Fair Work Act impacts


“The rules around engaging casuals and contractors are very restrictive. The fact that individuals can agree in writing to terms and then later claim for entitlements that they agreed to forego is particularly unfair.” “We are wary of taking on short-term contractors who work regular and systematic hours as we are concerned when it comes time to end their contract they will be seen as ‘permanent’ staff and could claim unfair dismissal… especially if we finish them up earlier than was expected.” Sentiments such as those above were expressed by HR practitioners in a recent survey AHRI conducted on the workplace impact of the Fair Work Act (FWA). The remarks indicate the quandary expressed by many HR practitioners who have been working closely with the legislation over the past two years. In response to increasing ‘noise’ within business and HR circles, three survey questions asked respondents to consider possible amendments to the FWA, and what they believe the likely impact of the amendments would be to workplace productivity, willingness to hire employees, and equity and fairness.

Possible amendments to the Fair Work Act

The amendments posited the following three possibilities:

  • That individual labour contracts be subject to a “better off overall test”.
  • Giving a choice between union and non-union negotiated labour contracts.
  • Enabling greater flexibility in the use of contractors and labour-hire employees.

The responses were somewhat mixed with the largest percentage of respondents to each question replying ‘No impact’. However, the response to the third option of allowing for greater use of contractors and labour-hire employees was the one most strongly favoured by the 691 anonymous respondents who answered the detailed survey. To be specific:

  • 40 per cent of respondents thought it likely that greater use of contractors and labour-hire employees would ‘improve productivity’.
  • 36 per cent thought it likely to ‘improve willingness to hire new employees’.
  • 19 per cent thought the amendment would be likely to ‘improve workplace fairness and equity’.
  • The majority of scores in all cases were neutral.

Recommendations to be made

In the 40 per cent approval figure, there is plainly a significant minority of HR practitioners who believe the proposed amendment would be good for workplace productivity, and AHRI will be making this point in its submission to the FWA review. In addition to the potential contribution to productivity of an amendment on the matter of contractors and labour hire, it is also apparent that the issue has a strong connection with employer flexibility. A number of respondents made observations very similar to the following:

  • Our projects are cyclical and in two years’ time we may face a different situation [from the one we face now].
  • Working with contractors is attractive to cater for these peaks and troughs.
  • As long as the introduction of these initiatives did not encourage the exploitation of employees they would work well.
  • At present, there is a strong sense of transparency and fairness with our enterprise agreement, so the use of other employment instruments or tools needs to be carefully planned.

Fair Work Act Review

AHRI has used the findings from its recent study in making a submission to the Government’s FWA Review because the findings are from HR practitioners who are working with the Act every day, and who can see the impacts that the legislation in its present form is having on the businesses in which they operate. On issues such as the one described above, it is believed the review panel will need to:

  • Exercise judgement.
  • Find more appropriate ways to satisfy the demand for improvements in productivity.
  • Balance more even-handedly the flexibility desires of employees with the business realities of employers.

On other matters, the evidence from the study is very clear. Matters such as managing underperforming employees in the context of reports of more robust union activity, increasing incidents of vexatious unfair dismissal claims and adverse action claims, as well as the impost on business of significantly greater costs involved in seeking legal advice and managing record-keeping under the FWA are constraining potential business growth, and little evidence is available from our research that they are making workplaces fairer.

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Fair Work Act impacts


“The rules around engaging casuals and contractors are very restrictive. The fact that individuals can agree in writing to terms and then later claim for entitlements that they agreed to forego is particularly unfair.” “We are wary of taking on short-term contractors who work regular and systematic hours as we are concerned when it comes time to end their contract they will be seen as ‘permanent’ staff and could claim unfair dismissal… especially if we finish them up earlier than was expected.” Sentiments such as those above were expressed by HR practitioners in a recent survey AHRI conducted on the workplace impact of the Fair Work Act (FWA). The remarks indicate the quandary expressed by many HR practitioners who have been working closely with the legislation over the past two years. In response to increasing ‘noise’ within business and HR circles, three survey questions asked respondents to consider possible amendments to the FWA, and what they believe the likely impact of the amendments would be to workplace productivity, willingness to hire employees, and equity and fairness.

Possible amendments to the Fair Work Act

The amendments posited the following three possibilities:

  • That individual labour contracts be subject to a “better off overall test”.
  • Giving a choice between union and non-union negotiated labour contracts.
  • Enabling greater flexibility in the use of contractors and labour-hire employees.

The responses were somewhat mixed with the largest percentage of respondents to each question replying ‘No impact’. However, the response to the third option of allowing for greater use of contractors and labour-hire employees was the one most strongly favoured by the 691 anonymous respondents who answered the detailed survey. To be specific:

  • 40 per cent of respondents thought it likely that greater use of contractors and labour-hire employees would ‘improve productivity’.
  • 36 per cent thought it likely to ‘improve willingness to hire new employees’.
  • 19 per cent thought the amendment would be likely to ‘improve workplace fairness and equity’.
  • The majority of scores in all cases were neutral.

Recommendations to be made

In the 40 per cent approval figure, there is plainly a significant minority of HR practitioners who believe the proposed amendment would be good for workplace productivity, and AHRI will be making this point in its submission to the FWA review. In addition to the potential contribution to productivity of an amendment on the matter of contractors and labour hire, it is also apparent that the issue has a strong connection with employer flexibility. A number of respondents made observations very similar to the following:

  • Our projects are cyclical and in two years’ time we may face a different situation [from the one we face now].
  • Working with contractors is attractive to cater for these peaks and troughs.
  • As long as the introduction of these initiatives did not encourage the exploitation of employees they would work well.
  • At present, there is a strong sense of transparency and fairness with our enterprise agreement, so the use of other employment instruments or tools needs to be carefully planned.

Fair Work Act Review

AHRI has used the findings from its recent study in making a submission to the Government’s FWA Review because the findings are from HR practitioners who are working with the Act every day, and who can see the impacts that the legislation in its present form is having on the businesses in which they operate. On issues such as the one described above, it is believed the review panel will need to:

  • Exercise judgement.
  • Find more appropriate ways to satisfy the demand for improvements in productivity.
  • Balance more even-handedly the flexibility desires of employees with the business realities of employers.

On other matters, the evidence from the study is very clear. Matters such as managing underperforming employees in the context of reports of more robust union activity, increasing incidents of vexatious unfair dismissal claims and adverse action claims, as well as the impost on business of significantly greater costs involved in seeking legal advice and managing record-keeping under the FWA are constraining potential business growth, and little evidence is available from our research that they are making workplaces fairer.

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