Leaked draft for terms of reference of Fair Work Act review: SMEs reacts

Penalty rates, flexibility and pay conditions are on the agenda for the upcoming Productivity Commission review of the Fair Work Act, according to Fairfax Media.

A leaked draft terms of reference for the review revealed the broad scope of inquiry this morning, as Council of Small Business of Australia executive director Peter Strong called on the Productivity Commission to be practical, rather than ideological in its approach to workplace issues.

“The penalty rates issue is great, but it often gets tied up in ideology. It’s not about getting rid of penalty rates, the big word is actually practicality,” Strong told SmartCompany.

“I think the Productivity Commission will stay away from ideology and actually look at the impact on productivity.”

The wide-ranging review is also set to look at union militancy, the ability of the labour market to respond to economic conditions and the impact of current laws on unemployment.

Small Business Minister Bruce Billson told SmartCompany the review has been designed to “support the objectives of the nation in terms of the economy and employment opportunities”.

“It’s consistent with our election commitment and it will improve the incomes, livelihoods and employment opportunities for Australians and also the economy more generally.

“We will take the changes to the next election so the electorate can decide if they’re for the good of Australia.”

The review’s scope is pleasing to small business, but Australian Retailers Association executive director Russell Zimmerman told SmartCompany “it’s no surprise”.

“I don’t think it’s really anything different to what the government said prior to the election. There is no great surprise and we’ve always supported the government and the Productivity Commission in its review of the Fair Work Act,” he says.

“We will be looking at penalty rates and we’ll be seeking a reduction, particularly on Sunday.”

The impact of red tape will also be considered as part of the review, which aims to establish “fair and equitable pay and conditions for employees, including the maintenance of a relevant safety net”, according to Fairfax.

The terms of reference are yet to be finalised by Parliament. However, the leaked document revealed it would “maximise outcomes for Australian employers, employees and the economy, bearing in mind the need to ensure workers are protected, the need for business to grow, prosper and employ and the need to reduce unnecessary and excessive regulation”.

While penalty rates are an important issue for small business, neither Strong nor Zimmerman expect them to be completely removed.

“We don’t think at this point in time we need to have penalty rates abolished completely,” Zimmerman says.

However, he does believe lowering weekend rates will help boost employment.

“Some of our large retail chains are closing doors on Sundays and public holidays. While this happens no one is getting employed. Obviously this is a detriment to the Australian economy and we need to look at making things better, fairer and boosting productivity for the whole of Australia.”

Strong says the broad scope of the review is necessary to meet the needs of small business.

“When things get too wound up in one issue, reviews like this tend to lose their way,” he says.

“From a small business point of view, it’s not one thing which affects us, it’s several.”

Strong says flexibility and pay conditions are also important issues for small business.

“With the flexibility legislation, many of us liked the laws which were introduced under the previous government, but they’re too hard to understand. So if the government and the commission is looking at how to better communicate with small business that’s a good thing,” he says.

“Pay conditions are also important. In a small workplace none of us are pay masters… We need a system which is easy for both the employers and employees to understand. There needs to be no ambiguity.”

Employment Minister Eric Abetz confirmed to ABC Radio the review would be broad and thorough, but did not elaborate further.

“We’re not in a position to pre-empt what’s going to be in the terms of reference other than to say we did promise a comprehensive, broad review of laws,” he says.

However, opposition employment spokesman Brendan O’Connor told ABC Radio the scope of the review was “frightening”.

“This government has Work Choices in its DNA and it wants to return to reducing conditions of employment particularly for low and mid income earners,” he told ABC radio.

“We know now the true intent behind this government in terms of reforming the Fair Work Act.”

But Strong says the Productivity Commission has a strong track history.

“We’ll get the right hearing and the right recommendations will come out of it, so long as the focus is on practicality, not ideology.”

Originally the review was due to be launched on March 7, but earlier this week it was delayed until after the March 15 state elections in Tasmania and South Australia.