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For many, the most significant loss from the Federal Government’s industrial relations (IR) reform package was the opportunity to change enterprise bargaining.
Bargaining in Australia has been steadily declining. This has contributed to record low wage growth and missed productivity opportunities including (potentially) simplifying employment arrangements.
So what were the changes to bargaining that, for many, were disappointingly abandoned and is there any point considering agreements now?
The Fair Work Amendment (Supporting Australia’s Jobs and Economic Recovery) Bill (‘the Omnibus Bill’) sought to encourage organisations back to the bargaining table by making bargaining less procedurally onerous. This included a few controversial changes like reducing the complexity of the Better off Overall Test (BOOT) to give allowances to COVID-impacted businesses and giving more weight to whether the employee and employer were supportive of the enterprise agreement, rather than the Fair Work Commission’s (FWC).
Another important change was to end EAs operating long past their nominal expiry date. Deloitte sees again and again in remediation work that poorly drafted, ambiguous and hard to systematise clauses often cause under and overpayments. The older the EAs get, the harder they are to interpret against today’s legislative system.
We’ve seen a number of significant employers proclaim the current rules of bargaining take away from productivity so they'll stick with the award system. Yet EAs remain an important change lever. EAs can in fact make the complex statutory system easier to apply for businesses, as they develop local work arrangements that better suit the business and generate productivity.
Awards can be prescriptive about work patterns in ways that don’t suit all workplaces or workers. Spans of ‘ordinary’ hours or strict requirements about break times can have costly consequences and limit flexibility. Altering these elements outside of EAs without the protection of the FWC’s approval risks compromising compliance with minimum conditions.
The award system assumes employees are directed in how and when they work, rather than self determining work patterns. It also presumes work at certain times should be valued more than work at other times, irrespective of employee preferences.
You don’t need a crystal ball to know that many existing EAs aren’t fit for purpose to carry the business forward. Smart businesses are reviewing their employment arrangements through a new, post-pandemic lens. They’re asking themselves whether there’s a more efficient, flexible way of applying the statutory minimums.
We recommend being deliberate and strategic about employment arrangements. Think both about what the organisation needs now - it might be a tidy up of unclear or redundant clauses, or a wholesale rewrite of the EA – as well in the long-term future – it might be a more agile workforce deployed to support particular outcomes or a hybrid workforce and workplace.
So how do you be more strategic about employment arrangements? You might start by getting a granular understanding of your labour spend, workforce composition and how rostering is contributing to spend and customer demand patterns. This baseline data can then help you reimagine what your future labour spend and allocation will look like based on your business’ strategy. And to get there? You’ll need a long-term industrial relations strategy.
Although organisations may grimace at the complexity in agreement making, there's much that can be done within current frameworks. And now is the time to choose your own route, not be led down the garden path or stumble on a dirt track and find yourself bush bashing in the wilderness.
Natalie James is a Partner in Deloitte’s Regulatory and Risk Insights practice. She leads Deloitte’s Workplace Integrity Team working with businesses to enhance their workplace integrity and ensure compliance with work laws. She brings deep expertise and insight to helping companies identify and resolve compliance risks, reduce complexity and build fit for purpose, compliant and sustainable workplace practices. Natalie was the Fair Work Ombudsman, leading Australia’s national workplace relations regulator, from July 2013 to July 2018. Prior to that she led the development of work laws as Chief Counsel for the Commonwealth Government. Natalie has a Bachelor of Arts Law and a Masters in Law (Commercial – Labour Law).
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