A Recipe for Chaos
You almost need a PhD in industrial relations law to decipher the awards negotiated by some unions. No wonder some managers are confused. By James Mathias.
In Imagine for a moment you are a law-abiding café proprietor trying to keep your business afloat whilst doing the right thing by your staff who have been at it since the crack of dawn.
A conscientious employee whose job is to clear the tables notices the orders from the kitchen building up at the counter and takes it upon himself to serve them to hungry customers. Just another moment in the collective work ethic of a small business, right?
Wrong. That one small act from an employee could land you in front of the Fair Work Commission. The job of returning plates to the kitchen is remunerated under level one of the Restaurant Industry Award. Taking them from the kitchen to the table is a job reserved for workers on level two or above.
After six years of Coalition government, our workplace relations system is still largely unchanged from the Rudd Government’s dismantling of Work Choices to the Fair Work Act (FWA) in 2009.
The daily news cycle has recently become littered with allegations of so-called wage theft. Yet as this example shows, the complexity of the award system makes compliance all but impossible.
This week Woolworths became the latest major employer to get caught in the Fair Work nightmare. The company admitted that it owes almost 6,000 staff up to $300 million in underpayments. It is unlikely to be a deliberate act. Rather, like most cases, it is a consequence of the overpowering complexity of the flawed FWA.
The Fair Work Ombudsman has created a handy Pay Calculator that I gave up on after 15 minutes of attempting to work out how much to pay a theoretical waiter. If you just skip through to the end using suggested answers you are met with a 25-page summary that leaves more questions than answers.
The Restaurant Award is not the only one so complex. The Hospitality (general) Award is 99 pages long. Again, the Fair Work Ombudsman is here to help and has created a summary for employers struggling with how to pay their worker that’s just 90 pages.
The Building and Construction Award General On-Site Award is 147 pages. The FWO pay guide summary is 103 pages.
At over 214,000 words, 800 sections and 122 modern awards which set out thousands of separate minimum wages, the FWA is bigger and arguably more confusing than Fyodor Dostoevsky’s Crime and Punishment. This phone book like legislation is crippling small and big businesses with its complexity, which in some instances acts as a deterrent to hiring more staff.
Not even the Fair Work Ombudsman could properly understand the FWA. This was recently revealed by a judgement of the Full Bench of the Federal Court.
Since 2010 it has been a legal requirement for employers to provide each employee with the Fair Work Information Statement, which has information for assessing the employee’s personal/careers leave entitlements. In the Statement produced by the Ombudsman, these entitlements were said to be accrued on a pro rata basis and this has been how companies have been acting for more than nine years.
However in its August judgement the Federal Court said that this was not the case and now, red faced, the Ombudsman has had to reissue its advice that it has been giving companies all these years. The Government has applied to the High Court to challenge this but the issue stands that if the ombudsman can’t even understand the FWA then what chance have small businesses got?
Despite the incredible length of the FWA, large sections of it are still unclear, leaving it up to employers to interpret the law for themselves. This is not why most people got into business, and they often don't have the legal or technical skills to deal with it.
In the Broadcast, Recorded, Entertainment and Cinema Award, four grades of pay are determined by the employer’s assessment of the employee's maturity. This opaqueness often leads to disputes about meal times, entitlements to overtime and classifications of pay rates which under section 739 of the Act had more than 1,500 disputes lodged last year alone.
Businesses are not underpaying their workers, as the media would have you think. Rather, they are scared of the consequences of unintentionally breaching the Act and often overcompensate by overpaying. A report by the Australian Payroll Association found that in fifty per cent of businesses audited, employees were actually being overpaid and that there is limited ability to recover these overpayments. But you won't hear about that on the ABC.
The inception of the Fair Work Act was by a Government beholden to the unions who ran a massive, well-resourced campaign to unseat John Howard in 2007 and whose ultimate prize was to set the legislation as they saw fit. To ensure their relevance, unions embedded this complexity that allows them to thrive by representing people against employers who simply just can’t understand the Act and who can’t afford a team of lawyers to work it out for them. Even big business with these very teams of lawyers gets it wrong.
If the Fair Work Ombudsman and a Publicly Listed company can’t understand the Fair Work Act, what chance does your local café or restaurant have?