Critics Say Fair Work Amendments Could Lead To Being Paid In Pizza or K-Mart Vouchers

Tuesday 2 September 2014 @ 10.49 a.m. | Industrial Law

As previously discussed on TimeBase, Parliament has been considering  the Fair Work Amendment Bill 2014 since March this year.  Having taken a backseat to the budget negotiations, the Bill now faces its biggest test yet in the Senate.  According to the Abbott Government, the Bill merely implements recommendations by the previous Government’s Fair Work Act Review.  But some critics are crying foul, saying that the new legislation raises the spectre of the WorkChoices arrangements that caused such controversy for the Howard Government.

Individual Flexibility Agreements

Critics have raised a number of concerns over the bill, in particular the changes relating to Individual Flexibility Agreements (IFAs).  When the Fair Work Act 2009 (Cth) was introduced,  all awards needed to include a “flexibility term” which allowed for the establishment of IFAs under certain circumstances.  Currently, IFAs need to fulfil a number of conditions, including a limit on what terms of an award may be varied, and the IFAs must fulfil a “better off overall” test for the employee.

The Australian Financial Review notes that:

“[t]he proposed change would allow the requirement for an IFA to leave an employee better off overall to be satisfied by the provision of non-monetary benefits. The subjective preferences of the employee would be relevant in assessing the relative value of benefits.

This opens the door for employers to negotiate IFAs to provide for employees to forgo overtime or penalty payments for working certain hours because those hours are ‘preferred’ by the employee. The value attached to the particular working hours by the employee would offset the reduction in take-home pay that the employee would receive as a result of the award provisions not being strictly adhered to.”

Criticism

Jenna Price, in The Canberra Times, has said that the changes are particularly concerning for young people and those working in the service industry, who have little power to represent themselves.  She believes that the changes potentially  “make it possible for employers to offer individual contracts that will cut take home pay and go below the award minimum.  Basically, offering pizza for pay.”

Michele O’Neil, the national secretary of the Textile Clothing and Footwear Union of Australia, told The Canberra Times that “her union's experience is that these conditions are imposed on workers and the implication is that employees will lose jobs unless an agreement is made.” 

She said that the union has “already seen K-Mart vouchers for work on a Saturday. This is exactly the sort of trade-off that companies will try and impose on workers.”

David Peetz, Professor of Employment Relations at Griffith University, wrote in The Conversation that there are further issues at play.  He writes that he is particular concerned about an amendment that requires:

“employer and employee to sign a “genuine needs” statement indicating both agree the employee will be better off. This is then prima facie evidence that the parties genuinely believed the IFA met the BOOT [the “better off overall”] test and typically prevents the employer from being prosecuted if it is sub-standard.”

He says that while the Fair Work Act Review did recommend employers have “improved defences against alleged breaches”, but that the Review only recommended this occur “where employers have notified the FWO they have signed IFAs with employees”.  This is not required by the proposed amendments in the Bill.

The Australian Financial Review noted that the Bill seems to be contrary to the attitude that the courts and tribunals have taken so far:

“As Commissioner Smith noted in 2010 when assessing an arrangement of this kind in an enterprise agreement proposed by BUPA Care Services, an approach which seeks to “rely upon the subjective belief of the employee rather than the objective testing of the award against the agreement... undermines the standards fixed in awards and the basis for determining the no disadvantage test.” The concept of the employer offering the “gift” of employment, provided it is at a rate discounted the safety net, “has far reaching implications for the operation of the safety net of wages and conditions”.

The Bill is currently at the second reading stage in the Senate.

TimeBase is an independent, privately owned Australian legal publisher specialising in the online delivery of accurate, comprehensive and innovative legislation research tools including LawOne and unique Point-in-Time Products.

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