Red-tape problems loom for award flexibility

Red-tape could undermine the usefulness of a new award flexibility clause that has been formulated by Australia’s industrial relations umpire, a leading workplace relations lawyer says.

The Australian Industrial Relations Commission formally kicked off the award modernisation process on Friday with a decision setting out the first industries to be targeted and releasing for the first time a model award flexibility clause.

The first industries that will go through award modernisation – a process of rationalisation designed to produce fewer, simpler awards – are coal mining, glue and gelatine, higher education, hospitality, metal and associated industries, mining, private-sector clerical, racing, rail, retail, rubber plastic and cable making, security, textile, clothing and footwear, and vehicle manufacturing.

The new modern awards that will result from that process may all include a version of the new award flexibility clause formulated by the AIRC, but a paperwork-heavy process that goes with the clause may limit its usefulness to employers.

The award flexibility clause is designed to allow employees to agree to give up some of their award entitlements in exchange for compensation – usually in the form of higher pay – from their employer.

But Australian Business Lawyers managing partner Tim Capelin says, on an initial reading of the complex clause, he is disappointed with what the AIRC has come up with.

A key problem is that employers will not be able to hire new staff under the flexibility clause, something business groups fought hard for but that was opposed by the union movement.

“The unions appear to have had a bit of a win on this one – employers will have to hire staff under the award and then have a second negotiation with them to move them on to a flexible arrangement, so there is an extra step and more red-tape associated with that,” Capelin says.

To hire an employee under the clause, employers will also be required to lodge a submission providing a range of information including the variation made to the standard award condition and why it doesn’t disadvantage the employee, something Capelin believes small business or those without access to legal counsel will have trouble complying with.

And, he says, the consequences of not complying with the no-disadvantage test also remain unclear.

“We still don’t know what happens if you don’t comply with the no-disadvantage conditions – will employers just have to pay the difference or would it void the whole agreement. There is big difference between the two,” Capelin says.

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