Tony’s timid IR strategy – not much there for small business

The coalition’s industrial relations policy is likely to disappoint small business. AAP

Tony Abbott’s industrial relations strategy has received a less than rapturous response from both business and trade unions.

The Business Council of Australia and the Australian Industry Group have criticised it for being too timid and not going far enough to address their concerns for greater flexibility.

The peak small business group, the Australian Chamber of Commerce and Industry (ACCI) said small business owners would be disappointed because Australian Workplace Agreements (AWAs) were not being reintroduced and the current collective bargaining rules would remain.

For their part, unions fear the plan will revise the role of the Individual Flexibility Arrangements (IFAs), introduced by Labor to replace the highly contentious WorkChoices individual workplace agreements or AWAs.

The Coalition has gone to great lengths to demonstrate there will be no return to AWAs. Existing provisions to protect workers from abuse, known as the “Better Off Overall Test” (BOOT), will be retained.

Nevertheless, it will be a key battleground for the coming election.

What’s in it for small business?

The policy specifically targets small business concerns over red tape and the burden of rules and regulations. A key plank is a set of assistance programs designed to help the small business owner hire and manage employees.

These include a guidebook called “Your First Employee”, offering “simple, plain English” advice for small business employers from micro non-employing enterprises, about hiring staff. This will be supported by a dedicated small business helpline to be established within the Office of the Fair Work Ombudsman and tailored to the needs of small firms. There will also be a smartphone or tablet App providing real-time information and assistance on wages and conditions for employees.

There will also be provisions to grant immunity from prosecution by the Fair Work Ombudsman for small business owners who mistakenly breach the conditions of the Fair Work Act. The main caveat is the employer must have sought advice on such provisions from the Fair Work Ombudsman beforehand.

These proposals are certainly useful, particularly for those with little past experience in hiring and managing employees. However, there is already a good deal of information available via the Fair Work Commission and Fair Work Ombudsman that provides guidance to employers of this kind.

The Coalition’s policy courts small business - but how much is in it for them? AAP

Bullying, bargaining and unfair dismissal

The policy criticises the current approach that places bullying into the realm of IR under the Fair Work Act, rather than treating it as an occupation health and safety issue. It suggests the system has been abused by unions and seeks to address this by including alleged bullying by union officials of managers and employees.

There was nothing mentioned about unfair dismissal provisions which under the current system have special exemptions for businesses with fewer than 15 employees. Employees from such firms have no right to make unfair dismissal claims within their first year of employment, while those from larger firms can claim after only six months.

Flexibility and the spectre of WorkChoices

The opposition’s plan to amend IFAs by removing the current restrictions limiting their use in the presence of an enterprise agreement is potentially the biggest change, as unions have been accused of misusing these provisions.

This part of the policy has attracted the most criticism from business groups, which have pushed for more radical changes.

Yet the plan will give employees more choice, reduce union influence and have no downside impact. This last point will be guaranteed with the requirement that IFAs will remain optional and must pass the BOOT provisions already in the Fair Work Act.

The current IFA system works within the context of the modern industrial awards and enterprise agreements system, which are essentially collective in nature.

The central plank of WorkChoices, individual workplace agreements, will not return under a coalition government, despite support from business groups. AAP

Under the Fair Work Regulations 2009, all modern awards and enterprise agreements must have a flexibility term allowing employers and employees to vary conditions to meet the genuine needs of both parties, say for flexible working hours for parents and carers.

The IFA is treated like an award or enterprise agreement under the law, and can be negotiated at any time once employment commences.

Under the BOOT provisions employers must not disadvantage the employee as a result of the IFA. Flexibility within the current IFA system is only permitted around working hours, overtime and penalty rates, allowances and leave loadings where a modern award is in place.

For enterprise agreements, the IFAs only apply to terms and conditions already set out in the agreement’s flexibility terms. If these terms state any terms can be varied, then there is little to restrict further discussions. However, if the agreement restricts further variation to only a specific set of terms, the IFAs are limited to these.

Excluded from IFAs relating to enterprise agreements are conditions that might discriminate against employees, introduce objectionable terms, alter the unfair dismissal provisions of the Fair Work Act, limit industrial action, union right of entry entitlements or override the occupational health and safety laws. They can include matters relating to the relationship between the employer and the union.

Put the politics aside

It is probably too much to ask for our politicians to put aside ideological crusades for a more efficient and equitable IR system. Much of the thrust of Abbott’s IR policy seems aimed at further eroding the power and influence of the trade unions. At the end of the day, however, it doesn’t really offer much at all to small businesses.

Most small businesses are not overly unionised and many rely on industrial awards as their mechanism for setting employee wages and conditions. I referred in an earlier article to a report from Fair Work Australia indicating around 13% of small firms were award-reliant. Most of these were likely to suffer from lower productivity, profitabiliy and survival rates.

The pattern emerging from this research was that firms commenced using only awards, then moved towards non-awards or a combination of award and non-award arrangements as they grew. However, the lack of reliable data made it difficult to draw any firm conclusions over causality.

While the Coalition’s proposed changes to the way IFAs are used within the IR system is likely to generate a heated political debate in the run up to the election, it is doubtful that they will have much of an impact on small business.

What is needed is a review of the industrial awards system and action to streamline what is essentially a complex environment for most small business owners, particularly the majority who operate micro enterprises with fewer than five employees.