Experts

Peter Strong: ACTU needs a reality check if they want to be trusted

- June 28, 2019 3 MIN READ

It is fair to say that the ACTU and the wider Union Movement in Australia are licking their wounds in the face of the recent re-election of the Morrison Coalition Government. There is no doubt the ACTU helped the coalition as enough people saw through the hyperbole of their ‘Change the Rules’ Campaign and instead voted for ‘no change’ and stability.

 But it does appear that the ACTU has learnt nothing from the result with the recent extraordinary and ideological attack on suggestions from Kate Carnell, the Australian Small Business and Family Enterprise Ombudsman (ASBFEO), that there was a need for some repair to the Small Business Fair Dismissal Code.

The ASFBEO isn’t the only one calling for these improvements to the code. Recent recommendations having been made by numerous reports including work completed by the Productivity Commission and the 2018 Billson Report which was prepared for the Fair Work Commission (FWC) itself.

Most notably, the changes being suggested are intended to bring the Code into line with its original intent, as articulated by the Gillard Labor Government when it was first introduced. So, we are talking about the operation of a triage system that was developed and introduced by a Federal Labor Government – not a Coalition Government – to protect small business owners against frivolous unfair dismissal claims.

Ms McManus’ claim that Ms Carnell’s suggestions would “let employers subvert the legal minimum standards for pay and conditions” and would “reduce protections against being fired and undermine working people’s rights” is nonsense and needs to be treated as such. The ACTU needs to remember the election is over and now is the time to confront facts not ideological fictions.

The statements also suggest that Ms McManus has no knowledge of the significant issues surrounding the current operation of the Small Business Fair Dismissal Code.

Given that the union movement represents less than 1 in 6 Australian workers in general and that its exposure to the small business environment is virtually non-existent, it is probably not surprising that they are unfamiliar with these issues. But the evidence of problems with the current operation of the Code is clear for all to see.

Figures published by the FWC indicates that 65 per cent of the Fair Dismissal Claims made in the first three months of this year were dismissed because they were either ‘legally invalid’ or because they failed the eligibility criteria. These figures were similar in 2018 (71 per cent) and 2017 (70 per cent).

This statistic also hides a far more insidious fact given that 95 per cent of the claims lodged with the FWC were resolved before proceeding to the Commission. This is because business people are choosing to pay out frivolous claims as they don’t trust the Fair Work Commission to administer the Small Business Unfair Dismissal Code as it was originally intended.

Perhaps most surprisingly, the ACTU has failed to see that there is a likely significant link between the current Fair Dismissal Code and underemployment. If small business owners are not confident in the operation of dismissal laws (and they aren’t), then they are more likely to employ people on a casual basis or not at all. So, improvement in the operation of the Small Business Fair Dismissal Code potentially creates more confidence to employ people on a permanent basis and reduce underemployment; which the ACTU has often highlighted as being one of its own goals.

And while we are talking about responses of the ACTU, it is also worthwhile reflecting on its stand on calls for changes to the Enterprise Bargaining System. Currently, it is impossible to satisfy the Better Off Overall Test (BOOT) which has to be applied to any Enterprise Agreement and this is preventing the implementation of new enterprise based arrangements.

As a result, many businesses have reverted to the rigid modern award which does not allow a business to realise productivity improvements or respond to the special needs of employees. More flexible workplaces and improved benefits will come with employers and employees embracing a meaningful Enterprise Bargaining process.

 And so, while the ACTU rightly identifies slow wage growth as an issue of broad community concern, they appear unwilling to join businesses in calling for an improvement in the enterprise bargaining system that can positively impact on business profitability and wage growth.

 We don’t want a war around workplaces, no one wins a war. We need to work together – businesses and unions – to make the industrial relations system simpler. Then the winners will be the business people who will be more confident about employing someone, and their employees who will have a better understanding of their employment conditions.

The union movement would also develop better trust with the Australian community, and currently, we are fifth lowest in the OECD when it comes to trust in unions. We all want our unions to be trusted, here is an opportunity.