Heads UP – workplace relations under a Labour Government

We recently posted an article on the likely effects of the proposed move from a “minimum wage” to a “living wage” – see that here

So what else is Labour planning to do if it wins power at the next federal election. Get ready because there is a lot on their agenda and here is just a sample of what’s coming if they win.

These are extracts from the ALP National Platform document titled “A Fair Go For Australia” along with a little commentary from us.

10 days paid domestic violence leave

“Labor supports the right of every worker to a safe home, community and workplace. Labor stands against family violence. Labor will introduce 10 days paid Domestic Violence leave as a universal workplace right in the National Employment Standards.”

Last year, the Fair Work Commission and the Australian Government respectively varied modern awards and National Employment Standards to provide for 5 days of unpaid leave to deal with family and domestic violence. At around the same time, New Zealand legislated for 10 days paid domestic violence leave.

26 weeks parental leave on full pay

“Labor’s goal is for parents to have access to 26 weeks of paid parental leave, as the internationally recognised best-practice benchmark, and the goal of 26 weeks at full pay plus superannuation through a combination of government and employer contributions.”

Currently, under National Employment Standards, parental leave is for 52 weeks without pay and people can access up to 18 weeks of parental leave pay at the rate of the national minimum wage.

Flexible working arrangements for caring responsibilities

“Labor will ensure the right to request changes to working arrangements to meet caring responsibilities, including an effective right of review for unreasonable refusals of their requests, is equitable for all workers and maximises access of workers to arrangements that suit their needs.”

Modern awards have recently been varied to provide a right of review for “unreasonable refusals of their requests”. That right currently does not apply for workers not covered by modern awards.

A national long service leave scheme

“Labor will work with State and Territory governments to achieve a national minimum standard for long service leave to form part of the National Employment Standards. “

Currently States have different schemes with different entitlement levels. The construction industry has long had contributory long service leave schemes (Coinvest in Victoria) and the Victorian Government has recently legislated to have similar schemes apply across some other industries (contract cleaning, security and community services). under Coinvest, leave accrues at the rate of 13 weeks for 10 years service. Elsewhere in Victoria it accrues at the rate of 13 weeks for 15 years service. If there is to be a common scheme, it would have to be a contributory scheme whereby employers pay into a fund from day 1 of employment rather than only incurring a real long service liability when an employee completes 7 years service as is currently the case for most industries and occupations. Long service leave would effectively become a reward for workforce participation rather than “long service”. Coinvest contributions are currently 2.7% of wages paid.

Gender Pay Equity

“Labor will take measurable action to address the gender pay gap and will ensure that the equal remuneration provisions in the Fair Work Act deliver for low paid women. Labor will make gender pay equity an object of the Fair Work Act. Labor will establish a statutory Equal Remuneration Principle, to guide the Fair Work Commissions consideration of whether feminised industries are paid fairly. Labor will establish a new Pay Equity Panel within the Commission led by a new Presidential Member with specific expertise in gender pay equity, and fund the Commission to establish a Pay Equity Unit that will provide expert research support during equal remuneration matters, and more generally. Labor will shine a light on pay inequity, including by updating Parliament each year on Australia’s progress in closing the gender pay gap, by requiring companies with more than 1000 employees to report their gender pay gap, and by prohibiting the use of pay secrecy clauses.”

What we can expect here in the Fair Work Commission is probably a series of work value cases to deliver wage increases for industries with high levels of female employment such as aged care and child care among others. The additional reporting requirement will be another stimulus for businesses to progress gender pay equity in real terms. The prohibition on pay secrecy clauses will probably not have great significance.

Portability of entitlements

“Labor will work with State and Territory Governments, employers and unions to facilitate and establish the portability of entitlements including through industry-wide schemes.”

There is no further detail in the ALP document on this item. There is currently a portable entitlements fund in the construction industry for businesses which have an enterprise agreement, most commonly (albeit not exclusively) with one of the construction unions. Perhaps something like that is what they have in mind. To give you an idea of what that might mean. current rates of contribution to Incolink are:

Weekly Contribution Rates Per Worker

Redundancy Contribution – $80.00
Portable Sick Leave (PSL) Insurance Contribution – $1.54*
Income Protection & Trauma (IPT) – $23.05*

Penalty rate cuts to be reversed

“Labor understands penalty rates compensate workers for working excessive or unsociable hours. Labor will reverse the cuts to Sunday and public holiday penalty rates, and will amend the Fair Work Act so awards cannot be varied to cut workers’ take home pay.”

The penalty rate cuts made by the Fair Work Commission in various retail and hospitality awards will be reversed. There is currently an ability for the Fair Work Commission to make take home pay orders. The way that it phased in cuts to penalty rates so that they were offset against annual wage review increases was designed to minimise the impact of the cuts. It sounds like Labour is proposing to legislate against any reduction in award monetary entitlements.

Greater controls on sham contracting and casualisation

“Labor will strengthen the laws that prohibit sham contracting. Labor will set an objective test in legislation for determining when a worker is a casual.”

We suspect that the sham contracting issue might be addressed by making government, principals in supply chains, head contractors, holding companies and franchisors legally responsible for downstream compliance. It is also likely that there will be greater limitation on the use of casuals where employment is regular and systematic. Perhaps this might take the form that is currently in some modern awards where, on completion of 6 months service, a casual employee must be specifically offered the opportunity to convert to full-time or part-time and the employer must comply with the employee’s election.

A national labour hire regulation scheme

“Labor will protect labour hire workers by establishing a national labour hire licensing scheme to regulate the labour hire industry and ensure that minimum legal standards are met. Labor will also legislate to guarantee that labour hire workers receive the same pay and conditions as directly employed workers doing the same work. Labor will not accept the abuse of fixed term contracts of employment.”

Queensland, South Australia and Victoria already have legislated labour hire regulation schemes so the transition to a federal scheme won’t make a lot of difference assuming it provides much the same in the way of obligations and regulatory powers. The requirement for labour hire workers to be paid the same as directly employed workers will be a disincentive cost wise for businesses to use labour hire. The abuse of fixed term contracts is probably related to cases like Workpac v Skene where a nominally casual employee was engaged on back to back contracts for 6, 12 and 12 months.

Fair Work coverage of gig workers

“Labor is committed to ensuring that the Fair Work Act provides appropriate coverage and protection for all forms of work and that gig economy platforms and other working arrangements are not used to circumvent industrial standards, or to undermine workers’ rights to collectively organise and access their union.”

There have been concerns in the last few years about potential exploitation of workers through gig economy arrangements where people are paid significantly less than what they would earn if paid under modern awards.

Note: this is just a sample of the items noted in the ALP policy document. There is much more in relation to union representation and participation, enterprise bargaining, the abolition of the Australian Building and Construction Commission and the Registered Organisations Commission and many other matters. The full document can be accessed here.

From “minimum wage” to “living wage” means what?

The Australian Labor Party has announced that, if and when elected, it intends to change the Fair Work Commission’s annual wage review process to deliver a “living wage” – what people need to earn to have a reasonable prospect of not living in poverty.

So what does that all mean?

It will mean that the quantum of annual wage increases will go up in the transition period, something that Labor says they will ask the Fair Work Commission to consider. Essentially this question amounts to how long that transition should be, taking into account a number of factors including affordability for businesses.

How long might that be?

We have had a bit of a hint from the ACTU in their claim to this year’s Annual Wage Review – they have asked for 10.7% over two years. This is significant because the history has been that claims have been made on a year by year basis with no forward projection.

There have been a variety of issues such as the transition to modern awards and variations to penalty rates in which the Fair Work Commission has decided to transition changes in stages, generally over three to four years.

No doubt, a Labor Government would want the transition completed during its term of office so that it can say that it delivered on that promise at the next election.

Given all of the above, our guess is that it will be two to three years.

How much will it be?

Last year, the increase was 3.5% and it was 3.3% in the previous year.

In making those decisions, the Fair Work Commission also noted that those on the lowest rungs of award wages remained at risk of poverty.

Logically, if those people are to be given a living wage, the increases will need to be larger than they have been.

The ACTU’s claim of 10.7% over two years is quite modest compared to their claims in recent years.

So what should you expect – probably in the range of 4% to 5% in each of the next two to three years.

Will they flow on to award rates?

Some of the reporting on this issue has claimed that Labor has said that increases resultant from the transition from a minimum wage to a living wage will not automatically flow on to award wages.

We don’t see how that flow on can be avoided for the simple reason that the minimum rate for the lowest classification in many awards is in fact the national minimum wage. You couldn’t have an award safety net that provided less than the national minimum or living wage.

Then to maintain the relativities in classification structures in modern awards, you would have to flow on the increases just as has happened year on year in annual wage reviews.

So we should be expecting that to happen.

Now let’s just wait and see what happens at the election and beyond.

Note: this article does not constitute professional advice and it is simply the personal opinion of the author based on the available evidence and is designed to provide some balanced and reasoned information for people to think about.