breakthrough?

July 28, 2020
FCB Workplace Law

By Michal Roucek, Senior Associate 

As anyone who operates a cross border business will tell you; Australia has one of the most convoluted systems of industrial relations regulation anywhere in the world.

Despite the advent of the Fair Work Act 2009 (Cth.) and modern awards, there remains a sometimes illogical and dogmatic system borne of over 100 years of blood-sport on an IR battlefield.

History tells us that “solutions” struck where there are “winners and losers” do not produce settled outcomes.

What’s worse is that this results in a situation where important laws that ought to protect workers and boost productivity instead lead to employers making mistakes when faced with complexity – so much so that even large Australian companies with large teams of experts get it spectacularly wrong.

With these matters in mind the IR Working Groups, chaired by Christian Porter, Attorney General and Minister for Industrial Relations have made a somewhat audacious bid to gather together peak employer and Union organisations and change the approach to deal with:

  • Award simplification
  • Enterprise agreement making
  • Casuals and fixed-term employees
  • Compliance and enforcement; and
  • Greenfields agreements for new enterprises

Predictably, employers and employees have released papers outlining wish lists of prized items including, relevantly for employers:

  • A broader number of provisions that can be the subject of individual flexibility arrangements;
  • Replacing the Better Off Overall Test in enterprise bargaining approvals with a broader no disadvantage test;
  • Defining casual employment more simply in the Fair Work Act 2009 (Cth.);
  • Doing away with the concept of wage theft which runs anathema to consultative compliance and audit activities; and
  • Ensuring that the process for creating a greenfields enterprise agreement is not so complex and time-consuming that it puts capital investment at risk.

The Unions are seeking to:

  • Strengthen the status of enterprise agreements by raising the bar on terminating an enterprise agreement;
  • Create a streamlined underpayment jurisdiction in the Fair Work Commission;
  • Provide casual employees with a unilateral right to casual conversion; and
  • Provide a maximum number of times a fixed or maximum term contract can be rolled over or a maximum period before employees may elect to become a permanent employee.

While we will likely not know about outcomes, if any, for some time, and it is likely the Government already has a reform agenda in mind, Minister Porter will need to closely guard the process to ensure it does not become a never-ending process like the 2 or  Yearly Review of Modern Awards.

This will require the Government to remind industrial parties that a “business as usual approach” will result in disagreement over basic concepts, with employers arguing for greater flexibility or simplicity against the Union framing such claims as a trojan horse for eroding employee rights.

One piece of low-hanging fruit that the Government could pick, might be to lessen the evidentiary burden applied to the Better Off Overall Test for approving an enterprise agreement where the employer and the employee representatives agree that employees are better off overall.

It will be important therefore to ensure that the outcome (and not just the process) is driven by a common goal for greater productivity which appeals to the general sense among industrial participants that “the system is broken”.

If the unity of purpose develops there may be some cause for optimism that any agreed outcomes can be run through the houses of parliament in a relatively short time.

But unless there is a different approach informed by interests being commonly understood, you get a strong sense that this will be more of the same.

What is starkly different now is that you can always find some measure of common ground in a crisis.

Perhaps somewhat perversely you can be sure that if the rate of unemployment is sky-high in September, you will see some areas of furious agreement where it was previously thought impossible.