Sladen Snippet - ‘Repair - not replace’ – Productivity Commission releases its hotly anticipated draft inquiry report

For some time now, the Productivity Commission (Commission) has been undertaking a public inquiry to examine the performance of the workplace relations framework in Australia and to identify improvements to it.

Today, the Commission released its hotly anticipated draft inquiry report. The report outlines the key issues identified so far during the inquiry, discusses some of the draft recommendations and findings, and outlines how stakeholders will be able to provide feedback.

In summary, the Commission identified that Australia’s current workplace relations framework is not dysfunctional and that it needs repair – not replacement. Key areas flagged for improvement in the draft report include:

  • the structure and operation of the Fair Work Commission (FWC) and the Fair Work Act 2009 – the Commission suggested that the Act and sometimes, the FWC, can give too much focus to procedure rather than substance, leading, in some cases, to poor outcomes and compliance costs. The unfair dismissal framework was flagged as an example of this. Amongst other things, structural changes have been suggested as a possible solution;
  • the process and considerations involved in minimum wage setting – the Commission noted that minimum wages are justified but significant increases do pose a risk for employment;
  • awards – the Commission recognised that some awards have undesirable inconsistencies and rigidities but nonetheless serve as an important safety net and benchmark for many employers. The Commission suggested that specified trouble-hotspots should be addressed rather than awards being completely replaced;
  • penalty rates – the Commission recognised that penalty rates have a legitimate role in compensating employees for working at unsociable times but has suggested that Sunday penalty rates for cafes, hospitality, entertainment, restaurants and retailing should be aligned with Saturday rates;
  • enterprise bargaining – the Commission found that this generally works well but is often ill-suited to smaller businesses and has pegged the introduction of a ‘no-disadvantage’ test to replace the current ‘better off overall test’. In addition, the Commission identified scope for a new form of agreement - the ‘enterprise contract’ — to fill the gap between enterprise agreements and individual arrangements. The Commission suggested that this sort of agreement could offer many of the advantages of enterprise agreements, without the complexities;
  • industrial action – the Commission identified that some minor tweaks are required, including changes to the processes for secret ballots, which can be overly complex.

This is of course a draft report only and the Commission has emphasised that some of its positions may change based on new information.

The Commission’s final report is expected to be provided to the Government in November 2015.

For further information, please contact:

Louise Houlihan
03 9611 0144

Jane O'Brien
Senior Associate
03 9611 0155

Rohan Kux
Senior Associate
03 9611 0107

Joanna Bandara
03 9611 0196