Fair Work Amendment Bill to increase workplace flexibility in exchange for penalty rate cuts

A Fair Work Amendment Bill tabled in Parliament yesterday will see employers able to trade penalty rates for increased flexibility, as foreshadowed last week.

The bill focuses particularly on Individual Flexibility Arrangements (IFA) and Right of Entry provisions, and the Coalition has been swift to ward off any suggestions by the opposition that it could signal a return to Work Choices.

As expected, the bill reflected the Coalition’s industrial relations election promises, a point emphasised by Employment Minister Eric Abetz.

Speaking to media last week, Abetz said the bill would give employers and employees greater scope to reach mutually beneficial outcomes.

“What we’ve seen unfortunately is enterprise agreements and awards trying to restrict the IFA regime,” Abetz says.

“It stifles the capacity of individual workers and businesses from being able to cooperate with their workforce, from being flexible to allow individuals to remain in the workplace, to be productive, to be able to work hours which suit them and their family life balance.”

The bill states that arrangements about when work is performed, overtime rates, penalty rate, allowances and leave loading conditions will able to be varied under IFAs, so long as it benefits the worker.

It also moves to add greater permanence to IFAs, which could see the unilateral cancellation of IFAs increased to 90-days’ notice, rather than the current 28 days.

Council of Small Business of Australia executive director Peter Strong told SmartCompany the changes show small business has been front-of-mind for Senator Abetz.

“It’s incredibly sensible. The penalty rates issue is huge,” Strong says.

“There are whole country towns closing down on Sundays because of the ridiculous level of penalty rates.”

Strong says penalty rates in principle are fine, but they’re too high.

“There is no return for business and they’re a disincentive to employ people,” he says.

“Flexibility in a small business can be difficult because we’re not paymasters and we don’t understand the specific legislations. But this could make it simpler, which is a good thing for employers and employees.”

Strong says this could signal further action on penalty rates, potentially by the Fair Work Commission.

“It’s reviewing wage rates this year and if common sense prevails in the commission, they will reduce penalty rates.”

Strong says given the recent job cuts announced by major companies such as Qantas and Toyota, small business will need to be a driving force of jobs growth.

“We’re the biggest group of employers. We’re the innovators. There will be some small businesses closing, but there will be others developing new processes, new products – we’ll build the economy as the big end of town goes through their restructuring.”

“If we have a good economy it will be on the back of small business,” he says.

The bill also aims to reduce union power, with legislative changes aimed to break bargaining deadlocks, stoping negotiations lasting months and months, and to limit unions’ ability to employ delay tactics, forcing employers into agreeing to higher wage conditions.

Australian Industry Group chief executive Innes Willox said in a statement the bill is an important step to implementing necessary changes to the Fair Work Act.

“The bill needs to be passed without delay and then followed up with further amendments to the Fair Work Act to implement a more flexible and productive workplace relations system. This is imperative given the cost and productivity pressures on business,” Willox says.

“Other more substantial changes are needed to the Fair Work Act to remove barriers to productivity and flexibility, including amendments to the bargaining laws, general protections and transfer of business provisions. These issues need to be addressed without delay.”