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The laws that could kill pay rises: Omnibus Bill explained

·9-min read
ACTU Sally McManus (left) has been at loggerheads with Minister for Industrial Relations Christian Porter (right) over the Industrial Relations Reform package. (Source: Getty, AAP)
ACTU Sally McManus (left) has been at loggerheads with Minister for Industrial Relations Christian Porter (right) over the Industrial Relations Reform package. (Source: Getty, AAP)

Today, Friday 5 February, marks the final day to get submissions in for one of the most controversial reforms to Australian workplace law.

Introduced by the Morrison Government to create jobs and help businesses recover after COVID-19, the Industrial Relations Reform would create a definition of ‘casual’ work; let casuals ‘convert’ to permanent workers after 12 months; and fast-track enterprise agreements that don’t meet minimum conditions.

But the Government has been slammed by groups that argue the proposals will actually leave workers worse-off and stifle wage increases.

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The Reform package was tabled to Parliament in December last year, and has been referred to the Education and Employment Legislation Committee for inquiry.

Because there are multiple components, it’s more often referred to as the ‘Omnibus Bill’. Its full name is the Fair Work Amendment (Supporting Australia's Jobs and Economic Recovery) Bill 2020.

With the submission deadline closing today, here’s an outline of what the reforms propose, what it aims to achieve, why it’s being contested, and by whom.

Industrial Relations Reform: What is the Omnibus Bill proposing?

While the draft legislation makes a number of proposals, five key measures in particular have been in the spotlight:

1. Defining what a ‘casual’ employee is

A reform would define what a ‘casual’ worker is in legislation. This would be someone who accepts work “where there is no firm advance commitment to continuing and indefinite work”.

Casual workers will also be given the right to convert to a permanent employee, if they want to. After 12 months, bosses will have to assess whether their casual workers have had regular shifts, and if so, offer them part-time or full-time work.

Significantly, the Bill also prevents what’s been called ‘double dipping’. That is, if a court determines a casual worker has been misclassified, and is actually permanent, they’ll have their subsequent leave entitlements off-set by the casual loading they’ve already been paid. This means employers don’t have to pay entitlements to the same worker twice.

  • More info: Read the fact sheet here.

2. Greater workplace flexibility

COVID-19 has triggered much greater workplace flexibility, and the Bill looks to extend some of these arrangements, including flexibility around what’s considered ‘part-time’ work.

Proposed provisions would allow bosses and part-time workers – who already work at least 16 hours – to agree on extra hours of work, at ordinary rates of pay.

  • More info: Read the fact sheet here.

3. Enterprise agreements get fast-tracked

These proposals have been particularly contentious, and relate to enterprise bargaining agreements, or EBAs. The reforms would fast-track EBAs, and change a number of things, such as the way the ‘Better Off Overall Test’ – or BOOT – is applied, including:

  • Only taking into account types or patterns of work that staff are currently engaging in (i.e. not taking into account hypotheticals);

  • Regarding overall benefits, including non-monetary benefits;

  • And giving weight to the views of the parties actually affected by the EBA.

There are some other changes too, like giving the Fair Work Commission power to approve EBAs that don’t pass the BOOT for a period of two years, and a provision that would kill off old ‘zombie agreements’ from 1 July 2022.

  • More info: Read the fact sheet here.

4. Bigger fines, jail time for underpayment

The reforms crack down harder on wage theft: companies would cop penalties of $99,990 for contraventions (up from the current $66,600), and individuals would cop $19,980 (up from the current ($13,320).

Those who have been found ‘dishonestly underpaying’ staff would also face four years jail time, as well as million-dollar penalties.

  • More info: Read the fact sheet here.

5. ‘Greenfields agreements’ will get lengthened

A Greenfields agreement is one that is made directly between the employer and employee groups like unions. The reforms would extend agreements covering the construction phase of new major projects, such as mining ventures, from 4 years to 8 years, and would have to give a pay rise at least once a year.

  • More info: Read the fact sheet here.

Why is this reform being proposed?

CANBERRA, AUSTRALIA - FEBRUARY 03: Attorney-General Christian Porter (L) speaks with Prime Minister Scott Morrison during Question Time in the House of Representatives on February 03, 2021 in Canberra, Australia. Liberal MP Craig Kelly has been told by the Prime Minister Scott Morrison to heed expert medical advice, after the outspoken politician promoted unproven coronavirus treatments and questioned the safety of vaccinations. (Photo by Sam Mooy/Getty Images)
Attorney-General Christian Porter (L) speaks with Prime Minister Scott Morrison. (Photo by Sam Mooy/Getty Images)

The Morrison Government has proposed this Bill as part of its plan to support jobs recovery and help keep businesses afloat following the COVID-19 crisis – but it also tackles some of Australia’s long-running problems in the industrial relations system.

When the Bill was first tabled, Attorney-General and Minister for Industrial Relations Christian Porter said the proposals were not “radical” or “driven by ideology”.

“Regrowing ... jobs – especially in some of our hardest hit industries such as the retail and hospitality sectors – is an enormous challenge that our IR reforms will help us to meet,” he said.

He also anticipated fierce opposition and roadblocks to passing the legislation. “The danger is that if those inside and outside the Parliament revert to their traditional ideological corners, these critical reforms could be delayed or even blocked, leaving business without crucial support and workers without an opportunity to get back into jobs.”

However, Labor, employee groups, unions and thinktanks alike have criticised various aspects of the Omnibus Bill, stating that it actually reduces workers’ rights.

The Omnibus Bill: A pay rise killer?

A close up of a wad of cash money notes in a tightly clenhed fist. 50 fifty as the main denomination. Gambling payday winning spending saving sales profit concept
(Source: Getty)

A number of voices have raised concern about the Bill’s impact on wage growth, which is already stagnant, and has been so for years.

Removing the BOOT test and making it easier for non-union EBAs to be fast-tracked would actually push down wages, one economist argues.

In a report, Alison Pennington – a senior economist for thinktank the Australia Institute’s Centre for Future Work – said that the reforms would “enhance the top-down power of employers to implement their own agreements”.

Pennington argues three things: that non-union agreements have consistently delivered lower wage rises than union agreements; that many non-union EBAs have delivered no wage rises at all; and non-union EBAs lock in lower wages for longer.

“The Omnibus Bill’s changes signal a clear pathway to reducing wages through non-union EAs,” she said.

RMIT University professor and employment law expert, Anthony Forsyth, highlighted the fact that the reforms give FWC power to approve agreements that don’t meet the BOOT.

“This is a major breach in the protections given to employees against wage cuts and other reductions in conditions. It will drive down wages,” Forsyth told Yahoo Finance.

One of the reasons why wage growth has been suppressed is because enterprise bargaining has “slowed right down”, he added.

The number of workers covered by EBAs in the private sector has dropped from 19 per cent in 2013 to just 11.7 per cent in September 2020.

Enterprise agreements are one of the main ways to secure above-award wages for workers, Forsyth said.

“We need measures that will kick-start bargaining. The Bill might lead to more agreements being made, but they will be in employers’ favour (because the provisions in the Bill remove many of the rights of employees to access information etc before a vote on an agreement, and limit the opportunity for union involvement).”

“The Bill aims to make the agreement-making process quicker and easier for businesses – not boost workers’ wages.”

What else is being said about the Bill?

Commenting on the Bill overall, Forsyth said it didn’t carry “a lot of good news for workers”.

For one, it gives employers greater powers to determine who’s casual and who isn’t, and doesn’t really offer workers a strong dispute resolution process if the employer refuses to convert the worker to permanent.

This is echoed by Australian Council of Trade Unions secretary Sally McManus, who tweeted that the Bill entrenches casual work.

McManus has also likened the reforms to WorkChoices, an unpopular number of amendments to labour law made during the Howard era in 2005.

“WorkChoices allowed employers to cut wages, and this proposal will do that as well,” she said.

“When WorkChoices was introduced employers rushed out to cut wages, the same will happen if this law passes. Some workers are still stuck with WorkChoices pay cuts some 13 years later.”

Who’s in favour of the Bill?

Other than the Morrison Government, which is introducing this Bill, business councils, industry groups and workplace relations specialists – which work with businesses – are all in favour of the reforms, to varying degrees.

Business Council of Australia CEO Jennifer Westacott has hailed the reforms as “practical and workable”, and “puts the ambition back in agreement making”.

She believes the EBAs will again become a “genuine alternative to awards” and will help achieve higher wages, better productivity and jobs growth.

Westacott also believes the flexible part-time arrangements will give workers more choices, increase take-home pay, address underemployment and incentivise workers to give their part-time staff more work.

The eight-year Greenfields agreements will also “inject more certainty” into pay and conditions, she added.

Innes Willox, CEO of the Australian Industry Group,, said the Bill was “balanced, fair”, and removed roadblocks to productivity.

The Bill’s casual employment provisions will address “widespread current uncertainty” and help casuals regain jobs. The changes to EBAs will also increase productivity and wage growth, he said.

Managing director Ed Mallett of Employsure, a workplace and employment relations specialist firm, said the prevention of “double-dipping claims” will help business cash flow.

“Business owners have been trying to save money any way they can as a result of the pandemic. With initiatives like JobKeeper coming to an end in coming months, a change like this, if executed correctly, would be the kickstart employers need to start the new year on the front foot.”

Where to next?

Submissions to the inquiry about this Bill close today.

According to the Parliament of Australia website, a series of public hearings will be held in Townsville on 8 February and Adelaide on 10 February.

The Education and Employment Legislation Committee will then report on the inquiry findings by 12 March 2021.

So stay tuned; Yahoo Finance will keep you up to date with the findings when the report is released.

jessica.yun@yahoofinance.com

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