Union Noise or Credible Solutions?

You may have read this week about the latest discredited push by the union movement to increase the amount of annual leave beyond 4 weeks in their submission to the inquiry into the National Employment Standards.

Clearly, these ambit claims come from a movement that had it not been for the bloating of the public service, would once again be in decline as it has been for many years. Union membership indeed did grow on the latest ABS figures but if you dig a little deeper you see that 94 per cent came from government connected industries (191,000 workers) but that private sector membership is at only 7.9 per cent.

Beyond their noise, HR Nicholls has made a credible submission to the same inquiry that is the lead story today in Workplace Express, arguing that though the National Employment Standards are prescriptive, they should be used as a basis for simplifying the outrageously complex awards they enable.

Australian Governments have spent more than 15 years making it increasingly difficult to employ people and pay them correctly. This over-complication is causing serious compliance issues that negatively affect both employees and employers.

Further, no clear boundary has been established to distinguish what should belong with the National Employment Standards, as universal statutory minimums, and what then should be in awards.

This as an issue has led to the now uncontrollable expansion of the prescriptive nature of awards. If this runaway train isn’t dealt with soon, there will continue to be employment and productivity related issues well into the future.

High-profile underpayment cases show that even Australia’s largest and best-resourced organisations are making costly and long-standing mistakes in paying their employees.

These organisations are not negligent or criminal; the employment system is simply too complex and overlapping, to be reliably navigated, even for those with substantial resources.

Small businesses face an even more difficult challenge. They have little chance of consistently complying with a system that baffles even the nation’s top employment lawyers, specialised law firms, charities, and the federal department responsible for workplace legislation.

If the experts have been caught underpaying employees, what chance does a small business owner have?

The vast majority of employers make genuine efforts to comply with their legal obligations, despite the system’s complexities and lack of regulatory coherence. When so many are unintentionally getting it wrong, either by underpaying or overpaying, the rules clearly need re-examination.

Unlike other nations with a single or minimal minimum wage, Australia prescribes multiple wages based on industry, workplace, occupation or type of employment. Other countries simply do not approach minimum standards, or minimum pay for work anywhere near our level of complexity or prescription.

The seven most common awards have an average of 36 classifications each and if extrapolated out, we would have a separate wage for every 3,347 employees in Australia. This heavy reliance on narrowly-defined classifications adds incredible layers of complexity to Australia’s wage structure.

The pay guide for the Hospitality award alone runs to 82 pages of tables of separate minimum wages which employers must observe under pain of substantial penalties and back pay, which apply in addition to a 175-page award. A conservative calculation finds the pay guide for this award alone having at least 5,000 separate minimum wages.

This award since being instituted on the 30th of December 2009 has had 74 separate versions and 91 variations.

Then there is the General Retail Industry Award - It has 8 classifications, spanning 3 types of employment, 10 different rates relating to apprentices, 7 rates for different ages of causals, 7 different rates for different ages of permanent employees. These different rates then break down into different shifts, overtime rates and then shift workers. Overall, it results in 1,424 different rates of pay detailed across 119 pages and over 26,000 words.

This award has been updated 83 times since 11 September 2009 and from 2015 to 2026 has grown from just 69 pages to nearly 120.

Within this award it has been determined by someone, somewhere, that a second-year apprentice completing a 4-year tenure who did complete year 12 is paid $1.41 per hour more than the person doing the same job who did not complete year 12.

A junior casual employed for less than 6 months and who is 20 years old working their first 3 hours of overtime from Monday to Saturday is paid $4.63 less per hour than the person doing the same job, under the same conditions, but who has worked for longer than 6 months.

If they work on Sunday, the difference is $5.96 per hour.

A full time or part time adult working as a retail employee on a level one classification baking bread in the morning is paid $4.65 less than the exact same person doing the exact same job but in the evening.

This is absurd.

How could a workforce less than the population of New York or Tokyo need thousands upon thousands of separate wages when they get by with simple and coherent structures?

We are free to marry whomever we choose; free to have children and bring them up; free to attend or not attend any church and practice any religion; free to buy houses, cars, businesses and whatever the market indicates but we are not free to arrange our own relationships with employers beyond simple national standards. Those relationships are prescribed for us in great detail, on the grounds that if they were not so prescribed, we would be grossly exploited and reduced to survival wages.

Employers in Australia feel as though they have a better relationship with hundreds of pages of legislation than their own employees. They must bemoan being more across the details of a phone book of pay scales than being on the tools with their employees, understanding how to grow their businesses.

These are the very things the unions wish to distract from, as of course the complexity benefits their business model and imbeds their relevance. Don’t listen to their noise, rather, listen to these facts.