Wednesday, December 17, 2008

Employers could be lost in dark legal tunnels

Substantial commentary on the Fair Work Bill is now on the public record.  Lines of division have emerged, expressed by key players in the public debate.

First, it's clear the 575-page bill is complex.  No business or employee is going to be able to read it and achieve a simple understanding.

The bill has a number of complex interrelated clauses governing single issues.  The explanatory memorandum doesn't help much.  It states there will be adverse economic impacts but doesn't discuss how these will happen.

In many respects the bill possesses dark legal tunnels down which businesses will have to travel without clarity.  This will create commercial uncertainty.  For example, it introduces a new concept concerning content in enterprise agreements.  Agreements will be able to include anything to do with the relationship between employers and unions.  This is interesting.  Employers that don't have contracts with unions yet now have a "relationship" by statute decree.  What does this mean and where will it lead?

Pattern bargaining is supposed to be outlawed.  Yet the clauses governing wage setting for "low-paid workers" have led many to the conclusion that back-door pattern bargaining will operate for this group.  Further, the bill doesn't define low-paid workers.  Businesses can only guess if they'll be included in these provisions.  Uncertainty again.

Enterprise bargaining is touted by the government as key to driving needed productivity.  Certainly during this protracted economic crisis, productivity improvement is vital to containing, limiting and emerging from a slump.  The new "good-faith bargaining" rules may make enterprise bargaining unhelpful in the productivity stakes.  These new rules are foreign to Australia and introduce unknowns.

Good-faith bargaining is all about process not outcomes.  Businesses will not formally have agreement content they don't want forced upon them, but the obligations dictated in the process could have the same outcome.  Some say Fair Work Australia, the new controlling authority, may be able to order the stopping of outsourcing, as an example.  What this would do to businesses exploring efficiency and productivity improvements no one knows.  One group that will be served by the bill is lawyers.  They are in the game in a big way.

Already, legal firms have been pouring out commentary and each firm suggests it has a full understanding of the bill, or better still, knows how to turn it to business (or union) advantage.

It's predictable that, particularly in the early stages of implementation, considerable legal testing will occur.  This will stretch over several years.  High Court cases settling interpretation are probable.

Still, the bill has to pass the Senate.  Submissions are due to the Senate inquiry by January 9.  The debate is set to be significant.  The Australian Hotels Association and Australian Chamber of Commerce and Industry are opposing parts of the bill.  The Australian Mines and Metals Association has been strident in opposition.  Other influential players such as the Australian Industry Group, Housing Industry Association and National Farmers Federation have so far been constrained in their commentary.

The federal coalition is somewhat caught by its past and identifying its future.  This is what the government clearly wants and it is how it is politically punching.  Every time the coalition suggests problems with the bill, the government throws the mantra of Work Choices back in its face.  The government seems intent on making the election in late 2010 a Work Choices scare rerun.  No doubt this is the union strategy.

Finding its distinct defining position on workplace issues is central to the coalition's future.

It's an issue at the core of Australian politics.  Hoping it will go away will not work.  Its first step makes sense.  The opposition spokesman, Michael Keenan, has announced the coalition will hold the government to its election promises, pointing out areas in the bill that were not election undertakings.

If senators Nick Xenophon and/ or Steve Fielding take a similar approach, amendments could be in play.  What matters ultimately is how the bill assists or hinders constructive workplace relations and business outcomes.

International commentary has so far not been good.  The Wall Street Journal has slammed the bill, citing legal costs, loss of productivity and less employment as predicted outcomes.  This makes the bill a bad look for international investors contemplating allocation of extremely scarce financial resources.

Indicators are that the Forward with Fairness debate is about to move from posturing to substance.


No comments: