Award modernisation goes backwards

I was all in favor of award modernisation when the concept was first proposed.

There are many archaic awards in Australia, sometimes covering sections within industries. They need to be revamped and brought into the 21st century.

Winning a mandate to achieve this should not have been used by the Rudd Government to reduce flexibility and rip off employers.

Instead of having to pay double time on Sundays, penalty rates for casual staff to work weekends should have been abolished.

After all, the jobs are casual. The people work because they want to. If they don’t want to work on weekends, they won’t.

The National Retailers Association is understandably unhappy about the direction this is heading.

Here is the full text of the NRA’s media release, issued today:

MEDIA RELEASE

The National Retail Association (NRA) is Australia’s largest and most representative retail organisation with over 3000 members and affiliates located across all Australian states and territories. NRA’s constituency includes many retail take-away food and fast food franchisors and franchisees.

NRA’s Executive Director, Gary Black, says that “while todays decision by the Australian Industrial Relations Commission to phase in labour cost increases resulting from the award modernisation process will slow down the rate of increase in labour costs, it fails to answer the fundamental question about why there should be any labour cost increases at all.”

The AIRC decision follows last week’s announcement by the Deputy Prime Minister that the Government would not instruct the Australian Industrial Relations Commission to alter the proposed retail and fast food modern awards to ensure that increases in labour costs do not result.

The transitional decision confirming substantial labour cost increases, and the Deputy Prime Ministers refusal to intervene and prevent substantial labour cost increases, makes it clear that employers have been deceived over the award modernisation process.

When the process was commenced the Commission was given an explicit direction that an increase in employers’ labour costs could not result. The Commission has ignored the direction and the government refuses to act. The Government’s refusal to act effectively legitimises award modernisation outcomes producing substantial increases in labour costs an approach which appears to contrast with statements from the Prime Minister and others urging wage restraint and emphasising job preservation. Small business in particular is left confused and bewildered by the unfolding award modernisation saga and the response of government.

The Governments endorsement of AIRC decisions to award substantial labour cost increases is also discriminatory because when it foresaw the possibility that employees may be disadvantaged, the Government legislated to prevent employees from suffering reductions in pay. Despite this intervention the Government consistently refused to extend the same protection to employers.

In the circumstances unprecedented labour cost increases are now almost certain to be inflicted on many employers over a period when unemployment is rising and the Australian economy is experiencing recessionary conditions. Job opportunities for young people will be the major casualty as fast food employers and retailers curtail their hours of operation and try to limit the increase in labour costs.

While the transitional provisions will mitigate the impact of the labour cost increases they do not alter the fact that over the five year transitional period the labour costs of some fast food employers will be increased in total by amounts between 20% and 30% PLUS the annual general wage increases to be awarded by Fair Work Australia. Given that these latter increases will be in the order of 4% per annum, this means that these particular small businesses will be confronted with annual labour costs increases for the next five years of around 8% to 10% per annum.

The deception and the disadvantage inflicted on employers by the modernisation process is compounded by the fact that the modernisation legislation included provisions banning appeals. This prescription may have been legitimate if the award modernisation process was implemented in a way that ensured neither employer nor employee were disadvantaged. Within such non-controversial parameters it is accepted that an appeal mechanism would have been unnecessary.

Given the recent decisions of both Government and the AIRC, NRA believes that urgent consideration now be given to amending the legislation to allow for an appeal process to be instituted which will ensure that the modernisation exercise is completed in a way which complies with the principles of natural justice.

NRA will now proceed to file applications with the AIRC seeking variations to the modern retail and fast food awards. However appeals to Caesar from Caesar are unlikely to be productive.

The bottom line for retail, retail take-away and fast food employers is that they must, where possible, act urgently to implement workplace agreements to try to lock in current conditions of employment. Employers are urged to contact NRA’s Employment Law Division for more advice.

The tragedy and the travesty is that this avenue of escape (workplace agreements) is not available to many new fast food and retail businesses which were established after March 2006. These employers will be severely disadvantaged after July 1, 2010, when their wages bill will rise well beyond many of their competitors.

The further tragedy is that overwhelmingly the victims of the award modernisation exercise will be small business. This is so because most medium and large businesses have enterprise agreements in place or have the resources to implement agreements. Small business in most cases will not be sufficiently alert to the impending danger or will not have the resources or the know-how to implement agreements.

Report This Post