HR managers say labour costs soaring under Fair Work Act: Survey

The people charged with administering the Fair Work Act have mixed feelings about the legislation, although sentiment is souring, with human resources professionals reporting that labour costs have increased and the needs of small business are not being adequately addressed.

An annual survey of HR managers compiled by the Australian Human Resources Institute found that just under half (47%) believe the Fair Work Act would decrease an organisation’s willingness to take on new employees over the next three years.

The survey of 691 HR people across private and government bodies also found that 58% said their labour costs had risen. One third of the respondents had between 100 and 499 employees. Ten percent had between 50 and 99 employees, 5% had been 20 and 49, and 8% had fewer than 20.

The percentage of practitioners saying the unfair dismissal threshold has made it harder to make jobs redundant has also risen nine percentage points to 35%.

Australian Human Resources Institute national president Peter Wilson told SmartCompany this morning that the “net movement is negative as more people get to grips with the Act.”

Wilson says this is because HR professionals are finding the legislation “costly, bureaucratic and not easy to deal with”.

The problems arise from the heavy involvement of third parties such as trade unions and the tribunal, high administrative costs and long processes, he says.

Wilson says HR managers are “in-house” experts on the Act, and therefore best placed to state how it is working in practice.

The report found that complaints with the Act centred on:

• It is not considering the needs of small business.
• Reduced employer flexibility to hire casuals or vary the schedule of part-time hours.
• Overtime provisions, particularly in the health sector.
• The increased costs associated with complying with provisions.
• The increased prerogatives conferred on trade unions.
• An increase in vexatious unfair dismissal claims and adverse action claims.

Conversely, some respondents noted that the Act:

• Improved conditions within the workplace.
• Is a good compromise between the extremities of the Conciliation and Arbitration days and the WorkChoices days.
• Is a positive piece of legislation that needs some tinkering to reduce the right to take protection action, the effects of adverse action [and] take-away money in unfair dismissal claims.