Pearls and Irritations

Fix the Institutions, the Fair Work Act and Casual Employment

Fix the Institutions

The institutions that regulate the labour market are no longer properly functional. Despite the high quality and impartial behaviour of some key people in the Fair Work Commission, it has (like other bodies such as the Administrative Appeals Tribunal) been damaged through a slew of partisan appointments. Interpretations of the Fair Work Act become more favourable to employers, making it barely legal for workers to undertake legal strike action. A significant number of workers are now outside the coverage of labour law and its associated institutions. The labour inspectorate fails to adequately enforce the minimum standards that should govern all employees’ work.

To start, I would abolish the Fair Work Commission and reconstitute it as a genuinely impartial institution. I’d call it something like the ‘Employment Relations Commission’. Appointments to this tribunal would be through an impartial process that would involve representatives from all parts of the labour market and both sides of politics. That bipartisan process would be established in a new law, not through administrative practice, so it could only be overturned by both houses of Parliament. Some people in the existing Commission would be appointed to this one, and some would not.

It would be no good just taking the existing body and making a series of new balanced appointments to it (that would just perpetuate the existing imbalance) or offsetting the current imbalance by making a swag of new appointments loaded the other way (that would just invite retaliation next time there was a change of government). A new body is needed.

Next, I would abolish the Fair Work Ombudsman and establish a new labour inspectorate with different accountabilities. Instead of being accountable to a Minister with a political agenda, this new inspectorate would be accountable to a board comprising representatives of the vulnerable groups that the inspectorate was meant to be protecting. That board in turn would answer to Parliament, not the Minister.

Sure, the inspectorate needs more resources and more powers. But these are of little use if under-utilised, because of problems of accountability. The careers of people in the inspectorate should not be driven by their ability to satisfy the political needs of the government of the day.

And I would create new institutions to reflect the wider remit that the Fair Work Act needs to have – as discussed below.

Fix the Fair Work Act

The Fair Work Act is rigged against workers and is one of the reasons that wages growth has been so low, despite a ‘tight’ labour market. This is partly because the interpretations that have been applied to it have increasingly gone against workers; but it’s also because of flaws in the drafting or in the ideas behind it.

It needs a thorough overhaul. This would include simplifying the procedures for workers wishing to take industrial action in support of a wage claim. Many countries have detailed industrial laws, yet none are as complex as Australia’s in such areas as secret ballots for strikes.

An overhaul would include ending the ability of employers to unilaterally terminate an enterprise agreement once the paper ‘expiry date’ had passed, enabling them to threaten to drop their workforce onto much weaker employment conditions.

And it would include enabling minimum conditions to be applied to workers who are not even defined as employees. Some are in sham arrangements imposed upon them, but most are contractors such as ‘gig economy’ workers, a number of whom like this mode of work. But this does not mean they are not entitled to, or don’t want, the protection of minimum standards. Workers whose labour is ultimately purchased by much more powerful corporations deserve and often demand protection, regardless of whether they are traditional employees or entrepreneurs in the new economy.

Doing this would likely require new institutions to be set up, either part of or separate from the reconstituted tribunal mentioned above. These bodies would receive submissions that helped them would work out whether and how to apply various national standards to non-standard workers.

Fix casual employment

Casual employment is a misnomer and a cover for something else.

The one thing that unites ‘casuals’ is that they have no leave entitlements. They are often not employed in any genuinely flexible way. They are better described as ‘leave-deprived employees’.

Their working arrangements are not in response to any employer’s need for labour that can be flexibly deployed over short periods in a variety of situations. That flexible use of casuals is actually quite rare. Instead, casuals are just stable, cheap, easily controlled, disposable labour. Not that employers often do dispose of that labour. It’s easier to just hang onto it. But the ability to cut hours down, or out, gives the employer substantial power over those employees.

The challenge is to find a way to overcome poor treatment while preserving the interests of this low paid group. Creating a ‘right to convert’ won’t prevent them from being dismissed before that right kicks in. Many may sensibly decide not to take their chances — the concept of ‘choice’ can be problematic when it is so constrained. And many leave-deprived workers become financially dependent on the casual loading anyway (if they get it — many don’t).

I would aim to eventually allow every employee to have access to paid annual leave, sick leave and other entitlements of ‘permanent’ employees, regardless of their status and (in the case of leave) proportionate to the duration of their job. They would also have access to protection against unfair dismissal.

Employees who have no guarantee of minimum weekly hours would still be paid a loading (an ‘unpredictability loading’). Existing leave-deprived workers could be protected by a ‘grandfathering’ clause, which would allow them to keep the current casual loading if that was their preference. In this way, the loading would shift from being a compensation for loss of entitlements and security, to being a genuine compensation for unpredictable hours.

Over time, the current casual loading would become less common and the unpredictability loading would take its place, for those people who really are employed for short and unpredictable periods. Work would be more secure. And almost everybody would have a right to a paid annual holiday.

Share and Enjoy !

SHARE TWEET SHARE COPY EMAIL PRINT