One-year opt-out period for SME enterprise contracts would be a “sop”, according to business groups

Employees should not be able to opt out enterprise agreements for at least three years instead of the 12-month timeframe suggested by the Productivity Commission, according to the Australian Industry Group.

The federal government is considering introducing changes to the industrial relations framework that would allow businesses with more than 20 employees to implement their own workplace agreements without having to get them signed off by the Fair Work Commission.

The so-called enterprise contracts were recommended by the Productivity Commission late last month in a bid to give small and medium businesses more flexibility when it comes to dealing with industry awards.

Under the proposal put forward by the commission, employees would be able to opt-out of their workplace agreement after 12 months and return to the industry award should they wish to do so.

However, the Australian Industry Group has said while enterprise agreements are needed, the 12-month timeframe is too short.

“The proposed 12-month opt-out period would create significant uncertainty and would deter employers from hiring employees on the basis of ECs [enterprise contracts],” Ai Group said in a recent submission to the federal government.

Peter Strong, chief executive of the Council of Small Business of Australia, says he agrees that a three-year opt-out period would be preferable for businesses.

“Certainty is what is good for everybody, whether for the employee or the employer,” Strong says.

“Three years is much more logical. I totally support that because it’s about certainty for everybody. One year is like a trial period.”

Strong says if the government introduced enterprise contracts for businesses with more than 20 employees but made the opt-out period 12 months, the new rules would be a “sop”.

On top of this, Strong says there is the likelihood the union movement will run a WorkChoices-like campaign against enterprise contracts

“This isn’t WorkChoices – WorkChoices was silly and my members have always thought that,” he says.

“But we do need a better workplace relations system. It’s about flexibility, transparency and certainty. It’s our fear that someone will turn this into something it’s not.”

The government is expected to announce its industrial relations policies in the next few months.