More flexibility is required in industrial awards to deliver mutual benefits for employees and employers through higher productivity and job creation, according to Business SA.
In a submission to the Productivity Commission’s Workplace Relations Framework Inquiry, South Australia’s peak business group argues that the existing workplace relations regime is unsuited to modern workplaces and is stifling economic growth.
“Business SA would strongly support a modern award system with the ability to bargain at the enterprise level, with flexibilities and productivity measures that are of mutual benefit to both employers and employees,” the submission says.
“A successful industrial relations system relies on the framework to be suitably adaptable to the enterprise level, and the centralised focus of the Fair Work Act 2009 hampers employers’ ability to manage their own workplace with its own particular requirements,” it says.
Business SA’s Director of Policy, Rick Cairney, said that in South Australia about 90 per cent of businesses are small and the ‘collective’ style of discussions or bargaining that occurs in larger enterprises is not suited to that environment.
“A small firm might only have five employees and the owner-manager will know the circumstances of each of those people making it much more effective to have an individual agreement between the parties,” Cairney told Business Insight.
Noting that both major political parties support the concept of an agreement reached between individual workers and their employer, Business SA recommends changes to the existing regime of Individual Flexibility Agreements (IFA).
“Whilst IFAs appeared to promise so much, in reality, due to restrictions, they have not proved to be a meaningful replacement for the flexibility provided by Australian Workplace Agreements and are rarely entered into,” Business SA says.
“Some of the restrictions in the Fair Work Act include; preventing employers from offering IFAs as a condition of employment, employees are able to cancel them by the giving of thirteen weeks’ notice and IFA’s only allow the award to be varied in five areas, not the whole award.
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“Few employers are prepared to make an IFA with an employee and pay a wage increase in return for certain flexibilities, when the employee can give thirteen weeks’ notice and cancel the agreement.”
Business SA recommends that elements of the Individual Transitional Employment Agreements (ITEA) that existed during the phase in of the new workplace relations system in 2009 could provide a foundation for a revamped IFA. The ITEAs contained standards for basic rates of pay and guaranteed casual loadings; hours of work; annual leave; personal leave; and unpaid parental leave.
“ITEAs included a fairness test which was conducted by a separate body…Business SA is supportive of a fairness test, along the lines of the current Better Off Overall Test (BOOT),” the submission says.
“A separate body from the Commission should be the main review panel by which agreements are assessed against the BOOT. In this way enterprise agreements can overcome their current failure to allow for flexibility and productivity to be governed at the workplace.”
The wide-ranging Business SA submission also comments on Productivity Commission’s five issues papers which include safety nets, the bargaining framework, employee protections and workplace relations issues.
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