Influencers & Profiles

The employers strike back

James Thomson /

Workplace Relations Minister Bill Shorten’s description of Toyota’s controversial redundancy program as “particularly unpleasant” is pretty hard to disagree with.

As a former automotive writer, I’ve visited the Toyota plant at Altona a number of times in the last 10 years and I’ve got to say that the feeling you were left with after walking the shop floor was of a real sense of collaboration between employer and employee. Toyota worked hard on its relations with the union and was proud that it didn’t have the proverbial parking spot at the old Industrial Relations Commission, scrapping over industrial actions.

It’s hard to imagine that feeling of collaboration exists after the manner of redundancies of the last two days. Picking off workers from the shop floor, packing them on buses, taking them to a run-down wedding reception centre to give them their marching orders – it’s an ugly, ugly look.

But clearly Toyota wasn’t worried about its reputation here. These redundancies were about drawing a line in the sand and making it clear that the company simply cannot afford to bow to union pressure.

Calling for voluntary redundancies would have been a simple way to get rid of 350 staff – and one approved by the union, the Australian Manufacturing Workers Union – but Toyota would have known that these first people to leave in these situations are the ones you want to keep: the workers who will get new jobs fastest and payout to boot.

By selecting the workers to be made redundant using an assessment criteria – which included skills, safety record and adherence to Toyota’s corporate culture – Toyota is telling the world that it can no longer afford to carry underperformers. The state of the Australian economy, the strong currency and the fragile global environment just don’t allow it.

Toyota’s tactics have been smart.

It has protected itself from unfair dismissal claims by ensuring these are genuine redundancies – under the Fair Work Act, anyone made redundant cannot lodge an unfair dismissal claim.

Toyota also appears to believe it has protected itself from adverse action claims – where, for example, an employee could bring a claim on the basis that they have been discriminated against on the basis of union membership, or because they previously made a complaint to management – by using the assessment criteria.

Presumably, if a former shop steward claims they were made redundant because of their union involvement, Toyota will point to the assessment criteria and say it has documented evidence of the reasoning behind the redundancy.

Will this stand up? Clearly Toyota and its lawyer Freehills thinks it will. The fact that the unions appear to have been involved in some negotiations over the assessment criteria (Toyota says the union agreed to the criteria, the union says it didn’t) probably counts in the car marker’s favour.

Toyota’s aggressive tactics in these redundancies can be seen in the wider context of big employers flexing their muscles in stoushes with the unions. It can be seen as part of a story that includes BHP’s decision to close its Norwich Park mine (partly, it has been reported, due to labour issues) and Qantas’ on-going unions battles.

In an opinion piece in the Australian Financial Review today, Freehills partner Anthony Wood, who has been advising Toyota, addresses this broader context with something of a rallying cry.

“The Fair Work Act empowers unions to exert enormous pressure on employers in support of claims in enterprise bargaining. But if employers can follow Toyota’s example and hold firm, their businesses can prosper.”

But it’s a delicate balance.

Toyota needs the flexibility to manage its business, particularly in times when its competitiveness is under threat. Clearly, it feels it needs to take a stand – fight back even – against what many employers believe is the way the Fair Work Act has titled the power balance in favour of the unions.

But the price it will pay for taking that stand will be heavy. It may take years to repair the damage done to its relationship with the unions and surely morale and the prized spirit of collaboration could be affected.

This Us against Them dynamic that appears to be returning to the Australian workplace is one of the worse impacts of the Fair Work regime.

Unions and employers have to share the blame for that – and we all need to realise how damaging it is for an economy in the grip of structural change.

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James Thomson

James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review's companies & markets editor, and a former BRW editor.

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