In terms of industrial relations (IR) policy, it continues to be a case of all quiet on the Opposition front ahead of next year’s Federal Election.

Traditionally, IR has provided a fertile battleground for an ideological war between the vastly different standpoints of the Labor and Liberal parties.

It doesn’t seem to be the case this time around.

IR remains a sensitive issue for the opposition following its 2007 election defeat. Many believe Kevin Rudd’s success in that election was largely down to the massive campaign waged against John Howard’s Work Choices.

Its replacement, Labor’s Fair Work Act (FWA), continues to be criticised for failing to promote productivity and flexibility, with critics saying it has gone too far in providing union bosses with more power.

The reason IR is unlikely to play an important role in the next election is that the Tony Abbott-led coalition is refusing to play its hand. Labor’s position has been crystal clear for a quite a while by virtue of its legislation.

“IR has been a battleground at every Federal Election I can remember,” says Tony Wood, employment partner in Herbert Smith Freehills’ Melbourne office. “However, the current Opposition prefers to neutralise the subject and take the heat out of it.

“If we are to believe pronouncements made by their leader (Abbot), I don’t anticipate any wide-ranging changes,” adds Wood.

Balancing act

According to Wood, the Coalition could look to explore the potential for greater agreements with individuals and possibly try to restore a bit more balance on industrial action.

He says there is a lot of pressure from employers to get greater flexibility in the legislation, adding that, “there are particular concerns at many aspects of the FWA in respect to bargaining”.

“Industrial action has tipped the balance too far in favour of unions against individual employees; I think that’s something where there’ll be pressure on the Coalition side to make changes,” he says.

Alice DeBoos, workplace relations partner at Middletons, says the Coalition will try to show that the FWA is not working ahead of the election, but have failed thus far to produce any alternative solution or proposal.

“With the Opposition yet to set out any clear IR policy, it’s hard to see how it will play as big a role as it has in the past,” she says, before adding, “When you’re not announcing polices that contradict the Government then it’s a bit hard to run on it as an election issue.”

DeBoos believes the Opposition is probably “scared of a workplace relations policy”, because large sections of the business sector are calling for a return to something similar to Work Choices.

“It [the Opposition] doesn’t want to announce its going there because they see it as a weakness,” she says.
Last month, in an off-the-record speech to a forum, former prime minister John Howard suggested that individual contracts and unfair dismissal should be examined by Abbott.

The Australian Financial Review reported that Howard told attendees that Abbott should look at measures to change the current Fair Work legislation.               

“There is no reason why this country should not go back to the workplace system we had between 1996 and 2005 where you had individual contracts,” said Howard.  

Abbott has since distanced himself from Howard’s comments, saying that “there’s no going back to the past ... we want the Fair Work Act to work better”, but that it needed to be made more workable.

On ABC’s Lateline, workplace relations minister Bill Shorten remarked that it was “time for Mr Abbott to bring it on, to bring on the workplace relations debate that we have to have”.

Wood says he doesn’t believe an Abbott-led government would try to dismantle the Act should the Coalition win the election.

“Although there will be pressure to make changes in government, the Opposition has in many respects been quite conservative in its statements that it doesn’t intend to make wholesale changes to the Act,” he says. “It’s very cautious about overstepping the mark with its Work Choices reforms.”

Under review

The Government is currently considering 53 recommendations to the Fair Work Act put forward by an independent review panel.

Wood believes there are some “common sense procedural improvements” in the recommendations, while DeBoos says that while some are “very smart”, the Government has just “tinkered around the edges rather then offered up something that really goes to some of the fundamental problems with the Act”.

Both Wood and DeBoos say that what’s not included in the review is more significant then what is, and it represents a missed opportunity by Government.

“The Act wasn’t reviewed with respect to achieving productivity enhancements in collective bargaining,” says Wood.

“The Act wasn’t reviewed to consider the efficacy of the awards system and its interaction with bargaining, and the

Act wasn’t reviewed to consider whether there should be changes to the mechanisms for the individual employees to reach agreements with employers in circumstances where that may conflict with collective bargaining outcomes.”

Wood believes these are very important aspects that are certainly worthy of further review and consideration.
DeBoos agrees.

She says that the biggest complaint from Middletons’ clients is about the way in which the Act operates around the bargaining framework, such as its provisions and the role of Fair Work Australia, particularly its powers in relation to bargaining.

“There is a lot of disgruntlement among employers, particularly employers who are involved in IR who have heavily unionised workforces,” says DeBoos, “mainly frustration around the bargaining process”.

Business leaders are urging the Government to use its response to the FWA review to boost flexibility and promote productivity.

The Australian Industry Group analysis of the review rejected 24 of its 53 recommendations, with CEO Innes Willox telling Business Spectator: “We were against them, totally against them, because they are productivity blockers and what we need is to improve our productivity.”

Terms and conditions

One recommendation by the panel that is making headlines is the amendment that would change the “transfer of business” provisions in the Act.

The Government wants to protect state public service entitlements where a state government outsources work or sells assets to private sector employers.

The amendment reads: “When employees of their own initiative seek to change to related entities they will be subject to the same terms and conditions of employment provided by the new employer.”

 The “transfer of business” provisions replaced the old “transmission of business” provisions following the last election; with critics of the former saying it favours the protectionist leanings of trade unions.

“Employers will not be overly concerned; however it’s clear that any more changes in this respect will create regulation,” says Wood. He adds that the extent of re-regulation of employer’s prerogative has probably been the primary concern expressed by employers on numerous aspects of the Act.

“In my view it will continue to exasperate those concerns.”

DeBoos says the amendment will be “a nightmare” and doesn’t make logical sense, but that it highlights one of the major arguments being debated in IR at the moment.

“What the Government seems to be suggesting is that when you outsource people you have to pay conditions no less favourable … now that flies in the face of the ability of business to manage your workforce flexibly,” says DeBoos.

“It’s exactly what the biggest argument in IR is at the moment, which is about a ‘contractor’s clause’. All the unions are asking to be included into price agreements which say that if you employ contractors to do work that your employees could be doing, or did in the past, you have to pay those people terms and conditions no less favourable then your employees.”

Neither DeBoos nor Wood agrees with employers that the FWA is pro-union.

DeBoos says the Act sits somewhere in the middle between pro-union and pro-employer, saying it’s not as far to the right as Work Choices and that it has certainly swung the pendulum back toward employees and unions, but it couldn’t be described as a pro-union act in its entirety.

“There are certain aspects of it where there is genuine criticism that it give unions too much power,” she says.

Wood says employers have expressed the view that the balance has been removed by pushing too many additional rights conferred upon collective union action.