Productivity Commission’s IR inquiry: Five things that will affect your business

The largest review of Australia’s workplace relations system in 30 years is well and truly underway, with the Productivity Commission yesterday accidentally leaking issues papers for its inquiry into the way employment laws operate across the country.

The issues paper was to be officially released today, but the document was inadvertently released to the public yesterday afternoon.

The federal opposition was quick to attack the wide scope of the review, with the shadow minister for employment and workplace relations, Brendan O’Connor, labelling the paper as “the blue print for Tony Abbott’s revival of WorkChoices”, but businesses groups of all sizes welcomed the chance to have their say on the way Australian workplaces operate.

Is this the blue print for Tony Abbott’s revival of Workchoices? https://t.co/Sctm7yBm2O #auspol

— Brendan O’Connor (@BOConnorMP) January 22, 2015

While the terms of reference for the inquiry were released in December, the issues paper provides more details about what will be on the discussion table. Here’s six items from the discussion paper SmartCompany believes could mean significant change for your business.

1. Penalty rates

Small business owners in the retail and hospitality sectors will be glad to hear penalty rates are among the many areas included in the Productivity Commission’s investigation.

In its issues paper, the commission describes the debate over penalty rates for weekend and holiday work as “polarised” between those who argue workers should be compensated for working at those times, and those who argue the “social rationale for regulated penalty rates has declined” as more Australians regularly work on weekends.

2. Minimum wage

The Productivity Commission has also put the minimum wage on the discussion table, along with other ‘safety net’ provisions for Australian workers.

Despite being part of the Australian workplace relations system for more than a century, the Productivity Commission says the minimum wage “remain[s] a persistently controversial issue”.  While the commission says there are equality-based arguments in favour of maintaining a federal minimum wage, it says increases to the minimum wage do make “lower-skilled, less experienced employees less attractive to employers”.

The current federal minimum wage is $16.87 per hour for adults, which is the equivalent of approximately $33,300 annually for a full-time employee.

3. Awards

A hot topic for all employers, the system of employment awards across the country, and the flexibility and efficiency of those awards, is also up for discussion. As is the role of the Fair Work Commission in setting awards.

While the commission says there has been a large reduction in the number of awards and wage classifications per award in recent years, as well as a decline in the number of employees with wages and conditions set exactly at the award, existing awards continue to play a role in the setting of enterprise agreements and in individual agreements that offer above award rates of pay.

4. National Employment Standards

The commission is also inviting submissions about the National Employment Standards contained in the Fair Work Act, including minimum requirements for access to leave, hours of work and termination and redundancy pay for Australian employees.

“These standards have social and safety net goals similar to those that underpin the minimum wage, and in some case there is an explicit acknowledgement that a condition has a wage equivalent, such as cashing out of paid annual leave in an award of enterprise agreement,” the commission said.

“Regardless, like minimum wages, there is a risk that they could impose a cost on employers that might exceed the marginal benefits of hiring some employees, with adverse implications for employment.”

5. Unfair dismissal and anti-bullying laws

Each week Australian employers appear before the Fair Work Commission fighting claims for unfair dismissal or workplace bullying and this is another area of the system the inquiry will put a microscope to.

While the commission acknowledges there are different views as to where the balance between protecting employee versus employer rights when it comes to unfair dismissal provisions, it said “there is emerging empirical analysis in Australia that unfair dismissal provisions have imposed modest, but not trivial, costs on employment and businesses, but had uncertain impacts on productivity”.

Likewise, the commission said there are concerns the broad anti-bullying provisions of the Fair Work Act are “confusing and complex” for both employers and employees, and while thousands of bullying claims were expected when the provisions came into effect in January 2014, this has yet to eventuate.