Labor cops out on Fair Work

Bill Shorten's recently announced changes to the Fair Work Act are only cosmetic, with IR now so heavily politicised that there is no will to address real structural deficiencies in the system.

There are few things more political than the Fair Work Act, the legislation brought in to wipe out John Howard’s legacy. Industrial relations is important for society, workplaces, managers and the economy. It touches us all. The government’s tweaks to unfair dismissal however show how political it has become and how public interest is now sacrificed for politics.

The tribunal president Justice Iain Ross is well aware of what a burden that political baggage is. In an interview with Business Spectator earlier this year when the HSU controversy was being investigated, he suggested depoliticising Fair Work Australia by renaming it the Australian Employment Commission or the Australian Workplace Commission, anything to get it away from the name of the contentious bit of legislation.

Ross should be commended for his insight and sensible suggestion. He has been ignored by the government which has decided to rename it the Fair Work Commission, just to remind voters which side they’re on, and about Abbott’s WorkChoices legacy.

The changes to unfair dismissal announced by Workplace Relations minister Bill Shorten are cosmetic because the system is so politicised. The changes amount to a political fix with the government putting most of the required changes in the too hard basket. Shorten has signalled not to expect anything until 2013, an election year.

Anticipating the slight modifications would leave business underwhelmed, the government announced a new body to improve the quality of leadership in Australian companies.

As part of the package, Shorten announced that the government would kick in $12 million, for a new Centre for Workplace Leadership, whatever that may mean, to focus on small and medium enterprises which just happen to be the ones struggling with the unfair dismissal regime. Again, a neat political manoeuvre with an advisory group made of luminaries like Wesfarmers boss Richard Goyder, former ACTU secretary Bill Kelty and Linfox founder Lindsay Fox. The question is whether government agencies have any business telling managers how to run a company.

Tweaks to the system won’t make any difference, they are purely procedural.

The government plans legislative changes that will standardise the time period under which an unfair dismissal claim and an adverse action claim can be lodged at 21 days. Previously, adverse action claims could be made 60 days after the incident in question. Unfair dismissal claimants had 14 days. Under the changes, Fair Work Australia will also be able to award costs against an unfair dismissal claimant who has unreasonably failed to end an unfair dismissal proceeding or accept a settlement. Theoretically, this is supposed to reduce unmeritorious claims that employers say are all part of the Fair Work regime. Fair Work Australia will also be able to ask unfair dismissal claimants for more information about the circumstances of their dismissal when a claim is first made. Again, this is designed to weed out frivolous claims.

To be sure, these changes might deter some claimants but don’t expect any quantum shift. The reality is that lawyers are ethically bound not to bring specious proceedings to a court or tribunal. In any case, it would not be difficult for any lawyer to present a case as to why the parties couldn’t come to a settlement. If the change will have any impact, it will apply only to a minority of extreme cases.

The changes do not deal with adverse actions, where the plaintiff identifies some form of discrimination and unfairly targeting employees, real or otherwise but broadly defined under the Fair Work Act, connected to their employment. An adverse action claim, where the plaintiff claims there has been some sort of discrimination, is an unfair dismissal by any other name but because it can end up in court, it’s more expensive and it’s happening more frequently.

In 2009-10, there were 1200 adverse action claims. This has risen to 1900 last financial year. With adverse action there is more time to lodge a claim. Also, there are no earnings restrictions and compensation is not capped. There is a reverse onus on employers to prove they didn’t act for reasons prohibited by the legislation which means they are more likely to pay go away money. Adverse actions are causing small to medium sized businesses a lot of grief and that will continue. Fixing it is too political and would require staring down the unions.

Significantly, the government is implementing only 17 of the 53 proposed reforms from the Fair Work Act review. The more controversial reforms, like allowing Fair Work Australia to arbitrate deadlocked bargaining on major new resource projects, model clauses for individual flexibility arrangements and banning legally protected strikes until bargaining has formally started, have been put on hold while the Workplace Relations minister gets some sort of consensus between unions and employers. Don’t hold your breath.

Employers are concerned about protected industrial action and good faith bargaining being reduced to process that’s not designed for determinations by Fair Work Australia, quite the reverse. Unions and employers have to slug it out. While employers claim that it basically amounts to extortion by unions, it has also resulted in militant action by employers as we saw last year with Qantas. It’s forced the government to step in and organise mediation for the Grocon dispute. In other words, it’s so political now that ministers are directing quasi-judicial authorities what to do.

A time limit on good faith bargaining is badly required. After that, it could go to arbitration. The government has left that alone. According to Shorten, some employers want arbitration while others don’t so that too has been put on hold. Too hard to fix.

Similarly, concerns continue about productivity. Agreements now are little more now than deals not to take strike action.

Gone are the days of the Accord when unions and employers would work out what concessions were needed to get a pay rise. These days, it’s harder, some managers say impossible, to get concessions out of the unions at a time when the economy is slowing and pressure is on to increase productivity.

WorkChoices was an experiment from the right that went horribly wrong and created a massive bureaucracy. The Fair Work Act was Labor’s experiment which has also failed, like WorkChoices, to shape productivity and economic opportunity.

"If you take a good hard look at this, it’s tinkering around the edges,’’ says Gerard Phillips, a partner at Middletons’ Workplace Relations & Safety Group. "You won’t see any meaningful change until there is a new government and someone has the gumption to say we are going to have something that favours neither the more militant employers nor the more militant unions”

Employer groups complain about our industrial relations system, but their interests have also been hijacked by the politics. The reality is that it’s not exactly a disaster. Industrial disputation has been relatively low and wages growth has been moderate. Nonetheless, with a slowing economy it will need attention because a good industrial system can transform workplaces, lift productivity and create new business opportunities at a time when we need it.

Still, no one expects Tony Abbott to campaign hard on this and propose exempting small businesses. That would only resurrect the ghost of WorkChoices.

Australia’s industrial relations regime needs to be fixed because of the deteriorating economic climate but Australia’s leaders won’t go near it. It’s a political hot potato. When politics is treated as a game, is it any wonder people are losing their faith in democracy?

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