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2002 - 2003
THE PARLIAMENT OF THE COMMONWEALTH
OF AUSTRALIA
HOUSE OF
REPRESENTATIVES
EXPLANATORY
MEMORANDUM
(Circulated by authority of the Minister for Employment and
Workplace Relations, the Honourable Tony Abbott MP)
WORKPLACE RELATIONS AMENDMENT (PROTECTING THE LOW PAID)
BILL 2003
OUTLINE
This Bill proposes to amend the Workplace
Relations Act 1996 (the WR Act) to ensure that adjustments to the award
safety net are made giving appropriate recognition to the needs of the low paid.
When adjusting the award safety net, there is a need for the Australian
Industrial Relations Commission (Commission) to give greater emphasis to the
needs of the low paid, the employment prospects of the low paid and the
unemployed, and the capacity of employers to meet increased labour costs. Under
recent decisions of the Commission quite highly paid workers have been able to
receive safety net adjustments. This acts as a disincentive to bargaining at
the enterprise level.
The Bill would amend the objects of the Act to
ensure that the primary focus of the award safety net is to address the needs of
the low paid. The Bill would also require the Commission to recognise that the
primary role of awards is to address the needs of the low paid when the
Commission performs functions and exercises powers in relation to awards.
In performing functions under Part VI of the WR Act the Commission would
be required to have regard to:
• the needs of the low paid,
including their need for employment (a primary
consideration);
• the employment prospects of the unemployed;
and
• the capacity of employers to meet increased labour
costs.
FINANCIAL IMPACT STATEMENT
The measures in this
Bill will have no impact on Commonwealth expenditure.
REGULATION IMPACT STATEMENT
REGULATION IMPACT STATEMENT – WORKPLACE RELATIONS AMENDMENT
(PROTECTING THE LOW PAID) BILL 2003
Problem:
1. The
Government’s longstanding policy position on the role of the safety net of
awards was reiterated in the policy statement Choice and Reward in a Changing
Workplace released in October 2001.
The Liberal/National Coalition
strongly believes in providing an effective safety net of minimum wages and
conditions of employment that can be relied upon by low paid employees, whilst
contributing to workplace bargaining above that safety net. (p
27)
2. The priorities of providing a safety net for the low paid,
while still encouraging agreement making for those able to bargain, are not
being effectively balanced during the process of adjusting the safety
net.
3. When adjusting the award safety net, there is a need for the
Australian Industrial Relations Commission (the Commission) to give greater
regard to the effect of its decisions on the encouragement of agreement making
and the employment prospects of the low paid and unemployed.
4. A
particular problem is the extension of safety net adjustments to middle and high
wage earners. Giving annual increases to higher paid employees fails to provide
an appropriate incentive for these employees to enter into workplace agreements.
Recent decisions suggest that the Commission continues to see a role for the
award system in determining the wages and salaries of middle and high wage
earners even though these employees are increasingly entering into wage
agreements with their employers and are less reliant on award based wage
increases.
Objective:
5. The Government’s objective
is to emphasise, when the Commission is varying and adjusting awards, the need
for it to focus upon the intended safety net role of the award system for the
low paid.
6. The Government’s policy position is that the award
safety net should focus primarily on the low paid and that adjustments to that
safety net should have primary regard for the needs of the low paid, including
their need for employment.
Options:
Status
quo
7. The status quo could be maintained. If this option were
chosen the Commission is likely to continue to award safety net adjustments to
all workers whose pay is set by awards – including middle and high wage
earners. The continued application of safety net adjustments to high and middle
wage earners is likely to continue to remain as a disincentive to agreement
making.
Increasing the emphasis of safety net adjustments on the needs
of the low paid
8. The preferred option is to amend the Workplace
Relations Act 1996 (WR Act) to emphasise that the needs of the low
paid, including their employment prospects, should be the primary consideration
for the Commission in maintaining the award safety net. In order to reinforce
the importance of the need for employment, the proposed amendments also include
that, in addition to current provisions, the Commission should have regard, when
adjusting the award safety net, to the employment prospects of the unemployed
and the capacity of employers to meet resulting increased labour
costs.
9. This option involves amendments to the WR Act which
would:
• emphasise in Part 1, Section 3 (Principal Object) the
needs of the low paid as a primary consideration when adjusting the safety
net;
• emphasise in Part VI, Division 1A (Objects of Part), a primary
consideration for the needs of the low paid when adjusting the safety net;
and
• add to Part VI, Division 1 (Functions of Commission generally)
that when the Commission is adjusting the safety net, primary consideration
should be given to the needs of the low paid including their need for
employment, and that consideration should be given to the employment prospects
of the unemployed and the capacity of employers to meet increased labour
costs.
Impact Analysis:
10. Adjustments to the safety net
that are not focussed upon the low paid and have disregard for the capacity of
employers to meet resulting increased labour costs, can create a disincentive to
bargain at the workplace level. This limits the benefits of increased
productivity and efficiency to be gained by employers, employees and the
community more generally. Refocussing the federal award system so that it acts
as a genuine safety net for the low paid will help protect the pay and
conditions of employees who are unable to bargain, while at the same time
encouraging agreement making for those who are able to do so. Encouraging
agreement making that is tailored to the needs of the particular workplace will
give the opportunity for increased flexibility and efficiency.
11. In May
2000 it was estimated that approximately 1.8 million non-farm employees
continued to depend on either federal or State awards as their pay setting
mechanism. Safety net adjustments directly affect up to this number of
employees as State jurisdictions flow-on federal safety net
adjustments.
12. The desired impact of the proposed Bill would be to
emphasise the importance of award dependent low paid workers and their ongoing
employment prospects, when the Commission is adjusting the award safety net.
The proposed Bill would increase the level of consideration given in Safety Net
Reviews to the capacity of employers to meet increased labour
costs.
Views of affected parties:
13. Consultations with
employer representatives during Safety Net Reviews have identified concerns
regarding the extension of safety net increases to middle and high wage earners,
the capacity of employers to pay increased labour costs following safety net
adjustments and the impact of safety net increases on employment prospects for
relevant employees.
14. In ‘Modern Workplace : Modern Future
– A Blueprint for the Australian Workplace Relations System
2002-2010’, the Australian Chamber of Commerce and Industry (ACCI)
supports a refocussed system where wages are primarily varied through workplace
bargaining and award rates of pay provide a genuine safety net for the lowest
paid.
Conclusion and recommended option:
15. The
recommended option is to amend the WR Act to emphasise that the low paid
and their employment prospects should be the primary consideration for the
Commission in setting the award safety net, and that the Commission should also
have regard to the capacity of employers to meet resulting increased labour
costs.
Implementation and Review:
16. The recommended
option would be implemented by amending the WR Act to
• Emphasise in
Part 1, section 3 (Principal Object) that addressing the needs of the low paid
is a primary consideration when adjusting the safety net;
• Emphasise
in Part VI, Division 1A (Objects of Part) that a primary consideration when
adjusting the safety net is addressing the needs of the low paid;
and
• Add to Part VI, Division 1 (Functions of Commission generally)
that, when the Commission is adjusting the safety net, primary consideration
should be given to the needs of the low paid including their need for
employment, and that consideration should be given to the employment prospects
of the unemployed and the capacity of employers to meet increased labour
costs.
17. The Department of Employment and Workplace Relations will
monitor the impact of the legislation. The legislation will also be reviewed
through formal mechanisms for consultation already in place. Consultation with
interested parties and groups will also continue.
Clause 1 – Short title
1. This is a formal provision
specifying the short title of the Act.
Clause 2 –
Commencement
2. This clause specifies that the Act will commence on
the day after it receives Royal Assent.
Clause 3 –
Schedule(s)
3. Clause 3 provides that an Act specified in a Schedule
to this Act is amended or repealed as set out in the Schedule, and that any
other item in a Schedule operates according to its terms.
SCHEDULE 1 – AMENDMENT OF THE WORKPLACE RELATIONS ACT
1996
Part 1 – Amendments
Item 1 – Subparagraph 3(d)(ii)
1. Section 3 of the WR
Act sets out the principal object of the Act. That object is to provide a
framework for cooperative workplace relations which promotes the economic
prosperity and welfare of the people of Australia. Paragraph 3(d)(ii) is to the
effect that providing the means to ensure the maintenance of an effective award
safety net of fair and enforceable minimum wages and conditions of employment is
one of the ways that the object of the WR Act is to be achieved.
2. This
item would insert a reference to the primacy of the needs of the low paid in the
maintenance of the award safety net. The amendment will emphasise that the
safety net role of the award system is targeted to addressing the needs of the
low paid.
Item 2 – Paragraph 88A(d)
3. Part VI of
the WR Act concerns the role of the award system in dispute prevention and
settlement. The objects of Part VI are set out in section 88A.
4. Paragraph 88A(d) currently provides that it is an object of the Part
to ensure that the Australian Industrial Relations Commission (the Commission)
exercises its powers and functions in relation to making and varying awards in a
way that encourages agreement making at the enterprise level and protects and
promotes youth employment.
5. Consistent with focussing the award safety
net on the needs of the low paid the Bill would also require the Commission to
recognise that the primary role of awards is to address the needs of the low
paid when the Commission performs functions and exercises powers in relation to
awards.
Item 3 – Paragraph 88B(2)(c)
6. Section 88B
provides the Commission with guidance on the performance of its functions under
Part IV of the WR Act. Subsection 88B(2) provides that in performing its
functions the Commission must ensure that a safety net of fair minimum wages and
conditions of employment is established and maintained having regard to a number
of factors. The needs of the low paid are already referred to as one of the
factors to be considered where the Commission is adjusting the safety net
(paragraph 88B(2)(c)).
7. The proposed amendment would provide additional
guidance to the Commission on factors that are to be considered when it is
adjusting the safety net. The Commission will be required to have regard to the
needs of the low paid, including their need for employment, as a primary
consideration. In addition the Commission is required to consider the
employment prospects of the unemployed and the capacity of employers to meet
increased labour costs.
Part 2 – Application
Item 4 – Application of Part 1 Amendments
8. This item
proposes that the amendments made by Part 1 will apply to any proceedings that
that the Commission has not finished dealing with on or before the day when the
Act commences. This means that the Commission will be required to apply the
amended provisions in relation to any part heard matters on and after the
commencing day.