“Formula for failure”: Sweeping industrial relations reforms on the table for Labor

Small- and medium-sized employers may have to contend with sweeping changes to Australia’s industrial relations landscape if Labor wins the next election.

In a speech to the National Press Club yesterday, Shadow Industrial Relations Minister Brendan O’Connor said enterprise bargaining is failing to serve Australian workers and consideration is being given to ‘enhancing the role’ of multi-employer bargaining for the low-paid.

It comes amid calls from the Australian Council of Trade Unions (ACTU) for a return to industry-wide bargaining, which would effectively do away with the current enterprise bargaining framework.

O’Connor’s comments stop short of committing Labor to the union position, but he was nonetheless critical in his assessment of the status quo, including existing multi-employer bargaining provisions, which have never been used.

“There are huge proportions of the Labor market missing out on any decent outcomes,” O’Connor said.

“It’s going to get worse if we do nothing.”

O’Connor also confirmed Labor is considering including a right-to-strike provision for employees during multi-employer bargaining negotiations but also said Labor will consider simplifying the IR framework for SMEs.

“Despite what the Morrison government may say, there is no evidence that multi-employer bargaining leads to increased industrial disputation, let alone their hysterical forecast of economic doom,” he said.

EBAs in decline

O’Connor would not be drawn on more specific details about Labor’s multi-employer bargaining plans, including what sectors would be included in any possible scheme.

He did, however, make it clear Labor views changes to the industrial relations landscape as an important part of boosting Australia’s economic prospect, namely by tackling inequality.

Enterprise bargaining has been on the decline for a number of years, with recent figures revealing there were 5,000 less EBAs approved between 2015 and 2018 than in the three years prior.

The decline in active EBAs has been a source of frustration for both unions and employer groups, amid a flurry of high profile cases were employers such as Domino’s have decided to just revert to award conditions.

SME voices won’t be heard

But there is a concern a move to industry-wide bargaining system could increase rates of industrial action and see many smaller employers robbed of flexibility.

Athena Koelmeyer, managing director of Workplace Law, says SMEs are likely to be the loser if multi-employer bargaining is expanded or enhanced.

“We know what will happen if it comes to pass, and it’s the same thing that happens with modern award reviews, industry bodies and big employers take over and everyone else is forced to go along,” she tells SmartCompany.

“The voices that should be heard, the SMEs making the wheels turn … won’t have as much of a voice as they would have if someone approached them directly.”

Council of Small Businesses of Australia (COSBOA) chief executive Peter Strong says a move to multi-employer bargaining would be destructive for employers.

“It’s an absolute formula for failure,” he tells SmartCompany.

“[SMEs] won’t fall through the cracks, they won’t have a voice at all.”

Strong agrees the current industrial relations framework needs reform and says Labor understand the issues facing small businesses but is being pressured by “ideologues”.

“The problem is not them, the problem is are they going to be beholden to the unions, and are they going to do what the unions say,” he says.

Labor to consider simplifying system for SMEs 

Both Strong and Koelmeyer agree multi-employer bargaining would add even more complexity to the industrial relations system for small businesses.

This has been an area of concern for SME advocates, including Australian small business and family enterprise ombudsman Kate Carnell in recent months, particularly amid a crackdown on Fair Work Act non-compliance.

O’Connor said yesterday he understands most non-compliance is inadvertent.

“A lot of failures to comply is not intentional, it’s inadvertent, but we need to certainly fix that up,” he said.

O’Connor said what’s good for low-paid workers is good for small business.

“The idea wage cuts in a real sense in any way helps sellers of goods and services, small businesses, I think is a myth,” he said.

Nevertheless, Labor will consider simplifications to the industrial relations systems to assist small businesses but has not committed to detailing its full policy platform before the election.

“We can look at ways to make it easier for small businesses to navigate, whether it’s the taxation system or the industrial relations system,” O’Connor said.

“It doesn’t mean we want them to find an excuse to cut wages, but I do think we have to be mindful they don’t have the resources … to deal with complication.”

O’Connor said Labor will have “more to say” about small business policy in the new year.

Unions welcome comments

The consideration of multi-employer bargaining is one of a myriad of industrial relations reforms either being considered or already committed to by Labor, including reversing the Fair Work Commission’s Sunday penalty rate cut and cracking down on labour-hire firms.

The ACTU welcomed O’Connor’s comments yesterday but did not specifically mention industry-wide bargaining.

“Too many employers have found ways to use the current system to gain an unfair advantage, leaving working people trapped in insecure work with wages that do not keep up with the cost of living,” secretary Sally McManus said in a statement.

Australian Industry Group chief executive Innes Willox said the enterprise bargaining system has served Australia well over the last 25 years.

“There is no country in the world that has both an award system and an industry bargaining system. Australia’s modern award system provides a very comprehensive set of legally enforceable wage rates and conditions of employment at the industry level,” he said in a statement.

O’Connor was also asked about access to capital for SMEs yesterday, saying experts needed to be involved in addressing the issue

“It’s something we can examine,” O’Connor said.

“We have too many small-to-medium enterprises putting their house, getting a second mortgage, really spending to the hilt on their credit card,” he said.

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