Submission 167 Australian Council of Trade Unions Workplace Relations Framework Public inquiry

The Fair Work Review Panel was unable to establish that the FW Act had increased compliance costs for business. It notes that it was not presented with any persuasive evidence of onerous compliance costs, when compared with earlier legislative frameworks¹³⁹.

To that end, it is unlikely that compliance costs in the industrial relations system have any significant impact on employment rates. Compliance costs are necessary, and in many cases unavoidable. Whilst the instability of legislative reform has in the short term increased compliance costs due to the need to adjust to new or changed regulatory requirements, in the longer term, the national system has reduced the overall compliance costs associated with doing business.

Main Sources of Costs

Transitional Provisions

Many of the complaints raised by employers about compliance costs related to the complexity and confusion that arose due to the transitional nature of some of the aspects of the Fair Work and Forward with Fairness reforms, including the phasing in of the modern awards. For example, some businesses reported to the Panel that they had to refer to the old award, the modern award and the transitional pay rate when seeking to establish the correct wages to pay their staff.

The workplace relations system in Australia has been in a state of transition since the commencement of WorkChoices in 2006. From that time, WorkChoices and each subsequent piece of legislation has included complex rules and regulations to assist with the transition from the old to the new legislation. Whilst these transitional periods have bought with them a level of complexity, they are unavoidable.

This time of transition is now at an end. For example, the transitional provisions in modern awards that may have preserved certain aspects (such as wage entitlements, industry allowances, casual loadings and penalties) of pre-reform modern awards ceased to operate on 31 December 2014. Other transitional provisions that applied to new employers to the federal system (e.g. non trading corporations, sole traders and partnerships in NSW, Queensland, Tasmania and South Australia) have now ceased to have effect as the phasing in of certain wages etc. have completed.

Since the beginning of 2015, the workplace relations framework is arguably now at its most simple. This is evident when you compare the FW Act to other workplace laws, for example to work, health and safety or workers compensation laws. Most employers in Australia can apply nationally relevant workplace laws to their employers¹⁴⁰, meaning that there is a single set of rights and obligations for all their employees (with the exception of some State based industrial jurisdictions that may still apply). The rationalisation and simplification of the award system has also drastically reduced the amount of regulation that once needed to be understood and applied to certain categories of employees. The modern award system has also made it easier for employers to monitor any changes to terms and conditions that have occurred arising from the award review process or other variation applications made by individual parties.

The Review Panel referred to the economic cost-benefit analysis conducted by Access Economics of moving to a single national workplace relations system. The Report found that moving a national workplace relations system would deliver small, but significant net benefits to employers. These savings would notably include payroll savings as a result of simplified terms and conditions for employees under modern awards.

However it should be noted that the award modernisation process, which commenced in 2008 and is largely still ongoing today (and is likely to continue until the end of 2016) has significantly increased both the costs and the need for resources within unions. Peak bodies such as the ACTU bear the significant weight of these proceedings given the breadth of our interest in the modern awards but also due to the increase in ‘test case’ proceedings. Whilst the rationalisation of modern awards has reduced the administrative burden on business, it has also meant that applications which once would have only affected a particular jurisdiction or sector of an industry, now has flow on effects for larger populations of the workforce. This has meant that this ‘test case’ litigation is bigger, both in the amount of evidence that is bought before the FW Commission but has also drastically increased the number of interested parties involved in the proceedings. This means that litigation takes longer to proceed and has increased the cost for those involved.

The Commonwealth Government had originally committed to approximately $2 million dollars to peak bodies to assist them with the burden of these additional costs during this time, however those funds were later retracted.

Litigation

It might be considered trifling whether or not a document is stapled for the purposes of compliance with a provision of the Fair Work Act, however in context of the complexity of industrial relationships during bargaining, such factors, as trivial as they may seem on face value, go the heart of the objectives of the collective bargaining framework under the FW Act.

Where formal hearings are necessary, the FW Commission must perform its functions and exercise their powers in a manner that:

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  Is fair and just;
  
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  Is quick, informal and avoids unnecessary technicalities; and
  
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  Promotes harmonious and cooperative workplace relations.¹⁴¹
  

The Fair Work jurisdiction is designed to be accessible for non-represented applicants and section 596 of the Act restricts the role of solicitors and practitioners during proceedings, who must seek leave to appear.

Whilst we do not have access to precise figures, in our experience, we would suggest that a number of proceedings are heard with parties choosing to represent themselves. On those occasions, the FW Commission can and does accommodate, and to some degree assist the parties to ensure that the matter is heard on a fair basis. By example, Vice President Hatcher allowed an employer to be represented by counsel however given the imbalance in representation, the matter did not proceed by way of formal hearing, and rather it was dealt with by private conference under s.398 of the FW Act¹⁴².

The Vice President described the process and some of the issues encountered in this way:

“[3] The Star sought and was granted permission to be represented by counsel in the proceedings. I was satisfied that, given the factual complexity of the matter, the representation of The Star by counsel would allow the matter to be dealt with more efficiently, and I considered that this would outweigh any disadvantage that might flow from Mr Gurdil being self-represented. However, given the imbalance in representation, I considered that it would not be appropriate to hold a formal hearing in relation to the matter, and instead the matter was dealt with in a private conference under s.398 of the Fair Work Act 2009 (the Act). Nonetheless, evidence under oath or affirmation was received in the course of the conference, and cross-examination of witnesses was permitted.

[4] Notwithstanding the considerable assistance I received from counsel for The Star in the conduct of the matter, it was inevitable that difficulties would arise from Mr Gurdil being a self-represented lay person. Mr Gurdil was unable to properly test the evidence of The Star's witnesses by way of cross-examination, although he did ask them some questions. He advanced controversial propositions that were not supported by evidence and/or had not been raised with relevant witnesses. He was required to undertake the dual role of witness and advocate without a proper understanding of the difference between evidence and submissions. The conduct of the matter by way of a conference permitted me to take a reasonably interventionist and inquisitorial role so as to ameliorate some of these difficulties, but nonetheless they remained to a significant degree. I have therefore had to take account of Mr Gurdil's understandable difficulty in presenting his case in my assessment of the matter.”

The ability of the system to provide this flexibility demonstrates that the framework, at least in so far as dismissal applications are concerned is working effectively. Self-represented litigants also have the benefit of a number of helpful resources, such as the Fair Work Bench Books, to assist them in preparation for their matters. Of course, as noted by the Vice President, such measures are not capable of overcoming all the difficulties that are exist in all legal systems. However further investment in education and information programmes is desirable.

In our view, parties who decide to engage legal representation do so as a matter of preference rather than necessity, as in the case of large employers and associations they would almost all have the internal capacity to be able to represent themselves. As such, the real driver of legal compliance costs is choice and preference and not due to the industrial relations system.