Time to bring award system into 21st century

Australia needs an award system that looks after employees but also does away with red tape and excessive union interference in the workplace. Innes Willox writes.

It is about time that award provisions reflect the needs of 21st century workplaces. The important issue of annual leave is one such area which desperately needs to be more flexible for both employers and employees.

The Australian Industry Group (Ai Group) has filed proposed new model annual leave clauses for all awards in the Fair Work Commission’s Annual Leave Common Issues proceedings which is part for the Commission’s 4 Yearly Review of Modern Awards.

The model clauses which Ai Group is seeking to have included in all modern awards, cover:

  • The implementation of a “purchased leave” arrangement by agreement between an employee and the employer. Under “purchased leave” arrangements, an employee has additional annual leave in a year (e.g. 8 weeks) with a corresponding reduction in salary, either for the period of the annual leave – e.g. half pay for twice the annual leave; or for the period of the year when the employee is not on annual leave.
  • The cashing out of annual leave by agreement between an employee and the employer, provided that at least four weeks’ of accrued leave is maintained;
  • The granting of annual leave in advance by agreement between an employee and the employer, with the employer having the ability to deduct payment for any leave granted in advance from money owed on termination;
  • The right of an employer to direct an employee to take annual leave where the employee’s accrued leave is excessive; and
  • The right of an employer to require employees to take annual leave during a close-down.

Ai Group’s proposals preserve a high level of protection for employees, while ensuring that employees and employers have access to flexible arrangements to meet their personal and enterprise circumstances.

Each of these matters is of significant importance in every industry and for all occupations. Therefore, it is sensible for each of the matters to be dealt with as common issues during the 4 Yearly Review.

It would not be an effective use of the FWC’s or industrial parties’ resources, for these same matters to be dealt with award by award, with the same arguments heard up to 122 times.

As our recent CEO regulation report found, industrial relations red tape – including restrictions on flexibility – continues to hamper business growth. In fact, of 83% of CEOs reporting that the regulatory burden surrounding IR as well as OHS is expected to place the most burden on their business in 2014.

According to the report, union right of entry to workplaces and employees’ claims of unfair dismissal are on the rise and need urgent attention.  Based on quarterly reports published by the Fair Work Commission (FWC, formerly Fair Work Australia), there was an average of almost 400 entry permits for union officials issued in each quarter up to September 2013. Quarterly data from the Fair Work Commission show there has been a steady increase in applications to the Commission to hear unfair dismissal disputes, from around 430 in the September quarter in 2010 to over 690 for the quarter ending September 2013. Both of these issues put an onerous burden on business and productivity.

While awards were largely simplified as part of the Award Modernisation process in 2008-2009, the reality is that many awards still contain restrictions on how employers are to employ and remunerate employees that are not in line with modern employment practices. For example, several awards do not provide for part time employment at all.

The Australian Industry Group strongly endorses the Federal Government’s submission to the Fair Work Commission’s Four Yearly Review of Modern Awards that modern awards need to support job creation and that the softening economic environment and labour market need to be carefully considered during the Review.