Think Tank: working for the man

• NAOMI HULBERT
• 15 April 2008
• Page 1 of 2 : single page

Surfing the IR wave

Naomi: Industrial Relations (IR) laws are changing – again. Everyone’s been talking about inequity and the need to protect employees, but a lot of Nett readers are employers. What do these changes mean for them?

Marguerite: I think that the election hype confused a lot of people. There were pretty big AWA (Australian Workplace Agreements) campaigns on both sides.

Larry: Well it’s a pretty major issue isn’t it?

Marguerite: We do hear, “All the IR laws are going to be rolled back, it’s going to go back to the bad old days.” That’s what most Australians are understanding, but I don’t think the changes are as spooky as people imagine.

David: The coalition is flip-flopping like a circus audition

reject to roll over and not block the abolition of AWAs. Julie Bishop told ABC News that the Liberals would move an amendment to change the nominal expiry date from two to five years, in order to put more flexibility into contracts. Such is the power of political clout and the two million or so small-to-medium businesses and the millions they employ, I guess. Now the government has trumped the opposition with the formation of the Business Advisory Group and the Small Business Work Group, to assist in the drafting of its Transition Bill.

Marguerite: Government is doing a bit of a crawl-back in the sense that even though small business hasn’t previously had a strong presence in cabinet, they’re announcing all these activities. The Transition Bill provides certainty as we discard AWAs, by honouring all existing contracts and enabling small businesses to use Individual Transitional Employment Agreements in limited circumstances. This Bill applies to employers and employees who had AWAs in place up to 1 December 2007. Most people would fall into that category.

Larry: Perhaps I’m an optimist, but I think this Labor government has a very pragmatic and responsible, if not conservative, approach to IR laws. I don’t think Labor is

blind to the fact that workforce flexibility is a major driver of employment, and that there were many benefits in the IR changes that the previous government put in place.

David: The challenge will be in channelling and refining contributions from the various vested interests to produce what most business owners are looking for: a straightforward, commonsense set of policies, equitable for both business owners and their employees.

Larry: Regardless of what the legislative environment is, if you are genuine about wanting to take care of employees, you are likely to avoid any of the unfair dismissal issues.

David: Many of the changes in IR legislation won’t come in until January 2010, with Labor’s proposed National Employment Standards – a replacement for the Australian Fair Pay and Conditions Standard.

Marguerite: National Employment Standards are the new key minimum entitlements for all employees. The government is looking for comment for this draft by April, so this will be the last opportunity to say anything.

David: Unfair dismissal is back for businesses with fewer than 15 employees, but workers will need to have on staff for 12 months, rather than six, to qualify.

Human Resources magazine suggests that if employers follow Labor’s proposed code of conduct, problems should be minimised.

Win government contracts

Naomi: Last month in Nett, we featured a story on winning tenders. Government tenders and big contracts are like the Holy Grail for small business, guaranteeing cash flow and security. But what happens when the big boys do the dirty?

Larry: Small companies often have dollar signs in their eyes chasing big contracts with big companies, but don’t lose sight of the fact that every contract you sign with a big company needs to be profitable and equitable. Don’t cut your margins too heavily or cut your conditions or your protections to win the business, because there is always a downside risk in the contract. You need to ensure that you’re going to be able to survive if this happens.

Naomi: Sally recently told me a story about how she really got shafted in her previous business...

Sally: We were caught in the tail end of the dotcom crash, and a number of our clients went down owing us money. One client in particular put us at great disadvantage – an overseas business that had won a major contract in Australia. We were their recruitment partner and ran a number of their employees through our books as they didn’t have a registered business over here, which was required at the time.

Naomi: That’s my worst nightmare come to fruition. You want to win a big contract so you compromise to get it. But you’re running all these contractors through your own books instead of your clients’, making you completely vulnerable if and when things go wrong.

Sally: Exactly. The project went pear-shaped and our client had a falling out, was dismissed from the project and then retreated back to the US and refused to pay the contract fees. The big issue for us was that we had paid all of the contractors, including their employees. This put us out of pocket by around a quarter of a million dollars – purely for salaries. We sought legal advice, but it’s hard for a small business to fight a giant, particularly one that has retreated back to its overseas base.

Larry: I guess it’s not completely unusual – it’s the tough side of business. When you’re dealing with a company that’s under enormous internal pressure, it won’t necessarily follow the ethical or moral course.

Naomi: Have you seen that happen before?

Larry: Yeah, we have. I think in every business’ life there are situations when you might be tempted to say, “Well, you know… I’ve got my own pressures here.” We all follow our own moral compasses as to what we do in those situations. After the dotcom wreck, we had a lot of debts, much like Sally’s client, that we weren’t able to pay. We took the view that we would pay everybody the money they were owed – and that’s what we did. But it did take a couple of years and it was pretty stressful.