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Employment Relations: Australian Financial Review

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Question:

Discuss about the Employment Relations for Australian Financial Review.

 

Answer:

Introduction

The current report is based on the changes that should be made to Better Off Overall Test. The Fair Work Commission when determining whether to approve a proposed enterprise agreement applies this test. The test is conducted on the basis of the relevant modern award that covers employees that could be covered by the proposed the enterprise agreement. As put forward by Angwin (2017), BOOT requires each award-covered employee as well as each prospective award-covered employee should be better off under the agreement. It is also identified that BOOT develops award conditions that need to be traded off.  An agreement passes the better off overall test if Fair Work Commission Australia is satisfied that each award covered employee as well as each prospective award covered employee could be better off overall if they were employed under the agreement instead of the under the relevant modern award (Bray 2014). Fair Work Commission Australia could be able to investigate the cases of employees in implementing the better off overall test. However, as the corporate environment has been dynamic, the policies of Fair Work Commission need to be changed. By evaluating the effectiveness of current policies, a set of suggestions have been provided.

 

Background

The “Better off overall test” is a principle in Australian organizations agreements that need employees are “better off” under the agreement than if the significant award applied. The Fair Work Commission considered the application of BOOT regarding its application to every single employee or to majority of workers.  As put forward by Clark, Taylor and Oakes (2016), the Fair Work Commission discarded a proposed enterprise agreement for Coles Supermarket because it did not pass the better off overall test. When the regulations require that each work should be better off the under an organizational agreement than the award, Fair Work Commission might not be satisfied if a majority of employees will be better off. Thus, a state of disagreement and controversy has been observed between the Fair Work Commission and the employers (Fair Work Commission 2017). It is possible for Fair Work Commission to approve an agreement that does not fulfill the requirement of BOOT, but only in some limited cases where the tribunal considers that approval of the agreement is not contrary to the public interest (Hannan 2016).

 

Aim of the Report

The aim of the report is to evaluate the effectiveness of Better Off Overall Test and provide suggestions to improve the Test. Thereby, considering this particular aim, the report focuses on the current effectiveness of the test because of which the employers and employees are in the consistent controversy.

Scope of the Report

The report only focuses on the current effectiveness of BOOT and based on the analysis, it provides suitable strategies that increase the efficiency of the test. However, Fair Work Commission in Australia has certain issues with the Better off test but the report does not include those issues.

Discussion

BOOT and its introduction   

The better off overall test is implemented by Fair Work Commission to judge the effectiveness of the proposed enterprise system.  This test is significant as it is developed on the basis of relevant modern award that includes workers that need to be covered by the proposed enterprise system. It includes each award-covered worker as well as each potential award-covered to better off under the agreement. In order to decrease the level of inefficiency and flaws in the employment policy, the Fair Work Commission has introduced “BOOT”. According to the principles of Fair Work Commission, the enterprise agreement must pass the better off test (Fair Work Commission 2016). Thereby, the Commission accepts the terms of the enterprise agreement or the outcome of the Test, each award-covered employee must be better off under the agreement in comparison with the relevant modern award. The Commission in Australia has shown its concern regarding the pay rates for junior as well as casual employees in the agreement.

BOOT Applied to Coles

The department of Fair Work Commission disapproved the proposed enterprise agreement for Coles Supermarket due, since it did not pass the better off overall test. As per the regulations, each employee should be better off under an enterprise agreement instead of the award. The organization Coles tried to minimize the penalty rates as well as compensate for the deduction via entitlements. The enterprise argued that by increasing the standard rate to a certain extent and providing other significant benefits. As per the regulation, the company has to compensate its employees adequately for the loss of wages. According to department of Fair Work Commission, the contingent leave entitlements depended on a particular employee availing that leave benefit. In several cases, these “contingent entitlement” might not properly compensate for the clear as well as unambiguous deduction in wages at the time of penalty rate periods (Hannan 2016). Eventually, the Fair Work Commission in Australia advised Coles to reapply for the acceptance of revised enterprise agreement once the company identified these deficiencies. Thereby, while reapplying for the approval of new enterprise system, Coles developed undertakings to meet the criteria of Commission’s concern with an undertaking of giving employees a right to ask for a reconciliation to check employees’ wages in roster criteria is larger than what will be entitled to receive. Based on the undertakings provided by the company Coles, the newly proposed agreement was further approved (Oakes and Clark 2016).  Thereafter, according to the criteria, an individual employee sough leaves to appeal the accepted decision on certain grounds that should include the following

  • The agreement did not fulfill the criteria of BOOT and the non-monetary benefits under the agreement seem to be unacceptable to offset a negative wage outcome
  • A clause dealing with the pay rates for part-time workers who accepted additional hours developed a clear detrimental to part time workers
  • The reconciliation technique undertaking considered by Coles is only triggered on the demand of a worker

In spite of the objection of Coles, Fair Work Commission agreed to the appeal mentioning the core significance of assuring that the agreement meets the criteria of BOOT considering the significant number of workers, who might be disallowed from the benefits if BOOT is not properly passed. The Fair Commission Work has decided that Coles’ did not meet the criteria of BOOT and the company was given a particular deadline to deliver fresh undertaking to identify the concerns of the Commission. Nevertheless, the company was failed to provide these undertakings and as the consequence, the agreement has now been disapproved in spite of reports of stringent support of employees. Consequently, almost 10,000 employees of Coles how were covered by the agreement have now fallen back under the earlier agreement developed in 2011 (Stevens 2017).

 

BOOT was applied to H&M

The Fair Work Commission has disapproved an application by H& M to approve their 2016 enterprise agreement based on the fact that it did not pass Better Off Overall Test. The Fair Work Commission department puts an end to the long-term dispute over the agreement between H&M and the shop. In accordance with the application approval, an analysis of 50 randomly selected casual rosters by the SDA identified that two out of 50 employees were deprived from the benefits in comparison with the award under the agreement. The fundamental claims increased the concerns regarding less break times as well as the working hours being averaged to assure that employees were not being told to work on weekdays as well as weekends frequently. As put forward by Desir (2017) the loss of penalty rates on Saturday, weeknights and Sunday leaves were not given compared to the awards.  In this context, Low (2017) also commented that non-casual employee working above 60% of the hours after 6 pm on weekdays will be worse off than the award under the agreement. In order to respond to the situation, H&M reported that agreement left salaried workers better off overall as it requires them to guarantee minimum salaries for all hours worked fulfilled the criteria of award.

The company also provides long breaks, volunteer leaves and parent leaves as well as increased notice of termination. In this context, Marin-Guzman (2017) commented that over several months, the SDA on supporting H&M retail workers right across the nation increased its concern with the agreement. The company did not comply with the BOOT test.  Like the employees in others, the workers of retail employees deserve fair pay, adequate breaks as well as decent working conditions that give them a chance to keep the balance between their personal as well as family lives. In addition to this, SDA is trying to negotiate an agreement with H&M that contain fair pay as well as working condition. Thus, they could compile with the conditions of Fair Work Commission tries to compile with the conditions of Fair Work Commission’s Better Off Test.

Strength and Weakness of BOOT

Strength

·         The introduction of BOOT is effective for the workers as they have the opportunity to avail the necessary employee benefits working in an enterprise (Stevens 2017).

·         The BOOT agrees to the conditions to be traded off as long as the overall benefits received by the employees remain as more favorable

·         The employees feel a sense of satisfaction as the employers negotiating with the enterprise agreement the workers. The employers must have to consider all required conditions, benefit as well as disadvantages to keep pace with the modern corporate environment

·         While preparing enterprise agreements, the organizations need not be concerned with assuring each and every conditions that leave the workers better off instead of being covered by the advanced award.

·         For the employers, BOOT could deliver a much simpler system for compensating the employees when compared to the strict application of the significant relevant advanced awards.

·         In several workplace, there is more than one award that is applicable to its employees. The BOOT test could streamline this technique by incorporating penalty rates, overtime as well as other allowances entitlement into a base rate payable to worker in accordance with the classification.

Weakness

·         For organizations, the major disadvantage is the time as well as cost required to negotiate enterprise bargaining to manage the approval process with the Fair Work Commission (Patrick 2017)

·         The organization must have to follow the stringent procedures as well as the timeframe that needs to be implemented. The failure to the implementation could lead result in the rejection of agreement

·         If workers want to be represented by the union, they have to pay union fees, which over time could amount to a particular amount of money (Marin-Guzman 2017).

·         To approve the enterprise agreement, the organizations require a majority of votes and if the employees do not agree with the union, the union does not have to any options besides subject to the agreement.

Table 1: Strength and Weakness

(Source: Marin-Guzman 2017)

How BOOT test can be improved

The implementation of BOOT has always been effective for the organization as it helps the organizations to deal with the employees and their external disputes. If an organization passes the BOOT test and the company is able to satisfy Fair Work Commission, the employees of each department will better off under the enterprise agreement. However, it is also observed that Fair Work Commission is involved into the dispute with the enterprise regarding the Fair work judgment. Thus, it is necessary for the enterprise to pass BOOT test to avoid the dispute with the employees and Work Commission. Fair Work Commission has to make the judgment to make up for any loss of award entitlements and conditions. In some particular context, Fair Work Commission could approve an organization agreement that does fulfill BOOT. Moreover, Fair Work Commission should ensure an individual’s base rate of pay under an organization agreement should not be less than the base rate of pay under the relevant modern award. The Fair Work Commission could vary an organization’s agreement to remove the ambiguity as well as uncertainty on the application of companies. In this context, () commented that in order to avoid the disputes as well as its consequences, the enterprise and the workers could make a joint application to Fair Work Commission.

 

Conclusion

On the completion of the report, it can be added that enterprises should comply with the rules and regulations developed by Fair Work Commission. In order to avoid the employee dispute and pressure from the Commission, the enterprise should comply pass the BOOT test.  However, it is also observed that the decision of Fair Work Commission will set a precedent but it will not be an eventual solution for other sectors in Australia. To avoid the further dispute with the Enterprises, the Fair Work Commission should implement the following recommendations.

Recommendation

To balance the benefits of both employers and the employees, Fair Work Commission needs to become an independent body with the power to implement a series of actions that are effective for all parties involved in the scenario. The department of Fair Work Commission should cover employers, workers, unions as well as other associates. The Fair Work Commission should develop the following principles to keep the balance among all parties. The principles must include the following business, as there are many sectors where the workers do not receive the fair judgment

  • Any organization that is constitutional corporation
  • Any organization in Victoria
  • The commonwealth authority
  • All registered organizations

The Fair Work Commission should exercise the powers outlined in the dispute resolutions techniques. The Commission should assist with the dispute by mediation or developing a suggestion. The Commission could arbitrate the dispute if the dispute resolution techniques allow the parties. Moreover, the general protections provisions of Fair Work Commission should focus on protecting the employees from the possible adverse actions based on certain rights such as workplace right, entitlement right as well as industrial activities. The dispute resolution process of Fair Work Commission should include conciliation. Instead of continuing with the existing principles, Fair Work Commission should publish a comprehensive guide with the intensive information about the procedures.

 

References

Angwin, M 2017. ‘EBAs are now just a blockage to productivity’, Australian Financial Review, 14 February, p. 39.

Bray, M, Waring, P, Cooper, R and Macneil, J. 2014. Employment relations: Theory and practice, 3rd edn, McGraw-Hill Education (Australia), North Ryde.

Clark, S, Taylor, J and Oakes, D 2016. Coles could be forced to renegotiate pay deal with thousands of workers after Fair Work ruling’, ABC News, 31 May. Available at URL:  https://www.abc.net.au/news/2016-05-31/part-time-coles-worker-wins-fair-case-against-supermarket-giant/7463132 [Accessed 28 February 2017].

Desir, B 2017. H&M enterprise agreement fails BOOT’, National Retail Association, 29 January. Available at URL:  https://www.nra.net.au/hm-enterprise-agreement-fails-boot/

Fair Work Commission (FWC) 2016. Decision FWCFB 2887: s.604 – Appeal of decisions: Vice President Watson, Deputy President Kovacic& Commissioner Roe: Melbourne, 31 May 2016, FWC, Commonwealth Government Printer.

Fair Work Commission (FWC) 2017. Decision FWC 310: s. 185 – Application for approval of a single-enterprise agreement: H & M Pty Ltd, Sydney, 16 January 2017, FWC, Commonwealth Government Printer.

Hannan, E. 2016. Coles workers may lose pay rise after Fair Work veto’, Australian Financial Review, 10 June, p. 7.

Hannan, E. 2016. Fair Work ruling could hurt Coles staff’, Australian Financial Review, 1 June, p. 3.

Low, C. 2017. H&M fails to secure enterprise agreement’, Sydney Morning Herald, 17 January. Available at URL:  https://www.smh.com.au/business/retail/hm-fails-to-secure-enterprise-agreement-20170117-gtsxwl.html [Accessed 28 February 2017].

Marin-Guzman, D. 2017. Fair Work takes swipe at H & M over failing to disclose pay cuts’, Australian Financial Review, 18 January, p. 3.

Marin-Guzman, D. 2017. Watson cuts moorings with final dissent’, Australian Financial Review, 23 January, p. 4.

Oakes, D and Clark, S. 2016. Coles refuses to boost penalty rates for workers despite Fair Work ruling’, ABC News, 10 June. Available at URL:  https://www.abc.net.au/news/2016-06-09/coles-refuses-to-boost-penalty-rates-despite-fair-work-ruling/7496114 [Accessed 28 February 2017].

Patrick, A. 2017. Fair Work Commission at war with itself’, Australian Financial Review, 24 January, p. 37.

Stevens, M. 2017. Brutally honest of broken system’, Australian Financial Review, 23 January, p. 28.

Stevens, M. 2017. Fair Work tinkers as IR system burns’, Australian Financial Review, 24 February, p. 32.

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