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Enforcement Of Minimum Labour Standards

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Question:

Discuss about the Enforcement of Minimum Labour Standards.
 
 

Answer:

Introduction:

Under the Fair Work Act of 2009, the government defined the fair practices that employers must adhere to. Section 193 of this Act focuses on the passing the better off overall test. This statute states, “When a non-Greenfields agreement passes the better off overall test” (ABC 2017), the Fair Work Commission must be satisfied at the time of the test that the award covered would make the employee better off overall (FWC, 2016). The enterprise agreement must also show how the prospective award covered employer thus make the employer better off overall thus justify the modern award applies to the workforce (Craig, 2012). Given the continued debate surrounding the adoption and effectiveness of BOOT, this article weighs into the debate to strike a common ground by fronting different questions.

The better off overall test is a test that the FW Commission relies depends on when assessing the enterprise or collective bargaining agreements against the awards (Bamber & Sheldon, 2007). The commission compares the registered agreement to relevant awards thus ensures the beneficiaries, especially the worker is better off overall thus qualifies for an approval (Creighton & Stewart, 2010). This answers the question, what is BOOT?

For several years, the Australian industrial system has constantly focused on the theme of protecting the weak that could be in the form of enterprise agreements or minimum standards in awards (Naughton & Pittard, 2013). Although the Australian industrial system has existed to achieve this objective and fight for justice, however, the trade unions have taken the central role in the compulsory arbitration system. Through the compulsory arbitration system, the trade unions have used the statutory tribunals to determine the minimum standards thus guarantying an equity regarding the bargaining power between the involved parties (Naughton, & Pittard, 2013). Therefore, it is worth to consider the historical background of the disadvantaged and low-paid workers as provided in the Fair Work Act.

Based on the face value of the Act, it guarantees weak some protection through the BOOT. It guarantees these workers, especially the low-paid employees an opportunity to enter into the collective bargaining negotiation through the multi-employer agreements. Previously, these weak employees experienced challenges in utilizing the streams of enterprise bargaining as described by Naughton and Pittard (2013). The FWA has guaranteed worker, notably disadvantaged a comprehensive equal pay platform thus access all the benefits relating to the statutory minimum standards. This is has been achievable by allowing the workers to access the National Employment Standards. Despite these provisions being evident on the Act, it has been impossible to protect sufficiently the disadvantaged and low paid employees (Naughton, & Pittard, 2013).

The traditional mechanisms provided in the FWA no longer protected the weak because even the compulsory arbitration system has not guaranteed fairness because of the unique characteristics. The statutory tribunal emphasized on the significance of trade unions as critical in the arbitration process and negotiations. The compulsory arbitration was adopted following the turbulent industrial events that were evident in New Zealand and Australia in the 1890s. The compulsory arbitration was intended to allow the third party to manage the process of dispute resolution. However, it emerged that the process was never a free-for-all because it assumed the role of the statutory tribunal in protecting the disadvantaged workers in the negotiation process so that it could establish a safety net (Murray, & Owens, 2009).

 

With the safety net, the public interests had appeared aligned. Before this development, the strike prevention part of the public interest but later turned to fixing the minimum rights. Therefore, the tribunal protected the weak based on the public interest connotation. It later became critical to consider basic wages in addressing the public interests. The Australian industrial citizens only earned sufficient wages for sustenance (McCallum, 2011). However, this effect never captured the employee voice expression. There was a need to introduce the rights and fairness of workers that superseded the wages. To this effect, workers got a window to air their views regarding their working conditions because hours and wages were not part of the fair work practices. The protection of the weak thus extended beyond the wages to various minimum employment standards. The compulsory arbitration system was a collective system thus enhances the protection aspects. Conversely, the arbitral tribunals considered the single voice representation across the industry (Quinlan & Sheldon, 2011). Hence, the unions found an opportunity to represent their membership in redressing the imbalance between stakeholders.

By 1920, the industrial relations sector introduced the award system to establish the minimum labour conditions the extending the awards beyond wages. Indeed, the extension ensured the award extended to hours of work, allowances, breaks, and shift rosters. The Test Case has established a significant regulatory processes and institution in the Australian political, economic, and social history (Plowman, 2004). According to Murray (2005), the evolutionary development of safety net has arguably led to the establishment of the standards.

Because of the failures of the initial efforts to protect the weak during the bargaining process, there was need for concerted efforts to restore and serve the interests of the weak. In the view of protecting the weak, the enterprise bargaining era addressed the legitimate concerns regarding the weak disadvantage test as provided under the FWA (Westacott, 2017). Naughton and Pittard affirm, “… the low-bargaining provisions under the Fair Work Act are specifically designed for workers who have not benefited from the bargaining system” (2013, p. 124) thus correcting the weaknesses in the previous tribunals and Case Test. Therefore, the statutory tribunal needed legislative provisions to review the minimum standards. The Test Case process seemed to have influenced the test cases. The minimum standard tests and procedural safeguards seemed to have formed the basis of the federal bargaining provisions. The Work Choices was part of the new legislation that the involved parties had to integrate into the agreement to accommodate the interests of the weak. This is because; the previous legislations and provisions failed to accommodate the disadvantaged workers (Thornthwaite & Sheldon, 2015). The new provisions ensured that parties compared the awards in the agreements and relevant laws.

The Work Choice Act is one of the recent industrial relations to continue protecting the weak. This law changed the nature of awards defined in an enterprise agreement. To this effect, the involved parties in a negotiation were supposed to show their good faith negotiating compulsions (Naughton & Pittard, 2013). The Work Choice Act 2005 thus described the safety net that specified the minimum employment entitlement (Ferrer, Morris, Hearn-MacKinnon, & Saville, 2012). With the Workplace Relations Act, the culture of the enterprise bargaining has changed. Owens, Riley, and Murray (2011) held that the Work Choice Act, it has been possible to restrict awards to 20.

New interventions have continued to arise to improve the situation and working environment for the weak. The dynamic regulatory change through the universal standards has affirmed the significance of responding to the public voice. For instance, the Fair Work Act 2009 came as a reprieve and an improvement from the initial situation (Naughton, 2012). It meant to protect the weak that were ignored under the Work Choices and Workplace Relations Act. The FWA focuses on the legislations that balance the framework for productive and cooperative workplace relations (Stewart, 2009). As such, it has become possible achieve fairness and productivity by emphasizing an enterprise-level collective goals and defining the rules that are essential in governing industrial actions (Owens, 2006). The weaknesses evident in the previous cases led to the adoption of the BOOT that recognized the input of the weak in the enterprise agreement process. The significance of BOOT has been evident in the Coles and H&M cases.

 


The problem with this test is that the analysis is never conducted line-by-line because it embraces a universal approach that considers merits and demerits of the award covered. Clark, Taylor, and Oakes (2016) had reported the Coles case where the employer was compelled by the Fair Work Commission to renegotiate the pay deal to meet the expectations and standard of BOOT. The question posed by the Test is not whether each employee is, better off under the agreement compared to their particular existing working arrangements but whether they are better off overall if the agreement applied rather than the relevant modern award. Stewart and Forsyth (2009) found that the Better off Overall Test applies equally to all employees ‘covered’ by the proposed collective agreement.

The Fair Work Commission full bench unanimously refused to approve the 2014/17 Coles Store Team Enterprise Agreement after the committee realized that the employees were better off overall without the agreement and the situation would be worse under the new enterprise agreement (Brooke, 2016). According to Sheldon and Thornthwaite (2011), the Commission declined to approve agreement because it never satisfied the provisions of the FWA provisions. The Commission, in its wisdom realized that the higher ordinary rate offered and additional entitlement provided. The main problem with this new law is the uncertainty regarding the penalty rates that seems to value the BOOT (Dewberry, Siow, & Stirling, 2016).

If cases are anything to go by, the Coles and Bi-LO had the real experience. The bench that was hearing the issue directed Coles to renegotiate the deal again. The full Bench determined that the Northcote and Benalla Stores never operated 24 hours (Le Mare, 2016). The Bench considered eight employees in the case who acted as on behalf of others to be among the victims. The Full Bench found that the affected employees found their above-Award hourly rates being negated that were never applicable to the agreements regarding the weekend and night work as explained by Butler (2017). When the Bench compared the award for the employees who worked on weekends and at nights, it found the victims were worse off as the workers lost $782-3,506 annual base wage (Clark et al., 2016).

The bench thus cautioned the against the wage increases for all workers because only a few workers were affected. Regarding the longer rest breaks, the bench wondered how such rests translated into monetary advantage (Clark et al., 2016). The agreement as presented before the full bench identified various generous entitlements that Coles wanted to benefit the workers. These entitlements include carer’s leave, redundancy pay, accident makeup pay, emergency services leave. According to Coles, the employees would benefit from the entitlements, such as defence service leave, pre-approved leave arrangements, natural disaster leave, and blood donor (FWC, 2016). Despite Coles’ arguments, he never provided evidence to back up his claims because he assumed that all employees would benefit. Nonetheless, the benefits never had any financial value that could have made it possible to apply them uniformly (Stewart & Forsyth, 2009).

However, for employees who were attached to the emergency department of the fire authority, the availability of the emergency service leave was relevant. However, Coles also failed to provide evidence regarding the population of workers who sought such leave. To this effect, it could have been prudent for the agreement to consider the individual wellbeing, domestic violence support, and manage the caring roles (Westacott, 2017). The views of employees made the bench to understand and interpret the agreement based on the participants during the negotiation and voting process (Sharp et al., 2012). The union’s efforts to support the agreement never added value because the submissions lacked relevance. Therefore, the remedy, according to the bench was to identify the flaws in the agreements thus affirming it failed to make workers better off overall.

The reality of the BOOT is become evident. For instance, the H&M enterprise agreement completely failed the test (Desir, 2017). The Swedish fashion company engaged in in the lengthy application process so that the Commission could approve its proposed national enterprise agreement. However, the Commission rejected this agreement as it failed to pass the BOOT. According to Desir (2017), affirms that the proposed agreement was to see the company trade lower public and weekend holidays penalty rates. In fact, it had proposed higher weekend rates thus making the casual employees worse off than modern award.

 


The Retail and Fast Food Workers Union and the Shop Distributive and Allied Employee Association objected the proposal as it disadvantaged some workers (Desir, 2017). Upon analysing the cases, the FWC validated the concerns of these trade unions. In responding to the concerns, the company offered various undertaking to the commission. Conversely, the H&M’s deputy President Geoff Bull later discovered that the proposed undertakings were insufficient thus refusing to register the agreement. The commission had issues with the time H&M had allocated to resolving the underpayment issues. With these difficulties, the company could not reconcile wages with the normal working days. The Commission was also against the company’s efforts to offer casual workers $0.65 per hour because the casual workers never enjoyed the 65 percent overtime.

The case demonstrated the difficulties that the companies experience in getting their enterprise agreements approved by the FWC based on the BOOT provisions. No level of negotiations and revisions can persuade the Commission to admitting a proposal that rarely assures the parties of a better off overall. For instance, the Commission criticised the H&M for offering an unheralded revision that it incorporated during the application process. The revision reduced the salaries of the employees by $5,000 based on the budget reviews.

What are the Strengths and the Weaknesses of BOOT?

The BOOT provides an opportunity for the voices of the unheard and weak in the workplace. For instance, could it have not been the FWC, H&M could have gotten away with the injustices against the casual workers (FWC, 2016). The test ensures that the proposed agreement satisfies the award-covered employees and prospective award covered employer so that both parties remain better off overall. The entertainment guaranteed under the awards system must be relevant to law. The new law allows the Commission to examine the classes of workers so that the agreement can make them better off overall. The current rigorous scrutiny of agreements by the Commission has led to their failures. This is because; it is a no-disadvantage test. Cole and H&M are the greatest casualties after the commission failed to approve their agreements. The Commission also considers the ability of the employer to explain to the employees on the provisions covered in the agreement. According to Bland (2016), the BOOT analysis provides each employee an opportunity to understand their conditions of work and pay rates thus satisfy the provisions of BOOT

The test gives room for the application of certain entitlement to the employer. The applications of such awards may be done to the employee’s disadvantage thus making them worse off. To this effect, the intention and objective of the BOOT is lost (Westacott, 2017). The EBA process is tedious and tiresome because it is long. The employer, for instance, has to consider all the stages in the negotiation process. For the employer, the time and cost needed for the negotiation is long and the FA Australia compels the employer to follow the process to the latter. With the strict timeline and process, any failure could cause the rejection. To the employee, there are a few views and opinions that the weak can bring to the negotiation. In most cases, the weak are never party to the process. For instance, if they expect to be represented, they are compelled to offer some fee that can be costly in the long-term. For the approval of the agreement, there needs to be a majority rule or vote. Where the employee disagrees with the majority, there are no other options (Bland, 2016).

 

How to improve the BOOT test

With the current approval processes involved in the enterprise bargaining negotiation, the employer must beware and fulfil all the requirements. It is important to understand that by fulfilling the requirements, it is possible for the agreement to be registered with the Commission. For employers, it is critical to understand the modern awards that the Australian Industrial Relations Commission has created. Therefore, it important to note that in this process, the aspects of quick fix is impossible. As such, it is prudent for the employer to review the employment conditions to ensure the company complies with the modern awards.

The issues concerning the practicality of the law have been brought into the fore. For instance, the Fair Work Australia can use “a different interpretation from no disadvantage test when it considers the new test” (Kollmorgen & Naughton, 2017). The way in which the test is expressed is difficult to understand. For instance, the different language of this statute can be interpreted differently. In fact, the name “better off overall” raises the bar higher than a mere test thus any reduction in the overall conditions and terms of employment could raise eyebrow. This implies that the authority needs to consider reviewing the language used to enhance the interpretation.

Kollmorgen and Naughton (2017) argue that the language of sec. 193(1) of the FWA implies that the test is met in the every award-covered employee. This makes it difficult to determine whether the employee experienced a reduction or a balance in their overall conditions and terms of employment, especially where those terms were the subject of negotiation. The no disadvantage test makes it easy to measure the overall benefits because it focuses on the classes of employees. As a mere language, the FW bill’s explanatory memorandum showed that the Act would apply the test based on the classes of employees without inquiring into the individual employee’s circumstances.

According to the Explanatory Memorandum Statement, the use of “classes of employees” seems unclear and ambiguous on the legislation face. The actual meaning as used in the test seems “to suggest that the requirement must be satisfied in the case of “each” employee (Kollmorgen, & Naughton, 2017, par. 10). Therefore, the new rule should address these unclear issues relating to language to avoid confusing the Commission and employers. Complying with this statutory regarding the validity of enterprise agreement has proved difficulty. This has compelled the employers to seek lead advice prior to initiating the negotiation with the employees. The FWC should consider simplifying the language used so that the employers can understand and interpret with ease. With the difficulties in understanding language, many people failed to access job opportunities because the employers fear the rejection of their bargaining agreement (Watson, 2017).

The current Better off Overall Test has made the interpretation of agreements difficult, risky, and challenging for companies with large workforces (Westacott, 2017). It is feared that if the trend persists, the Australian companies will have no any other option but to increase default, especially to the regulated award systems. Indeed, a system with over 124 awards that is unclear, complex, and out-of-date. It remains critical to get the fundamentals that were anticipated to achieve by the enterprise bargaining (Westacott, 2017). As such, the unions, employers, and workers can work together, thus allow them to respond to the emerging issues. The Australian companies not invest in this arrangement at the expense of global competitive pressures.

Conclusion

The efficiency and productivity of workforce can be maximized no matter the business size. Nevertheless, the workplace staffing and structures needs are a moving business plans and target. Based on this article, it is evident that BOOT is a good idea that is meant to capture the interests of the weak that was never the case. Although complying with the new award system is an ongoing action, the adoption of BOOT took time. To justify the significance of the law, Coles and H&M suffered the consequences when their agreements were rejected. Therefore, it is prudent for the employer to consider the process in advance to avoid rejection.

 

References

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Bamber, G., & Sheldon, P. (2007). Collective Bargaining: An International Analysis. In Blanpain, R., Comparative Labour Law and Industrial Relations in Industrialised Market Economies, 9th Ed. (pp. 585–631). Alphen: Wolters Kluwer.

Bland, A. (2016, May 9).Understanding the Pros and Cons of an Enterprise Bargaining Agreement. Key Business Advisors. Retrieved 9 May 2017, from <https://keyba.com.au/understanding-the-pros-and-cons-of-an-enterprise-bargaining-agreement/>

Brooke, P. (2016, Jul 25). Are Your Employees Better Off Overall?- Jul 2016. Piper Alderman. Retrieved 6 May 2017, from <https://www.piperalderman.com.au/publications/employment-relations/article/8516>

Butler, J. (2017, Feb 23). Penalty Rates for Sundays, Public Holidays to be Slashed. Huffington Post. Retrieved 7 May 2017, from <https://www.huffingtonpost.com.au/2017/02/22/sunday-penalty-rates-to-be-slashed/>

Clark, S., Taylor, J., & Oakes, D. (2016, May 31). Coles could be Forced to Renegotiate Pay Deal with Thousands of Workers After Fair Work Ruling. ABC News. Retrieved 7 May 2017, from <https://www.abc.net.au/news/2016-05-31/part-time-coles-worker-wins-fair-case-against-supermarket-giant/7463132>

Craig, C. (2012). Oxymoronic or Employer Logic? Preferred Hours Under the Fair Work Act. Australian Journal of Labour Law, 25, 43-64.

Creighton, B. & Stewart, A. (2010). Labour Law, 5th Edition. Federation Press.

Desir, B. (2017, Jan 29). H&M Enterprise Agreement Fails BOOT. NRA Legal. Retrieved 9 May 2017, from <https://www.nra.net.au/hm-enterprise-agreement-fails-boot/>

Dewberry, S., Siow, V., & Stirling, A. (2016, Oct 26). Focus: Employment Law. Employment & Safety. Retrieved 8 May 2017, from <https://www.allens.com.au/pubs/wr/foemp26oct16.htm>

Fair Work Commission (FWC). (2016, Aug 22). Approval Process. Retrieved 7 May 2017, from <https://www.fwc.gov.au/awards-and-agreements/agreements/approval-process>

Ferrer, J., Morris, L., Hearn-MacKinnon, B., & Saville, K. (2012). The Fair Work Act 2009: A Case Of Unrealised Expectations, in The Fair Work Act: Revision Or Restitution. Heidelberg: Heidelberg Press.

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Le Mare, N. (2016, Jul 7). The Coles Agreement Decision and what it Means for Enterprise <Bargaining. Corrs Chambers Westgarth. Retrieved 8 May 2017, from https://www.corrs.com.au/publications/corrs-in-brief/the-coles-agreement-decision-and-what-it-means-for-enterprise-bargaining/>

McCallum, R. (2011). Citizenship at Work: An Australian Perspective. Legal Studies Research Paper No. 11/17.

Murray, J. (2005). The AIRC’s Test Case on Work and Family Provisions: The End of Dynamic Regulatory Change at Federal Levels. Australian Journal of Labour Law, 18, 325.

Murray, J., & Owens, R. (2009). The Safety Net: Labour Standards in the New Era. In Forsyth, A., Stewart, A. Fair Work: The New Workplace Laws and the Work Choices Legacy (pp. 40–69). Sydney: Federation Press.

Naughton, R. & Pittard, M. J. (2013). The Voices of the Low Paid and Workers Reliant on Minimum Employment Standards. Adelaide Law Review, 34, 120-139.

Naughton, R. (2012). The Role of Fair Work Australia in Facilitating Collective Bargaining. In Creighton, B. & Forsyth, A. (Eds). Rediscovering Collective Bargaining: Australia’s Fair Work Act in International Perspective. New York, NY: Routledge.

Owens, R. & Riley, J., & Murray, J. (2011). The Law of Work, 2nd Edition. Oxford: Oxford University Press.

Owens, R. (2006). Working Precariously: The Safety Net after Work Choices. Australian Journal of Labour Law, 19, 161.

Plowman, D. (2004). Employers’ Associations and Compulsory Arbitration. In Isaac, J., & Macintyre, S. (Eds), The New Province for the Law and Order: 100 Years of Australian Industrial Conciliation and Arbitration (p. 603). Cambridge: Cambridge University Press.

Quinlan, M., & Sheldon, P. (2011). The Enforcement of Minimum Labour Standards in an Era of Neo-Liberal Globalization: An Overview. The Economic and Labour Relations Review, 22(2), 5-15.

Sheldon, P., & Thornthwaite, L. (2011). The State, Labour and the Writing of Australian Labour. History Labour History, 100, 83-104.

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Thornthwaite, L. & Sheldon, P. (2015). Fair Work Australia: Employer Association Policies, Industries, Industrial Law and the Changing Role of the Tribunal. Journal of Industrial Relations, 53(5).

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Watson, G. (2017, Mar 8). ‘Better off Overall’ Test Creates More Jobless Workers. Australian Financial Review, 39.

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