Labor IR pitch leaves SMEs high and dry

Key business groups in the SME sector have slammed Labor’s new position on industrial relations, which they say offers nothing for small business owners except the prospect of a complex transition period that threatens to become a lawyers’ picnic.

A move to allow employees who earn more than $100,000 per year to be exempt from awards, a status equivalent to being employed on an AWA under the current system, was the only big surprise in yesterday’s announcement by Labor leader Kevin Rudd.

Further new aspects of Labor’s IR policy revealed by Rudd yesterday include:

  • Existing laws that heavily restrict union entry to workplaces to be retained.
  • AWAs signed before the new laws take effect to be allowed to run their course, potentially allowing AWAs to be in place up until 2013.
  • Heavy penalties for secondary boycotts contained in trade practices laws to be kept.
  • Employers will keep the right to go straight to court to take action against illegal industrial action – it had previously been suggested Labor may require employers to go through the Australian Industrial Relations Commission first.

On the issue of greatest relevance to most SMEs – the exemption of businesses with fewer than 100 employees from unfair dismissal – there was no movement. Instead, Rudd repeated his previous commitment to abolish the exemption and replace it with an extension to one year of the probation period for workers employed by businesses with fewer than 15 staff.

AWAs have become increasingly popular in the hospitality sector, where more than 20,000 agreements were signed in the nine months before March 2006 (when WorkChoices was introduced). Restaurant and Catering Industry Association chief executive John Hart says these will come to a screeching halt under the Labor proposal.

“There is nothing in this for our members and nothing for SMEs. The $100,000 cut off is impractical and covers less than 2% of our employees, so it really is no concession whatsoever from our perspective,” Hart says.

Labor is touting new “flexibility clauses” in awards as providing an option for employers seeking additional room to move under any new regime, but Hart says that will be totally impractical in the hospitality sector.

“The only chance we’ve got is these clauses to be added to awards to provide some industry specific arrangement for flexibility, but that will mean union negotiations to get clauses through. Why should we, when in our industry only 7.2% of employees are union members?”

National Retail Association executive director Patrick McKendry says the $100,000 cut off excludes the services sector from individual employment arrangements.

“What they’ve announced is very complex, very murky, and employers will be scratching their head and asking what the motive is for Labor doing what it is doing. There really isn’t any evidence of the need for any further safety net measures, so why add an unnecessary and burdensome layer of red tape to a system that works,” McKendry says.

Real Estate Institute of Australia president Graham Joyce also slammed the laws today. “While a fair workplace is essential for employees, there also has to be protections in place for business owners. The policy lacks balance for small business across different employment sectors.”

And, if Labor is elected, the task of changing over to a new industrial relations system will add a significant new burden for small businesses, according to NSW Business Chamber spokesman Paul Ritchie.

“For a period you’ll have pre-WorkChoices AWAs, WorkChoices AWAs before fairness test, and after fairness test. In addition you’ll have transitional individual agreements for new employees for up to two years. Then there‘ll be individual contracts and different rules for below $100,000 and above, there will be awards and collective agreements, some with union involvement and some not. There is no question it will become more complex, and really without any significant justification,” Ritchie says.


New red tape you would have to deal with under Labor

  1. No more AWAs: Businesses with employees on AWAs will have to start thinking about what new employment arrangements they will put in place when the AWAs expire. In the meantime, new employees will have to start on awards or collective agreements, leaving employers to operate to separate employment systems in the one workplace.
  2. Who earns more than $100,000?: Employees on more than $100,000 can go on to common law agreements – but make sure you calculate the wage and benefit package correctly. Does it include overtime? Performance bonuses?
  3. Unfair dismissal is back: Labor says it plans to introduce a set of rules to help employers dismiss employees safely. Employers with less than 100 employees will need it – they will have to start dealing with Labor’s “Fair Work Australia”, which it says will replace the Australian Industrial Relations Commission.
  4. Collective bargaining, whether you like it or not: If a majority of employees in a workplace vote to have collective agreement, you will have no choice but to start negotiating one. Does this wreak havoc with your current IR practices? Too bad.


For more on IR policies and electioon issues, see our Growth Resources Election 2007 pages.

What do you think about Labor’s package?
Is a year long enough to decide whether an employee fits in your workplace?
Should Labor keep the unfair dismissal exemption?
Is Labor ignoring small business?





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