Change the rules – which ones? What businesses need to know about Labor’s employment policy
The Federal Election is less than two weeks away and the Australian Labor Party (Labor), has announced a robust and ambitious reform agenda. Within this reform agenda are key changes to the Australian Fair Work régime, and the question arises as to how will these changes impact Australian businesses if Labor is elected?
Unions have mounted a campaign to ‘Change the Rules’, but the amount of change to be implemented remains uncertain. This article examines Labor employment and industrial relations policies and provides some insight as to how Australian businesses may be impacted, should there be a change in government. It appears that businesses who are likely to be the most impacted, are those who engage migrant workers, have been impacted by penalty rates reform, and who operate in a feminised industry.
Labor has announced key changes to penalty rates, being the reversal of the changes which cut certain penalty rates, and legislation to prohibit future changes to penalty rates.
As the decision to cut penalty rates was made by the Fair Work Commission (FWC), it is likely that Labor’s changes to penalty rates will be implemented by legislative amendment to the Fair Work Act 2009 (Cth).
These changes will impact businesses in the service sectors recently subject to amendments to the penalty rate provisions in their relevant modern awards, including retail and hospitality.
Should Labor be elected, they have promised that these changes will implemented within the first 100 days of government, so businesses would need to ensure that their penalty rates were aligned with any legislative change.
Changing the Australian minimum wage to a “living wage” is an ambitious proposal that lacks policy clarity. Traditionally, the Australian minimum wage system is already based on the living wage decision provided in the Harvester judgement 1907. In this decision Higgins J declared that fair and reasonable wages for an unskilled male worker required a living wage sufficient to support a wife and three children. This differs from the definition of a minimum wage which is traditionally the minimum wage required for an individual. Therefore, it is unclear what Labor will actually change in substance, however, it is likely that it will be through an amendment to the annual wage review criteria.
As the Annual Wage Review 2019 is already underway, a transition to a ‘living wage’ is unlikely to occur until at least 2020. Therefore, this particular change is not something that Australian businesses need to be concerned with in the immediate future.
Labour hire is a popular short-term staffing option in many industries, particularly horticulture and manufacturing. Labor has revealed that they intend to mandate that labour hire employees are paid the same as their direct hire counterparts. Employers should note these changes and consider whether staffing needs are better fulfilled by labour hire arrangements, or by directly engaging staff.
Labor will legislate to ensure that all casual employees have the right to request conversion to permanent work after 12 months of full or part time engagement. Presently most if not all awards have casual conversion clauses, but non-award employees do not have the right to request casual conversion. Under Labor’s proposal, employees would now have the right to challenge an unreasonable refusal of such request by employers. Existing provisions for casual conversion are quite stringent so employers should ensure that they are compliant with modern award requirements when assessing a request to convert to permanent employment. Labor will also introduce a legislative definition of casual employment following consultation with key stakeholders.
The pay equity policy is perhaps the most robust reform agenda proposed by Labor in their employment and industrial relations policy agenda. Equal remuneration will be addressed by implementing pay equity as a central objective of the workplace relations system and by establishing a statutory ‘Equal Remuneration Principle’.
This will be accompanied by the creation of a Pay Equity Unit and a boost to FWC funding to conduct Pay Equity Reviews and order pay increases to feminised industries. Companies with more than 1000 employees will have mandatory reporting of their gender pay gaps and there will be a ban on pay secrecy clauses. It is unclear when this change will be implemented, but it will be significant. This will have an impact on large employers who will have to report pay inequity and employers in feminised industries such as child care, who will be subject to phased funding of pay increases.
Another robust policy agenda item is changes to temporary skilled migrant visas. Labor will increase the Temporary Skilled Migration Income Threshold for 457 visa holders (or similar visas), and limit non-monetary factors that contribute to the base salary such as accommodation. This will be accompanied by increased funding for a joint agency taskforce and the extension of existing FWO powers. There will be more stringent criteria for skills assessments and occupational licensing.
Labor has claimed that they will establish an independent labour market testing body to determine genuine skills needs. It is unclear if this will genuinely bridge a gap between employment, education and training, and immigration, three areas that are typically managed separately. Temporary skilled visas will be further restricted to genuine skills needs, and the cost of the visa will be increased. This indicates a crack down on the use of temporary migrant workers. This may pose difficulties for industries that have traditionally relied on migrant labour such as IT and aged care. Employers that heavily rely on skilled migrant workers should be proactive in their labour force planning.
The Labor policy agenda outlines plans to amend the legal test for sham contracting, limit the circumstances where enterprise agreements can be terminated, and increase the enforcement and penalties for the underpayment of wages. While these particular changes will only impact employers who are non-compliant, they do have the potential to create more administrative red tape for all employers.
Fair Work Commission
It is no secret that Labor has expressed disapproval at the Coalition Government’s rapid appointment of 20 FWC commissioners from an employer background. In response, Labor has signalled a merit-based appointment system alongside the previously mentioned establishment of a Pay Equity Unit. This may signal a significant overhaul of the FWC with the impact of such changes currently being unclear.
Analysis of the Labor policy agenda on employment suggests that the changes will be staggered, and with potentially significant impacts on Australian businesses. As always, with any legislative change, businesses should ensure that they remain informed and adjust to any legislative changes promptly.