The current workplace relations framework is comprehensive and broad in reach and in many respects it works. However, some elements of the scheme are out of balance and require reform. Undue restrains on business decision-making impede growth and innovation, while complexity drives up compliance costs.
For many farm businesses, labour is the largest single operating cost. The four yearly modern award review is a long and resource intensive process and is unlikely to enhance productivity or efficiency. The Better Off Overall Test (BOOT) used for Individual Flexibility Agreements and enterprise agreements sets a higher bar than the previous ‘nodisadvantage test’, and is a disincentive to bargain. The result has been a slow decline in the number of enterprise agreements overall.
Currently, the Fair Work Act 2009 requires a four yearly review of the Modern Awards. The enormity of the task means that modern awards will remain in a perpetual state of statutory review, requiring constant allocation of resources from all stakeholders representing all award covered employers and employees in Australia
Recent changes to the modern awards objective that require the Fair Work Commission (FWC) to take into account the need to provide additional remuneration for work outside ordinary hours have been incorrectly interpreted by dissenting FWC decisions as a statutory requirement for all modern awards to include penalty rates.
The broader issue of penalty rates requires indepth consideration. The nodisadvantage test was replaced by the BOOT for the negotiation of enterprise agreements during the Modern Award Review process. The nodisadvantage test is more facilitative to effective agreement making as it allows entitlements to be traded so long as the employee is not disadvantaged overall. The recent Productivity Commission Inquiry into the Workplace Relations Framework made a number of sensible recommendations for reform that should be implemented.