Insights

Fwd: Thinking 15 May 2019 Australian Federal Election 2019

What could it mean for your workplace?

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Industrial Manslaughter in Australia

Vince Rogers 15 May 2019

What is the Queensland industrial manslaughter offence and how might it apply nationally?

In this video, we explain the Queensland offence of industrial manslaughter and the possible impact of the ALP's proposal to work with State and Territory governments to establish a harmonised industrial manslaughter offence across Australia.

Enterprise Bargaining and Industrial Action

Shannon Chapman 07 May 2019

What is the ALP proposing and what might the implications be for employees?

In this video, Shannon Chapman discusses the ALP's proposed changes to the ability of employees to conduct multi enterprise bargaining and to take industry-wide industrial action.

Termination of enterprise agreements

Marie-Claire Foley 17 Apr 2019

What changes are proposed to an employer's ability to terminate enterprise agreements?

Marie-Claire Foley discusses the ALP proposal to limit an employer's ability to terminate enterprise agreements, and our experience assisting clients with this industrial strategy under the current laws.

An election for the Living Wage

The ALP has proposed that the Fair Work Commission be empowered to "deliver a living wage for Australia's low-paid workers".

What does this mean in practice, and how might it affect your workplace?

Implications of the proposed Living Wage

The proposed Living Wage policy represents the ALP's overarching response to the well-documented slowdown in wages growth in Australia. Economic commentators, including the Reserve Bank of Australia, have suggested for some time that stagnant wage growth has burdened the economy because the effects of consumer spending, inflation, tax revenue and Government spending have also become stagnant as a result.

Opinions differ about the ALP's proposal to fix wage stagnation through legislative intervention. One view is that it is difficult to determine whether implementing a Living Wage will have an effect on wages growth over a longer period of time. It acts as an immediate 'fix' to low wages, but may create issues for workers in higher classifications whose wages may plateau or increase only marginally as a result.

Providing wage increases that do not flow to the higher classifications in award structures means that only a relatively small proportion of award-covered workers benefit from the increase. This is likely to have a minimal impact on enterprise bargaining, and overall economic factors are still likely to be the biggest factor in determining wage growth nationally.

It may be that in order to achieve the ALP's goals of addressing low wages and increasing living standards of those living on current minimum wages, there will need to be a broader reform agenda (including reforms to welfare and taxation). Until further detail is revealed, the true effect on businesses, the workforce and the economy will remain uncertain. What is certain, however, is that the current policy proposal represents a fundamental shift in the approach taken by the ALP, towards a more interventionist approach to wages policy.

The ALP's proposal for a Living Wage

The ALP announced in March 2019 that,

A living wage should make sure people earn enough to make ends meet, and be informed by what it costs to live in Australia today - to pay for housing, for food, for utilities, to pay for a basic phone and data plan.

The concept of a living wage is different from the minimum wage.  The minimum wage sets the safety net for wages; seeking a living wage is seeking to raise the minimum wage to provide for a certain standard of living.

Proposed amendments to the FW Act

It appears that the ALP would implement a living wage by expanding the powers of the Fair Work Commission in relation to wage setting. We anticipate that the process would involve the Commission:

  • deciding what monetary figure the Living Wage should reflect; and
  • establishing a timetable for lifting the current minimum wage to the level of the Living Wage (presumably in increments, rather than in a single increase from the existing minimum wage). 

It is likely a living wage would increase minimum wages at the lower classifications levels in most modern awards. It would not necessarily result in increases at higher classifications. 

Calculating the Living Wage

The ALP has not outlined the criteria the Commission would be required to consider in calculating the Living Wage. Options include:

  • the approach taken by the United Kingdom's Low Pay Commission. In the UK, the Living Wage is calculated as equivalent to approximately 60% of the median wage. The ACTU has indicated that an Australian Living Wage, on this basis, would currently be $20.84 per hour, up from the current minimum wage of $18.93; and
  • considering the average costs of expenses such as housing, food, utilities, school education and contingency money for emergencies, as they apply to low-paid workers.

Unintended consequences of implementing a Living Wage

In practice, a living wage will act as a minimum wage threshold – but what happens when award wages that fall below the living wage are raised to meet it?

There is a risk of disturbing long-established work value relativities in modern awards by compressing minimum wage rates in the lower half of the classification structure. This could devalue the work performed at mid-range award classifications, and disincentivise workers from seeking promotions to a higher classification.

Alternatively, if existing award wage relativities were maintained, it could result in significant wages increases across the award classification structure. This would have broader economic consequences (including unemployment and youth unemployment levels) and could be expected to flow through to agreement-covered workers via the enterprise bargaining system.

Given the potential for unintended consequences, it may be preferable for living wage considerations to be addressed through the tax and transfer system, rather than the industrial relations system.

Authors: Jon Lovell, (Partner), Julie Mills, (Expertise Counsel),  Elysse Lloyd (Lawyer) and Daniel Tracey (Lawyer).

 

What could the major parties' workplace policies mean for your organisation?

POLICY ALP COALITION
Minimum wage & penalty rates
  • Increase the minimum wage to reflect a ‘living wage’ by changing the criteria the FWC applies when setting the minimum wage.
  • Reverse cuts to penalty rates in certain modern awards.
  • Does not support changes to the FWC process for setting the minimum wage.
  • Supports the FWC’s decision to cut penalty rates.
Industrial manslaughter & WHS
  • Introduce an industrial manslaughter offence into the harmonised WHS laws and/or state/territory criminal codes within its first year.
  • Does not support industrial manslaughter laws and supports the continuation of the current regime.
Sham contracting, labour hire & casuals
  • Strengthen laws which prohibit sham contracting.
  • Long term casual employees be given a right to request permanent employment and being able to seek a review by the FWC if an employer unreasonably refuses such a request.
  • Introduce a national labour hire licensing scheme and require labour hire employees to receive the same pay and conditions as direct employees.
  • The 2019 Budget allocated funding to establish a sham contracting unit within the Fair Work Ombudsman.
  • Provided in-principle support for the creation of a national labour hire registration scheme in the horticulture, cleaning, security and meat processing sectors.
Whistleblower laws
  • Introduce a scheme which rewards whistleblowers for providing useful information.
  • Replace existing whistleblowing laws with a single Whistleblowing Act.
  • Establish a ‘Whistleblower Protection Authority’.
  • Supports the new private sector whistleblower regimes which commence on 1 July 2019.
  • Does not support a reward scheme.
  • Does not support a ‘Whistleblower Protection Authority’.
Enterprise bargaining & industrial action
  • Improve access to collective bargaining, eg through multiemployer and industry wide bargaining, focussed on low paid workers.
  • Change good faith bargaining by introducing a framework for disclosure of information when denying a workforce claim.
  •  Does not support changes to the existing bargaining framework.
Termination of enterprise agreements
  • Prohibit the unilateral termination of enterprise agreements.
  • Termination will only be possible where a majority of employees approve the termination of the agreement and the termination will not result in employees being worse off.
  • Not commented and likely to maintain the current framework, which permits an employer to unilaterally seek termination of an expired enterprise agreement.
Underpayments
  • Extend responsibility for compliance with workplace laws to corporations who are economic decision makers, including franchisors and businesses along the supply chain.
  • Increase civil penalties for employers and related entities who systematically underpay workers.
  • Provided in-principle support for the Migrant Workers Taskforce’s recommendations, including introduction of criminal sanctions for exploitative conduct that is clear, deliberate and systematic; increasing penalties for underpayments and extending the accessorial liability provisions of the Fair Work Act.
Gender equality
  • Give FWC greater focus on ‘gender pay equity’ considerations, eg when setting the minimum wage.
  • Increase Domestic Violence Leave to 10 days paid leave per annum.
  • Enable employees to request a review of ‘unreasonable refusals’ of flexible work arrangements.
  •  Not commented and likely to maintain the current framework.

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The information provided is not intended to be a comprehensive review of all developments in the law and practice, or to cover all aspects of those referred to. Readers should take legal advice before applying it to specific issues or transactions.

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