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Industrial Relations Reform a Mixed Bag

The rules of unfair dismissal have taken a backward step since the introduction of Fair Work Act 2009 and should be overhauled, according to a new report by The Centre for Independent Studies.

Since the introduction of the Fair Work Act, unfair dismissal laws have broadened and claims have increased. Small business is no longer exempt from unfair dismissal laws that now cover nearly all private sector workers in Australia.

There are serious problems with the unfair dismissal process, says Alexander Philipatos, CIS Policy Analyst and author of the report. ‘At conciliation, no evidence is permitted yet 80% of claims are finalised, with small businesses complaining about the need to pay ‘go away money’ to avoid a costly trial.’

‘Unfair dismissal laws also have negative effects upon the disadvantaged, such as the long-term unemployed, because of restrictive hiring and firing regulations.’
 
The perception by some in the business community that we are returning to ‘industrial chaos’ and constant dispute does not stand up to the facts. Australia’s strike rate has declined by 75% since the first major reforms in 1993.

‘Despite the positive data on industrial action, it is worrying that the Fair Work Act has broadened the matters that employees and unions can strike over, such as management’s use of contractors and external labour.’

‘It should be management’s right to decide who and how they hire workers because it is management who are ultimately responsible to shareholders.’

‘The Fair Work bargaining system is cumbersome and inflexible. Only 18% of Australian workers are union members. Yet under the Fair Work system, unions have a guaranteed place at the bargaining table, even in workplaces where there are few union members and the employer wishes to deal directly with employees.’

Labour market liberalisation has been broadly successful since the 1990s in removing restrictive work practices that hampered productivity.
 
‘The rigid award system has been simplified. Awards used to number in the thousands and regulated a wide range of employment conditions. Today they serve as a safety net numbering just 122 and regulating a lot less of the employment contract.’
 
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Alexander Philipatos is a Policy Analyst at The Centre for Independent Studies. He is available for comment.
 
The CIS Policy Monograph, Back to the Bad Old Days? Industrial Relations Reform in Australia, is available at the CIS website.

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