THE FAIR WORK REVIEW PANEL
(The Fair Work Act 2009)
SUBMISSION
AUSTRALIAN MEAT INDUSTRY COUNCIL
February 2012
1
The Fair Work Review Panel, Submission, Australian Meat Industry Council February 2012
1.INTRODUCTION
Australian Meat Industry Council (AMIC)
i)AMIC is registered as an organisation pursuant to the provisions of the Fair Work (Registered Organisations) Act 2009. It has been registered as an organisation under federal legislation since 1928.
ii)AMIC represents the substantial majority of employers engaged in or in connection with all sectors of the meat industry across Australia. It is the peak meat industry body in Australia. The meat industry employs in excess of 70,000 persons in all states of Australia.
iii)All AMIC members, with the exception of entities such as sole trader/partnerships in Western Australia, are covered by the provisions of the Fair Work Act 2009 (the Act).
iv)AMIC represents some of the largest meat industry employers in the country with thousands of employees all the way down to many hundreds of entities that come within the definition of a ‘small business’ employer.
v)AMIC made submissions in the lead-up to the commencement of the Act.
vi)AMIC was also heavily involved in the stages of the award modernisation process undertaken by the then Australian Industrial Relations Commission (AIRC) following the legislative request of the Minister pursuant to section 576A of the Workplace Relations Act 1996. Arising out of this process, the Modern Meat Industry Award 2010 was handed down. The award coverage includes all ancillary functions of meat establishments.
This submission
i)AMIC has drawn on the views of membership in the preparation of this submission. The AMIC submission is also based upon experiences representing members.
ii)It is not our intention to canvass all of the 69 questions raised in attachment B to the Fair Work Act Review Background Paper.
iii)We do note from public statements that other employer bodies will be debating many of the questions from the Background Paper. While we would no doubt agree with many of the general submissions of other employer bodies AMIC wishes to limit the submission to some of the main issues relevant to AMIC members.
2.OVERVIEW
General observations
i)Over the last fifteen years there have been significant changes in federal workplace legislation. The cumulative effect of the changes has been the most significant when compared to the period from federation to 1996. The implementation of the Act was yet another layer of significant change.
ii)AMIC entities, never before regulated federally, were roped into the system from 2007 (under WorkChoices) and others in 2010 (under the Act). For the latter AMIC members, the change has mostly come with increased costs and/or additional regulation.
iii)There is little doubt that the Act has given rise to much litigation before tribunals and the courts. The scope and width of the Act has presented interested parties with many avenues to advance agendas that were previously not fully unavailable. We refer mainly to unions.
(iv)It is little wonder the Act has presented legal firms with increased workload with IR practitioners publicly stating they have never been busier representing clients.
(v)In sifting through the breadth of the Act and tribunal and court decisions it seems difficult to conclude that the 2009 system is properly balanced between unions, employees and employers. The Act has substantially increased the position on unions. Their influence under the Act far outweighs the level of their presence across industry. The direct experience of AMIC and feedback from members supports this conclusion.
(vi)In respect of the comments of the previous paragraph, we can hear loudly the other side of the debate namely - if it is not unions where else can employees turn for representation and support? The comment may be somewhat true but that is not the issue we raise here. It is a question of balance of rights and obligations of employees, employers and unions under the Act.
(vii)The Act created core provisions such as NES, Modern Awards, enterprise-level collective agreements and good faith bargaining provisions. Has the Act largely met its objectives? The answer is that it probably has met the objectives. The answer is a quantitative one rather than qualitative.
(vii)One can say with some certainty, that the Act is reasonably simple and less complex than the predecessor, more understandable in many respects.
(viii)Nevertheless, problems continue for AMIC members with many provisions of the Act that require attention.
General concerns to AMIC members
i)Before dealing with specific issues from the Act, we outline some general serious areas of concern.
(ii)We commented earlier on the diversity of AMIC membership, some with many thousands of employees down to hundreds with a handful. Each group confront different workplace issues.
(iii)But there is one common issue amongst everyone, from some of the larger enterprises down to the smallest. It is that the federal system in place must be capable of returning workplace flexibility at critical points. It is paramount that the core provisions allow this flexibility.
(iv)There is the large meat retail/wholesale sector that effectively operates seven (7) days per week in the major cities and surrounds and in other key geographical areas where trading hours are mostly unrestricted. The retail/wholesale sector of the meat industry in these geographical areas is dependant upon wide ranging flexible work arrangements. The conclusions of the Productivity Commission Report of 4 November 2011 into the retail industry are relevant to the meat retail/wholesale sector.
(v)If we turn to enterprises that have years of experience with enterprise agreement negotiations and ratifying agreements before the operation of the Act, flexibility and productivity offsets appear to have stalled since the introduction of the Act. It is true there may exist any number of reasons but in many of the periodic negotiations taking place,we hear that union money claims are on the table with scant regardin the bargaining process given to improvements in workplace flexibility or productivity.
(vi)Many of the export meat industry companies are suffering. We refer in particular those in the meat processing and meat manufacturing sectors as defined under the modern meat award. They are at a major cost disadvantage compared to overseas competitors. Labour costs for these enterprises, relative to other direct and indirect costs, rank near the top of the ‘cost’ tree. The only way to offset this uncompetitive advantage is through continual productivity improvements and greater workplace flexibility. These meat industry exporters have been economically tested all through 2010/2011 with shortage of stock and unfavourable market conditions. In some cases there has been no alternative but to shut down shifts.
(vii)Then there are core bargaining provisions. The Act came with new agreement making arrangements for parties. Non-union agreements gone, statutory individual agreements gone, new bargaining procedures, so-called good faith bargaining rules, new agreement content, new ratifying procedures (with nothing about productivity in the filing process). All of this, in varying degrees, uplifting unions to higher positions of dominance.
(viii)There are situations, under the Act, where harmonious and productive enterprises are disturbed through union entry into the workplace and the demand to bargain. Unions with perhaps a mere one or two members or a sprinkling of financial or unfinancial members in a workplace seem intent in pushing demands thereby disturbing a relatively peaceful work environment. Valuable time and resources are wasted as the employer (and in some cases employees) face the full brunt of union bargaining reaction.
(ix)Right of entry provisions are being utilised not to truly participate in discussions with employees who wish to have discussions because the union has not visited some sites for up to 20 years. The reason is to drive a wedge throughdecades of best practice relationships between employer and employees. How do we know? Because of the number of right of entry disputes involving AMIC members, some of which led to matters being arbitrated.
(x)Why should employers/employees find themselves in this situation when employees are contented with workplace arrangements? In the experience of AMIC in these situations, the right of entry provisions as presently drafted result in unnecessary confrontation.
(xi)This leads one to the modern awards. AMIC, unlike many other employer bodies, was reasonably content with the Modern Meat Industry Award 2010. During the process of the making of the award, AMIC was attacked by many unions seeking to carve up (mainly) ancillary segments of the meat industry like ‘rampaging dogs’ to suit their vested interests and against the efficiency interests of the meat industry employers. The AIRC, to its credit and impartiality, decided otherwise and placed a fence around the meat industry.
(xii)The making of modern awards was supposed to be cost neutral but it was an impossibledemand for the AIRC to meet. Many AMIC members, and we come back to ‘small business’, have suffered unnecessary cost increases and will do so to 2014 because of transitional arrangements and costs associated with other regulatory parts of the Act. Many of these smaller members are award reliant like most ‘small business’ so the flexibility has to be found in the modern award and the Act. The reliance on the award for ‘small business’ AMIC members has been noted in tribunal decisions over a long period.
(xiii)Some employer bodies are already publicly agitating for one industry award for all employers or a number much less than the present modern award number. Such an outcome would be a disaster for the bulk of employers in the meat industry and we suspect for most industries. It has been difficult enough reducing 70 meat awards over a period of 14 years into the present one award.
(xiv)Having made the comment that AMIC is reasonably content with the modern meat industry award is not to run away from the fact that additional improvements are needed in the modern award system.
(xv)FWA must be presented with ample powers to decide on the proper model flexible clauses to be inserted into all modern awards. This model clause should also be compulsory for Enterprise Agreements as a safeguard (presently, the award model clause is limited to a mere 5 items and is at the behest of the farcical attitudes of unions to flexibility clauses in agreement bargaining which needs to be addressed).
(xvi)Full unfair dismissal rights have, more or less, been restored and claims have increased in number under the Fair Work Act. AMIC members are regularly involved in the ‘pay and go away’ cash cow system during conciliation. The system needs to provide for greater disincentives to commencing actions especially for small business. Some employers now find themselves under threat of ‘adverse action’ claims as an alternative to unfair dismissal claims.
3.AMIC KEY ISSUES FOR CONSIDERATION
We turn to some specific issues for consideration concerning AMIC members.
National Employment Standards (NES)
By and large, AMIC is of the view that the NES is reasonable.
Question 10poses the issue of NES dealt with on a state-by-state basis in comparison to one federal code. The latter is preferable.
The NES is enshrined in legislation and modern awards and enterprise agreements and flexibility provisions are subject to NES. Because NES applies to all employees under the federal system, drafting of the NES has to be clear and unambiguous.
AMIC raises the following NES matters:
(i)Hours
There is some confusion amongst employers and award/agreement free employees. Salaried staff, by agreement, usually work hours in excess of 38 per week or an average of 38 per week and receive compensation accordingly.
Section 20 prescribes the ordinary hours for such award/agreement free employees. Section 64 provides for the averaging of hours. There appears no reason to limit the averaging to 26 weeks as in s.64. Averaging should be allowed over the whole of the employment year as was the situation under previous legislation.
(ii)Annual leave - Annual leave loading
Many modern awards provide for non-payment or only partial payment of annual leave loading leave upon payment of any accrued leave on the termination of employment. The Modern Meat Industry Award is one such instrument.
Section 90(2) of the Act – reproduced below - seems inconsistent with many of the present modern award provisions including the modern meat industry award.
“Section 90 - Payment for annual leave
. . . .(2) If, when the employment of an employee ends, the employee has a period of untaken paid annual leave, the employer must pay the employee the amount that would have been payable to the employee had the employee taken that period of leave.”
Obviously this issue will be raised during the modern award review process but this anomaly needs to be rectified. The anomaly could never have been intended or if intended is grossly unfair and needs rectification.
As far as we can ascertain, no federal industrial legislation since the annual leave loading test case has ever prescribed payment of annual leave loading on termination nor made any mention of annual leave loading. It was always an award or agreement provision.
(iii)Public holidays
There remains confusion in this area and it concerns s.116. The note tos.116clarifies some areas but further clarity is needed. Why cannot s.116 contain the simple message such that ‘where the public holiday does not involve a person’s ordinary hours or the person is not rostered to work then the person is not to be compensated for the public holiday’?
(iv)Long service leave
No recommendations should be made with respect to this NES subject until full discussion about a uniform code is in the public arena and fully debated. Background Papers need to be developed. It is a complex issue.
Modern Awards
A review of the 122 modern awards is scheduled in the first half of 2012 and parties are now able to make submissions to FWA. The tribunal however, is restricted by the Act and yet here we are dealing with the Act to which FWA is subject in any modern award review.
We repeat some of the problems raised by AMIC earlier in the submission:
- FWA must be presented with proper powers to decide on the proper model flexible clauses to be inserted into all modern awards;
- For many AMIC members who are award reliant there was little gain in flexibility relief/benefit for them in the making of the Modern Meat Industry Award 2010;
- The making of modern awards was supposed to be cost neutral but it was not. AMIC members, especially those defined as a ‘small business’, have suffered cost increases and will do so at least until 2014 because of transitional arrangements and costs associated with the NES.
Industrial Action
AMIC members that have, historically, not been party to enterprise agreements are finding themselves dragged to the negotiating table under the threat of protected industrial action irrespective of operating a harmonious workplace. Protected action can take place prior to bargaining even taking place.
Where industrial action is taking place, it is possible for FWA to stop the action. It appears difficult for individual employers to meet with success in applications having regard to the legislative tests imposed: s.423 to s.426. We note the cases of FWA where direct party applications to stop industrial were denied even though the losses were in the order of the millions of dollars.
Primarily, AMIC is concerned in the area of third party rights where we submit the Act should be reviewed. This involves ss.423/426 of the Act.
AMIC ‘export processing establishment’ members found themselves in 2011 indirectly involved in a CPSU bargaining dispute. A brief summary is as follows:
- under the Export Control Act 1982 (Cth.) it is obligatory for the Commonwealth to provide meat inspection facilities to export processing plants;
- in 2011, the relevant public sector union was involved in organising protected action and the meat inspection area was but one area the subject of protected action;
- it was not the employer (the Commonwealth) suffering as a result of this protected action but the meat processing establishments because without meat inspection facilities, processing is halted instantly and cannot proceed;
- if processing is halted, planned production is lost and processing employees are idle or need to be stood down and this brings into play the terms of any award or agreement that is operating at establishments;
- the plant is idle and potentially costs the third parties considerable money and so the meat processing establishments suffer while negotiations occur between the bargaining parties in the midst of protected action;
- the industrial action that occurred varied from morning and afternoon, from day to day and there was no requirement to provide notice to the third parties;
- meat establishments were placed in a situation of staff turning up for work very early in the morning to plan for the day’s production and did not know whether production would or could commence.
We noted above thesuspension/termination tests are difficult to meet having regard to some FWA decisions under the Act. FWA decisions dealing with s.426 give cause for concern.