AS part of our ongoing advocacy for a modern, flexible workplace relations system that supports employment and investment in Australia’s national resource industry, AMMA is campaigning for ‘5 workplace relations reforms over 5 years’ during the lead-up to the 2016 Federal Election and beyond.

These reform priorities have been identified by AMMA members as key areas for workplace change through the 2016 AMMA Federal Election Survey.

This week, we take an in-depth look into the final of our 5 key reform priorities: Replace the Fair Work Commission with modern, balanced institutions by creating an Australian Employment Tribunal and a separate Employment Appeals Tribunal.

Fair Work Institutions:

Under the Fair Work Act 2009, a new national workplace tribunal, the Fair Work Commission (FWC, originally known as Fair Work Australia) replaced the longstanding and respected Australian Industrial Relations Commission.

The FWC now oversees a vastly expanded jurisdiction, including determining collective and individual workplace disputes, minimum wages and conditions, and hearing appeals. The non-adjudicative functions of the tribunal includes regulatory oversight of registered organisations.

It remains important that employers, who are subject to its jurisdiction, have the utmost confidence in our workplace institutions including the FWC. While the FWC has embarked on a range of new initiatives, it is clear that there is broad support for the institution to be reviewed and modernised to meet the expectations of stakeholders such as resource industry employers.

Why reform of the key workplace institutions are required?

The Fair Work Commission must be reformed

AMMA’s 2016 Federal Election Survey found overwhelming support for reviewing the current FWC, with 87% of respondents agreeing that the next Australian government should as a matter of priority review its structure to ensure it is a modern institution capable of dealing with changes in the Australian economy and labour market.

One respondent in the metalliferous mining sector said:

“The industry in which we operate has changed considerably while the labour institutions and regulatory framework has been very slow to respond. The pace of change will continue and it is apparent that unless we modernise our labour relations in Australia we will not be an attractive investment option and, importantly, innovation and growth in our economy will be stifled.”

A majority of respondents (74%) also agreed that the next Australian government should as a matter of priority promote the use of Alternative Dispute Resolution (ADR) for workplace disputes including mechanisms outside of the Fair Work Commission. This lends support to perceptions that the FWC is not delivering expert dispute resolution services for its clients, such as employers.

The results may also reflect the Fair Work Commission’s increasing reliance on using inexperienced public servants to carry out individual workplace dispute ADR services, rather than utilising members of the tribunal, who are required to have experience or knowledge in workplace relations, law, business and related fields.

An innovative institutional reform which has been supported by resource industry employers, particularly small to medium sized firms, is to ensure that the current appeals mechanism under the Fair Work Act reflects international best practice. Such a proposal to create a new and separate appeals mechanism continues to be popular with 9 in 10 respondents supporting a new and separate appeals body to determine all appeals from FWC decisions.

Support for a Registered Organisations Commission to regulate Registered Employer Organisations and Unions

In addition, a majority (79.6%) want the Parliament as a matter of priority to create a new Registered Organisations Commission (ROC) to more effectively regulate registered trade unions and employer organisations, which are currently regulated by the Fair Work Commission.

The strong desire from resource industry employers is warranted in the wake of significant misuse of union member funds by officials of trade unions which was outlined in detail as part of the Royal Commission into Trade Union Governance and Corruption.

Part of the Royal Commission’s extensive recommendations, included the transfer of all current regulatory functions from the Fair Work Commission to a new Registered Organisations Commission as well as holding officials to a higher level of accountability and scrutiny, in a similar way to how companies are regulated.

Continued support for the Australian Building and Construction Commission

The Australian Building and Construction Commission (ABCC) commenced operation in 2005 and was recommended in 2003 by the Cole Royal Commission to tackle unlawfulness in the building and construction sector. In 2012, the ABCC was replaced with a vastly watered-down agency called Fair Work Building and Construction. Coupled with significantly reduced powers and penalties, this has unfortunately led to a resurgence of unprecedented levels of lawlessness and complete disregard to the Rule of Law.

AMMA’s 2016 Federal Election Survey found strong support (82%) for the Parliament as a matter of priority to restore the building industry watchdog, the ABCC. AMMA has also advocated that the jurisdiction of a reinvigorated ABCC should extend to the off-shore construction sector where the potential for disruption by unlawful tactics and behaviours by industry participants can jeopardise the construction of significant resource projects.

What are the benefits of AMMA’s reform options?

The benefits of AMMA’s reform options to the institutional framework will result in a suite of ‘fit for purpose’ national employment institutions and focused regulators.

A modern employment tribunal which is able to exercise its jurisdiction in a modern and increasingly complex business environment, must also be able to respond to the needs of its stakeholders.

Most importantly, the pre-eminent national employment tribunal that is perceived by stakeholders to be fair and balanced and equipped with highly qualified people with experience from the business sector, will improve the confidence of both employers, employees and the community.

The Productivity Commission’s (PC) review of the Fair Work laws was highly critical of Fair Work Commission and suggested significant reforms including to the way individuals are appointed.

Following the abolition of the Australian Industrial Relations Commission and establishment of the Fair Work Commission in 2009, the independence of the Fair Work Commission was significantly compromised in both re-structuring the hierarchy of the tribunal and a heavily skewed appointment process which was also lacking in gender diversity.

The PC also criticised the way the FWC sets and adjusts the safety-net and recommended setting up a separate body to deal with these important matters. As noted by the PC in recommending significant changes to the FWC, “[i]nstitutional change would represent one of the bigger microeconomic reforms in the last 15 years” and that “maintenance of the status quo is not an option”.

A new and separate appeals jurisdiction modelled on international best practice, such as the UK, should result in fewer matters required to be appealed to the courts which are cost prohibitive to smaller firms. A panel of highly qualified judicial officers could establish binding principles and interpret the provisions of the relevant legislation in a more consistent manner, which will mean more certainty for users of the system and tribunal members, and ultimately more confidence in the employment institutions by the public.

Increasingly business is looking to utilise Alternative Dispute Resolution (ADR) services, including utilising professional and independent arbitration services. The Australian Government should build pathways within the employment law framework to assist employers and employees resolve disputes without needing to resort to the Fair Work Commission or federal courts. More disputes which are resolved between the parties to the direct employment relationship will mean more co-operative and productive workplaces and reduce the need for the tribunal to be involved in resolving collective or individual disputes and workplace grievances.

A focused and well-resourced building industry specific regulator which can regulate and enforce the Rule of Law within the building industry, will result in higher compliance levels. Importantly, investors and stakeholders will have more certainty that large-scale projects will be built according to schedule and within budget. Greater accountability on union officials by a stand-alone agency outside of the Fair Work Commission, will ensure that trade union members’ monies are less likely to be misappropriated and ensure trade unions and officials are regulated to the same extent as companies and duties of union officials are commensurate with company directors.

Where to from here?

In the 2016 Federal Election campaign AMMA is advocating that the next Australian Government commit to reforming existing institutions to better meets the needs employers and employees, and of the general community through balancing equity considerations with increased productivity, economic activity and job creation.

AMMA’s road map for reform [page 5 here] summarises key changes AMMA proposes to reform our national workplace institutions.

KPMG research found that implementing all of AMMA’s recommended reforms could add up to $30.9 billion to Australia’s GDP and create up to 36,000 jobs.

For regular updates on AMMA’s workplace relations advocacy during the 2016 Federal Election campaign, visit our ‘Getting Back on Track’ campaign page.