Federal election 

We are due a federal election where the government will be seeking a mandate to change the Fair Work Act 2009. 

It is our expectation the federal government is unlikely to make any fundamental changes after the election to the current workplace relations system, despite the recommendations made by the Productivity Commission as part of its inquiry this year. Our view is largely predicated on two facts: one, the LNP coalition is still extremely sensitive to a “Work Choices” scare campaign if it tries to change even a comma in the Act and two, in any event, the Senate is incapable of dealing with change in this area as evidenced by its refusal to even pass legislation aimed at improving trade union governance. This is despite the criminal and amoral behaviour uncovered by the Royal Commission this year in its investigation into trade union corruption. 

Even if we are wrong about that, at best, we will see incremental changes that have minimal impact on current IR practices. Some possible changes could include: 
•    Trade union governance and regulation 
•    The introduction of a standard entitlement to long service leave 
•    Changes to the powers of the Fair Work Commission in relation to approving enterprise agreement (process issues only) 
•    Increased ability for individual employees and their employer to negotiate arrangements different to the terms of their EAs or the Award. 

Award modernisation 

The Fair Work Commission is in the process of reviewing the modern awards as part of the 4 yearly review. It is our expectation that the results of this review will take effect just in time for the next review.

The aspect to watch in this review process involves a legislative change introduced by the last Labor government. It introduced a new provision to the Fair Work Act 2009 requiring the Commission to have regard to the “need to provide additional remuneration for employees working overtime, unsocial hours, shift work or weekends”. 

Many awards in their current form have flexible penalty rate regimes. If the FWC amends awards to meet the new requirements of the Act, this will have a significant impact on these flexibilities and in turn, labour costs. 

Trends in enterprise bargaining 

Apart from a genuine and sustained lower level of wage increases, enterprise bargaining is more remarkable for the lack of it. The FWC now deals with three times as many unfair dismissal cases as it does with EA approval applications. Given the rigidities of awards and the forensic, black-letter law approach taken by most FWC members to agreement making, employers are staying away from this area, which is contributing to slowing productivity across many industries. 

That is not to say that innovative agreements cannot be made – they can be. But waiting around for the legislation or the attitude of the FWC to change is no solution. The system can be worked with, productive agreements can be made. 

We predict employers who have been holding back in the hope of legislative change will accept the situation and focus instead on getting agreements in place before the awards that apply become even more restrictive. This is because, despite the rhetoric about awards become less influential and diminishing in relevance over time, both unions and employer associations are spending millions of dollars of their members’ fees on massive cases in the FWC to expand the content and reach of modern awards. 

The “IR Club” is back and very busy. Employers who want no part of it, will act in 2016 before these awards become as prescriptive and dominant as they did last century.

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