Fair Work review needs grassroots perspective

Industrial relations will be back in focus in the coming days as the Qantas dispute heads to an inevitable conclusion – arbitration by the IR umpire, Fair Work Australia.

It was always going to end up like this because neither Qantas nor the unions want to give ground on the issue that lies at the heart of the battle – the airlines’ plans to move some of its operations offshore, to low cost Asian centres.

The unions want to try to get Qantas to promise not to shift operations offshore as part of a formal agreement; Qantas wants no such thing and is confident that Fair Work Australia will not impose such conditions on it in its eventual decision.

Qantas will lose something in the arbitration, to be sure. But if CEO Alan Joyce can come away from this whole mess without agreeing not to go offshore, he will see his high-risk strategy as resulting in a big victory.

It’s a fascinating battle, but for SMEs the lessons are actually fairly limited. Few SME employer groups would like to see any step back towards arbitrated IR outcomes, but this is clearly a special case. There are few SMEs that will pass the “national interest” test that allowed governments to intervene in this dispute.

Last Friday the Australian Chamber of Commerce and Industry held a meeting with 20 employer groups to try and work out the key issues from an SME perspective ahead of the Government’s review of the Fair Work regime, to be carried out next year by the Productivity Commission.

While the ACCI conceded that the laws have been in place for only a limited time, the meeting concluded that the Labor IR system had “increased trade union power, were impeding business efficiency, and were imposing higher costs and red tape on small business”.

Exactly how bad your business is being hit by Fair Work depends on the industry you are in, the level of union involvement in your business and your policies and procedures.

But the ACCI’s meeting did identify a few crucial “core” problems around “higher labour costs under awards, new adverse action and unfair dismissal litigation, and the compliance nightmare when Fair Work laws are added to other regulation”.

The feedback we’re getting is that adverse action is really the issue that is catching many SMEs out.

These regulation, which were a new feature of the Fair Work Act, prescribe a set of reasons for which “adverse action” cannot be taken against an employee, such as race, colour, creed, age, gender and union membership.

Sounds reasonable, but the definition of “adverse action” is actually quite broad and can include everything from dismissal to passing someone over for a promotion – basically anything that “alters the role” of an employee to their prejudice.

IR expert and SmartCompany correspondent Peter Vitale is one of many lawyers who has warned adverse action has become a sort of “catch all” for employees who have felt they have been hard done by.

And as Peter wrote a few months ago, there are few really crucial decisions that have made adverse action even harder for employers to understand.

One landmark decision, which has now been appealed to the High Court, involved a TAFE employee who used his employer’s email system to distribute an email advising employees that he had been informed that employees were being asked by management to falsify documentation relating to an accreditation audit process.

“The TAFE suspended the employee on the grounds that he should have reported the alleged misconduct to management before publishing the allegation in the workplace and that his email damaged the reputation of the employer,” Peter wrote.

But the TAFE employee, who was also a union delegate, took action against the TAFE saying that “the suspension constituted adverse action for the prohibited reason that he was engaging in union related activity”.

The employee won his case in the Federal Court and then the Full Court of the Federal Court, which found that it was not enough for the TAFE just to say they had taken action based on its policies and not the employee’s union status.

It was a decision that had Vitale calling for legislative reform.

“This approach leaves employers potentially facing an almost impossible task in defending adverse action claims. In effect, the reasons given for an employer’s action will always be coloured by the surrounding facts. The surrounding facts in a dispute of this nature, taken at face value, will almost always suggest that it is possible that a prohibited reason was activating the decision of the employer. The onus on the employer to prove that they did not act for a prohibited reason, if they cannot rely on evidence of actual intent, becomes almost impossible to discharge.”

The ACCI and other employer groups are right – these are the crucial issues that need to be reviewed. There are not many airlines in Australia, but there are awful lot of small and medium businesses that are being tripped up by these things every day.