The Fair Work Act was a 2009 initiative by the common wealth countries, Australia included, mainly to streamline the economic arena The Act took effect in January 2010, effectively replacing the Work Choices Act of 2005 (which had initially replaced the Workplace Relations Act of 1996), as the sole government industrial legislation. The implementation of the Fair Work Act in Australia has been heavily reliant on the set of provisions referred to as the National Employment Standard (NES).
Through the National Employment Standards, considerable gains have been made in terms of workers bargaining for better treatment at the workplace. Through the National Employment Standard, workers are entitled to more flexible working hours inclusive of leave days for maternal or paternal reasons in addition to a limited number of working hours (38 hours) (R.Cooper, 2010). This ensures that the workers are not oppressed. This submission critically examines the operation of the Fair Work Act of 2009 in Australia through the National Employment Standards. The submission, while acknowledging the gains achieved by the legislation, looks at the shortcomings of the NES and makes recommendations for an all-inclusive approach to carter for the employer as well, who has been noticeably shortchanged. This would guarantee sustainable and innovative development of the country.
2.0 Evolution of The Fair Work Laws and the current situation
The Fair Work Act of 2009 was intended to provide a background for collaborative and productive efforts among the commonwealth country. This would in turn encourage the country’s economic wellbeing as well as socially including all Australians in the process; by creating a favorable working environment for the populace with respect to the Australian’s wellbeing, international labor obligations, and development policies and so on. In short, its purpose was to safe guard both the native Australian as well foreign investors from the effects of the ever dynamic global economic landscape; shield the locals from exploitation and at the same time make the country attractive to investors (both local and foreign).
As earlier mentioned, the Fair Work Act was formulated to replace the Work Choices Act of 2005. It must be noted that the Work Choices legislation was initially intended to weaken the trade unions ‘continued hold on industrial relations. This aggressive assault on trade unions resulted in counter attack measures (from trade unionists) thus the Work Choices Act ended up re-asserting the trade unions’ role in industrial relations instead of minimizing it. The Workplace Relations Act (1996) also suffered the same fate; the attack the legislation launched on the trade unions didn’t bear much fruit. The trade unions successfully used the provisions of the legislation to hinder reform in the industrial relations reforms hence maintenance of the status quo. Given this initial failures in industrial relations legislations, the platform was set for the enactment of the Fair Work Act.
Unfortunately, the implementation of this Act was temporarily halted in 2010 by the political shift, witnessed in Australia; the then incumbent prime minster, Kevin Rudd, was successfully ousted by his then deputy, Julia Gillard. This change of guard was mainly attributed to the government’s labor policies, including massive amendments to the Labor Party’s national economic stimulus package, the policy change concerning the enactment of a Carbon Pollution Reduction Scheme effected earlier in 2010. The pronouncement of a new “resource super profit tax” prior to the May budget also contributed adversely to the incumbent’s re-election; triggering negative television advertising campaign from mining employers.
The implementation of the legislation was left solely to Fair Work Australia; a tribunal as tasked with issuing bargaining orders, ensuring the presence of good faith on both the employers’ and employees’ ends and giving the final nod on the resultant agreements. Fair Work Australia mainly depended on the National Employment Standard; all agreements were based on this set of standards. The National Employment Standard provides the following: it regulates the working hours to 38(though employees are allowed to work in excess hours but within reason), employees have the right too request flexible working hours based on personal reasons(this may be rejected by the employer only on the basis of commercial reasons), employees are entitled to a parental leave of up to 12months(unpaid of course), it guarantees the employee 28days of paid annual leave, 10days of personal leave for each year of service, 4 days of mourning leave per occasion (of which two days are paid and the remaining non-paid ) and employees have the right to participate in community service as directed by relief organizations or the legal system.
In addition to all this, employees are also entitled to long service leave, absence from work on prescribed public holidays, statement of their rights(as prescribed by the National Employment Standard) and right of reasonable notice pending termination . The legislation also limits negotiations to unlawful terms; these terms restrict the extent of negotiations but are not anti-trade unions but industrial relations linked. In addition, the legislation strengthened the trade unions by giving the more access to work places (even where they did not have members). This law was heavily bent towards the employees side and totally ignoring the employer as clearly demonstrated by the National Employment Standard. Given the effects of the work relations on the politics, that have earlier been mentioned, it goes without saying that the NES were crafted to favor employees and trade unions for political expediencies. However this move created other problems due to ignoring the plight of the employers.
3.0 Short comings of the Fair Work NES Act and t
The primary purpose of the Fair Work Act was to come up with an unprejudiced, impartial and capable framework of driving economic productivity, sustainability and prosperity. Nevertheless, the legislation has already had the following impacts on the economy that have adversely affected productivity hence negating the principles behind its enactment: It brought about the re-regulation of labor and the market at work places and businesses hence significantly tampering with the free economic environment.
Initially, it was designed to replace old and complex work relations legislations and make the simpler and hence easier to implement; this has not been the case since Fair Work Act is still convoluted, multifaceted and a detailed regulatory framework. The included worker safeguards are seen as an impediment to enterprise bargaining; restrict the employers hand in hiring hence making the conditions for doing business unbearable. Affirmative action has given unions’ enormous powers; they have access to work environment beyond their jurisdiction and their tendency to get involved in non-employment related issues.
Although it has been lauded as a way of protecting the employees’ rights, the National Employment Standard has its own biases. The right to request affords the workers an opportunity to ask for leave on grounds of care. They could require leave in order to care for a young child, a disabled one or an ailing one. However the right to request is not necessarily granted. In some industries such as private businesses, leave has been denied to workers at times on account of loss of business as a result of request for leave. In addition to that, the right to request leave does not cover the employees’ right to care for the elderly or a spouse. An employee whose request has been denied does not have the right to contest the decision in a court of law or Fair Work Australia .
The employers on the other hand have had their rights trampled upon by the Fair Work Act. The National Employment Standard seem to provide a limitless code that favors the employee and gives them room to negotiate for better working conditions. However the employer does not get a comprehensive definition of their rights thus leaving room for second guessing and unfairness which could be characterized by pointless legal suits.
The Fair Work Act has given room for an increase in the flexibility at the work place. As a result of this, there is no standard model for how households and individuals interact with the workplace. Over the last twenty years, the number of single income households has been on a significant decline though dual income households have been on the rise. In the hospitality and the retail industries, a lot of the jobs created have been low paying casual jobs. Employees in the casual and precarious work are at a great risk due to these flexible arrangements (Waring & Bray, 2006).
Most of them end up working for several years without one day of paid sick leave, one day of paid annual leave or paid public holiday thus bear the brunt of the flexible work environment as provided for by the Fair Work Act. Sydney University's Workplace Research Centre aptly describes this in their recent study in stating that Australian workers have absorbed more financial, social and economic risks. According to the Australian Mines and Metal Association, the Fair Work Act has led to an increase in the wages of the workers in that industry. However the increase has been insignificant when translated into real terms.
A survey done by ABS in early 2011 showed that the increase in Average Weekly Ordinary Time Earnings (AWOTE) for full-time adults in February 2011 was 3.9%. Although these statistics suggest that while the Fair Work Act of 2009 aims to restore the balance of power and working conditions of employees lost through Work Choices, this has not translated into higher wages for employees. This is further supported by the overall trend in the decline in wages as a proportion of national income.
There have been claims by Australian legislators that the implementation of the Fair Work Act will lead to an increase in the cost of labor as a result of the increased wages which have been termed as excessive. This school of thought argues that the increase in labor costs will lead to cost of living pressures, increased inflation, and upward pressure on interest rates and loss of jobs. However statistics prove otherwise. The general trend has been a fall in cost of labor. In fact the lowest cost of labor was reported in 2010 after the introduction of the Fair Work Act.
Surveys show that the average hours worked by employees have gone up by 2.9% but this is not an accurate measure of labor productivity. The main measurement of labor productivity is the change in the level of GDP per hours worked. Labor productivity in Australia has been declining over the past decade. However the implementation of the Fair Work Act in Australia has to some extent led to better managerial practices, an element that directly influences labor productivity .
The Fair Work Australia has attempted to close in on the gender gap between males and females in the work force. This is through taking a stand in acknowledgement of the gender based undervaluation of female workers in the Social and Community Sector (SACS). The SACS industry is mostly comprised of women with 87% of the work force being women. The wages of the women however are as low as 50% of those doing similar jobs in male dominated industries at the local, state and federal level. However Fair Work Australia is yet to take steps to rectify this anomaly.
It has been argued by industry groups such as the Australian Mines and Metal Association that the level of protected and unlawful industrial action has been on the increase under the Fair Work Act. Australian Mines and Metal Association (2010) argues that changes to unions’ right of entry into premises, the reinstatement of unfair dismissal laws and the option for unions to take protected industrial action before bargaining begins will result in higher levels of industrial action.
4.0 Recommendations (Arguments for change)
This submission therefore attempts to mitigate the negative effects of the Fair Work Act. This is in addition to addressing its effect on productivity; reducing the extent of involvement of the trade unions in the economy and their bargaining power. It also seeks address the role played by trade unionists in shaping the political landscape Australia’s industrial relation system has to a larger extent restricted institutional reforms due to the extreme interference.
Based on this I submit that as the commonwealth reviews the Fair Work Act there should be an effort to minimize the interference and the role of trade unions and government regulators. Attempts by subsequent federal governments have only led to half-baked controversy ridden reforms that have only worsened the situation; they have just succeeded in making it easier for the Australians to be unemployed rather than employed. Though the Fair Work Act has been regarded as the best of the three Industrial Relations Reforms, it still controls labor thus adversely interfering with working relations; the employer’s role in decision-making has been greatly underplayed and the trade unionists given a wider purview that includes non-work related issues coupled with the fact that they have access to work sites where they do not have even a single member.
It is therefore clear that the government and trade unions have blatantly ignored the global economic characteristics (recession included) and focused all attention on the worker’s welfare. The consolation is that, the Fair Work Act was implemented on a trial status pending reforms in 2011 depending on the extent it shapes the economy in terms of production. The legislation is highly biased in favor of the employee and the trade unions at the expense of the employer; little is expected from the employee and trade unionists while much more is expected from the employers (the restrictions set a very high standard for the employer but does not one for the employee and their representatives). Some demands should also be placed on the employee and the trade unions. It is obnoxious to give any party a lot of freedom, rights and privileges with very few limitations.
Currently in Australia, the conflicting objectives are national competitiveness, impartiality for employees and enterprise flexibility. The Australian government should formulate economic legislations(especially labor ones) whose main concern is to benefit more from the new markets, strategies and technology rather than regulate fundamental shifts in sectorial activities; because these shifts are a direct result of the dynamic market environment. These legislations should be directed towards minimizing the unnecessary burdens imposed upon businesses by the current legislations; a framework should be put in place for both the employer and employee to reasonably and mutually agree on terms favorable to both sides with limited participation of the trade unions.
Rather than advocating for more government control, the Fair Work Act should be reformed to empower the workspace with the capacity to deal with the ever dynamic national and international economic landscapes through treating all stakeholders equally and allowing for flexibility in industrial relations. This can be achieved by developing the present provisions of the Fair Work legislation as well as introducing some new strategies. These include but are not limited to:
The bilateral agreements between the employer and employee should be established on subsequent results rather than on the procedure; worker rights should be based on performance rather than mere formality as it is the case currently. This strategy gives priority to the employer-employee relationship; because it has a direct impact on production.
The employees should be given the powers to decide who represents their interest during bargaining agreements; currently, bargaining is done by trade unions that may or may not fully understand fully the worker’s plight, plus these ensures that only stakeholders interest are addressed in the negotiations rather than involving third parties who in most cases burden industrial relations unnecessary.
A framework should be put in place to allow specific employers and employees to tailor make their labor relation agreements suitable to their economic environment, but of course subject to certain stipulated safeguards. This does away with generalization and the complexities that come with it; it brings flexibility into industrial relations according the nature of business.
Salary remunerations should be based on productivity rather than matters of principle. Employee competence also should be above reasonable doubt for wage hikes to be allowed or even considered. The present scenario breeds laziness; employees earn pay they haven’t worked for or better still are not entitled to give their efficacy levels.
Dispute resolution should be done at the work level rather than at a central tribunal level; the employer and employee should be given an opportunity to bridge their differences because they stand to gain or lose directly instead of involving a third party in mediation.
Union interference should be limited to the enterprise agreement (between the employer and employee); the need for trade union involvement should be a reserve for both the employer and the employee and should be done earlier during the negotiations rather than during crisis management. Though necessary the workers concern may be, they must be balanced with other factors of production that equally influence; clearly production is a cumulative of many factors of which labor is just one amongst them basing industrial relations on labor alone is an injustice to business.
Given that most enterprises in Australia are SMEs (small and medium enterprises) hence strict labor regulations stifle these ventures. Therefore, for sustainable development, it is also imperative for employers to balance employee relations with commercial factors. This two-pronged approach enables attainment of both industrial relations and economic viability.
It must be noted that the above proposed model is based on several assumptions, which include: that employers shall without compulsion pay their employees fairly for services rendered and that the government shall continue aiding the jobless and poorly remunerated employees through other initiatives such as tax reliefs and income subsidy programs. Based on the above listed strategies, the proposed industrial relations framework would do away with bureaucracy; mainly through understanding and adopting these simple and clear all inclusive propositions. This approach would subsequently lead to a shift from conflict based strategies to concerted obligations, and hence ultimately benefiting all, thus facilitating productivity and innovation at work places. This would subsequently enable enterprises to be flexible and empowered to deal with the ever dynamic global economic landscape.
Based on the proposed framework, it is to the Australia’s best interest that employers are given more say in industrial relations. More importantly, a simple but detailed framework should be adopted to steer the country towards sustainable production; strategies should be clearly outlined to avoid opposition during implementation. More so, the industrial relations should shift from conflict resolution to including mutual issues to both employer and employee is strictly commercially related. There also should be a shift from trade unions to the better company based union for improved representation (Alexander, Lever, & Gahan, 2008).
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