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Productivity Commission: ‘hybrid’ deals for small business

Justin Grey
11 August 2015 2 minute readShare

Small business owners would be able to sign up employees to new statutory contracts and modify basic award conditions under a Productivity Commission proposal to shake-up workplace laws.

* This article was originally published by The Australian


Small business owners would be able to sign up employees to new statutory contracts and modify basic award conditions under a Productivity Commission proposal to shake-up workplace laws.

The commission urged the government to consider so-called ­“enterprise contracts” that would serve a similar purpose to now defunct Australian Workplace Agreements, but cover a larger number of employers.

Productivity Commission chairman Peter Harris said it was a new model that would enable a small enterprise to “put forward a variation to an award structure based around a statutory contract” and lodge it with the industrial umpire.

“The enterprise contract is designed to meet a gap,” he said.

“Enterprise bargaining is the province of medium and large-sized firms and for organised ­labour because they are both well set up.”

Workplace Relations Framework

The new agreements are designed as a “hybrid” between an enterprise agreement and an individual flexibility arrangement and, if implemented, would be subject to a no-disadvantage test.

A safeguard attached to the proposal would allow employees to opt out of the contract and return to the award after a period of 12 months, providing an incentive for employers not to undercut wages or conditions.

In its 1000-page draft reform blueprint, the commission found that in 2014 only 6 per cent of non-managerial employees in small businesses were covered by enterprise agreements. By contrast, this compared with around 80 per cent for the largest enterprises.

Enterprise agreements were least likely to be found in the rental, hiring, real estate, scientific and technical services industries that accounted for 16.7 per cent of all Australian small businesses. The commission also found that hourly wage rates for small businesses that did use enterprise agreements were the “highest for all methods of setting pay”.

ACTU secretary Dave Oliver yesterday railed against the proposal for enterprise contracts, saying it was one of the big surprises of the draft report.

“They are suggesting a new form of enterprise contract or individual bargaining which has all the hallmarks of what we saw under the Howard government’s WorkChoices legislation,” he said.

“I actually think there’s elements of this that are worse than WorkChoices, particularly the enterprise contract arrangements where they can make it a condition of employment to basically trade-off conditions that you currently have under the award.”

Australian Chamber of Commerce and Industry chief Kate Carnell said the proposal handed a new mechanism to small business owners to strike an agreement with their employees.

“We love it,” she told The Australian. “The problem for small to medium-sized businesses is they don’t have access to enterprise agreements. This is a method of giving them an opportunity to come to an agreement with their employees.” Council of Small Business of Australia head Peter Strong said the rationale behind the new contracts was admirable but a more sweeping change to create a new small business award would have been more effective.

“I was hoping they would come up with a plain English small business award,” he said.

“That would have been a really good thing.”

Labor’s workplace relations spokesman Brendan O’Connor said the proposal was “vague” but warned against changes allowing an employer to “unilaterally lower conditions of employment in a so-called enterprise contract”.


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Productivity Commission: ‘hybrid’ deals for small business
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Justin Grey

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