Impact of Fair Work Act on Australian Workplaces - a practitioner ’ s perspective Peter Wilson AM National President,

1. Impact of Fair Work Act on Australian Workplaces - a practitioner’s perspective Peter Wilson AM National President, AHRI April 2011

2. Background – the journey since 2007 … Work Choices Survey - Aug 07 AHRI data 1000+ responses Law changed - follow up study deferred until 2010

3. Background to AHRI research AHRI focus – high performing & equitable workplaces AHRI WorkChoices Survey– Aug 07 (1000 replies) Survey results very critical – “costly bureaucratic monster” “Made the job harder & political criticism much easier” “A backward step from 1996 Reith Workplace laws”. Fair Work Act introduced July 2009 Sept 2010 AHRI Fair Work Act survey (970 replies) 2007 & 2010 Surveys not strictly comparable – changed laws

4. Today’s economic environment Post-GFC recovery No double-dip Intense Global Competition post 2009 China / India / Aust: “up” US, Europe: “sluggish” $ appreciates - tougher competitive environment Total factor productivity - flat / declining TFP $A

5. 2010 AHRI Survey: respondent profile • 54% from private sector companies • 17% from publicly listed companies • 15% from government • 5% MD/CEO • 32% executive-level HR • 38% middle-level & operational HR .

6. 2010 AHRI Survey questions covered - 1. Company & workforce profile 2. Fair Work Act & role as HR professional 3. Fair Work Act & organisation 4. Fair Work Act & employment contracts 5. Critical perspectives – from coal face of ‘implementation’ .

7. 2010 Key findings – job complexity 57% say FWA makes their job ‘more difficult’ 66% say FWA requires ‘more time’ on IR issues .

8. Key findings – formulating contracts • 68% FWA requires more time making employment contracts • 30% FWA will require more time making employment contracts in one year’s time • - but … 47% say ‘no change’ by then … .

9. Key findings – bargaining .

10. Key findings – legal advice 74% say FWA increases need for legal advice 40% expect FWA will require increased legal advice in one year’s time - 41% expect ‘no change’ .

11. Key findings – workplace disputes 30% say managing workplace disputes is more difficult 54% say ‘no change’ 25% expect managing workplace disputes will still be more difficult in one year’s time 55% expect ‘no change’ .

12. Key findings – cost of IR 53% dealing with IR costs more - 35% say ‘no change’ 37% expect will cost more to deal with IR in a year’s time - 43% expect ‘no change’ .

13. Key findings – pay and penalty rates 31% say overall remuneration has increased 66% say ‘no change’ 25% say penalty rates for overtime have increased 71% say ‘no change’ .

14. Key findings – carers’ leave 20% say carers’ leave days allowed have increased 76% say ‘no change’ Most acknowledge change is because of competition for talent – not the FWA laws .

15. Key findings – union involvement 27% say union involvement in bargaining has increased 69% say ‘no change’ 26% union involvement in settling disputes has increased 69% say ‘no change’ .

16. Key findings – union visits & disputes 29% say union visits to work sites have increased 23% say industrial disputes have increased .

17. Key findings – productivity 13% say productivity has decreased 78% say ‘no change’ 58% say record keeping has increased 39% say ‘no change’ .

18. Key findings – jobs & productivity - 2013 Dual ‘sting in the tail’results: 37%say FW Act will materially diminish business willingness to employ people 2011-13 53%say FW Act will cause negative impact on productivity growth 2011-13 .

19. Key findings – unfair dismissal 16% say new UD rules have increased the number of claims 72% say ‘no change’ 26% say new UD rules make redundancies harder 65% say ‘no change’ Note – AHRI survey of companies primarily above 100 employees – i.e. not SMEs .

20. Key findings – flexible arrangements 83% say coy has adopted ‘flexible working arrangements’ 14% say their organisation has not Most requested are: - working from home - flexible start & finish times - part-time work “Most acknowledged need to do this – due to war for talent” .

21. Key findings – transfer of business 41%say impact negative or very negative Sample respondent views: “increased the need for legal advice” “Staff transferring bring industrial instruments coy doesnt want” “Made sale difficult … buyer reluctant to take the staff on” “anti-employment provision” “Employees feel comfortable that they are not losing anything” .

22. Key findings – most significant FWA changes Sample respondent views: - “Additional training needed - business awareness of entitlements” - “Adverse action provisions” (expect these will be invoked more) - “Providing unions with ‘default’ bargaining status” - “Document everything so disputes can be settled based on actual fact” - “First line leaders must have employee relations capability” .

23. Key findings - expected effects of FWA • Sample respondent views: • “bogged down in disputes with adversarial unions” • “Increased compliance costs” • “More open-minded about flexibility requests” • “Increased costs doing business; no increase prod’ty .

24. Updates - Current Senior Exec HR views • Transfer of Business (Restructurings / Acquisitions): • “businesses forced to acquire a mosaic of EBAs & employment rules and regulations” • “doing little more than providing a decoration around increasing bureaucracy and declining productivity, with major anomalies to employment creation”. • “Simple ‘no disadvantage test’ for critical minimum benefits should be all that’s required to protect workplace equity for employees transferred in restructurings” • “Risk of another AMCOR case” .

25. Updates - Current Senior Executive HR views • Bargaining & Agreement making • “As Prof Ron MacCallum recently noted – reaching useful end of common law to supervise bargaining outcomes”. • “Having inconsistent results emanate from the ‘luck of the draw’ on who you get from the FWA bench must end”. • “Must move to a system of minimum standards” • “FWA to convene as full bench to define decisions on majority basis, to eliminate current risk of rogue outcomes”. • “Give FWA discretion to approve agreements if fair and reasonable to do so, despite non-compliance with pre-approval steps or procedural requirements - amend s 188” .

26. Updates - Current Senior Executive HR views • “JJR v TWU decision - effect of FWA Full Bench decision is protected action ballot can occur before bargaining is formally initiated”. • “The new FWA sees effective end of non-union agreements & individual contracts for non executives”. • “Right of Entry – this has become an open access freeway and many instances where it stopped production dead, for no genuine economic reason”. .

27. Next AHRI FW Act Survey – late 2011 • AHRI - SHRM 2011 partnership • “Global Index of Workplace Performance & Flexibility” • 50 countries ranked overall by EIU • Beyond FWA & Workchoices … a “new way” for fairer & higher performing workplaces?

28. AHRI 2011 “HR with Impact”