How the federal government’s IR reforms will affect SME supply chains

The Coalition’s industrial relations omnibus bill, introduced on Wednesday, will allow the Fair Work Commission to approve two-year enterprise agreements that do not meet the better off overall test.

However, after criticism from Labor and the union movement, Attorney-General and Minister for Industrial Relations Christian Porter said he is “willing to consider any sensible amendments”.

Currently, the Fair Work Commission can approve enterprise agreements if they pass the better off overall test (BOOT), which ensures a worker is ‘better off’ under an agreement compared to the minimum conditions of an award.

The Morrison government’s industrial relations bill will allow the Fair Work Commission to approve two-year agreements even if they do not meet the full requirements of the BOOT. In such cases, the commission would consider the impact COVID-19 on businesses involved in an agreement.

The move has been slammed by Labor and the unions, which believe the bill will open the door to lower wages and worse conditions for workers.

In the current Fair Work Act, introduced by Labor in 2009, there is already a hardship exemption that allows the Fair Work Commission to approve agreements in certain circumstances if they do not comply with the BOOT.

Since 2009, the commission has approved 21 agreements that do not comply with the BOOT, according to The Australian Financial Review.

What does it mean for small businesses? 

COSBOA CEO Peter Strong says most small businesses rely on awards rather than enterprise agreements, so the impact of any changes to the BOOT will be indirect.

“The impact for small businesses will be on their supply chains,” Strong tells SmartCompany.

“So if a large supplier downsizes or cuts some of its production, that will impact upon the supply chain, including small businesses.”

What are the opposition and the unions saying? 

In the House of Representatives yesterday, Labor Opposition Leader Anthony Albanese asked the Morrison government how it would guarantee no worker would be worse off as a result of the changes to the BOOT.

Porter responded, and denied the legislation would result in lower wages.

“You can’t even manage a fear campaign at the moment, your leadership is so weak,” Porter said.

Unions have compared the proposals to the Howard government’s WorkChoices reforms, saying the bill is “dangerous and extreme”.

“WorkChoices allowed employers to cut wages, and this proposal will do that as well,” Australian Council of Trade Unions secretary Sally McManus said in a statement.

“When WorkChoices was introduced employers rushed out to cut wages, the same will happen if this law passes.

“Some workers are still stuck with WorkChoices pay cuts some 13 years later.”

McManus said changes to the BOOT were never raised during roundtable discussions, and that the union movement “will fight these proposals which will leave working people worse off”.

What’s the government saying?

The Morrison government’s industrial relations bill was drafted after discussions between the government, employer groups and unions, and focuses on enterprise agreements, award simplification, compliance and casuals.

As Labor and the unions continue to criticise the proposed changes to the BOOT, Porter has said the introduction of the bill is not the end of the consultation process.

A Senate committee is expected to examine the legislation over the coming months.

“This is an opportunity for further submissions to be made by all sides of the debate, and the government will be willing to consider any sensible amendments that pass the simple test of being good for job growth,” Porter said.