Published in the May 2009 Australia’s Mining Monthly

Thanks to Labor’s IR law overhaul, companies with more than 15 workers will have to consider future employment decisions very carefully.

Prime Minister Kevin Rudd promised a change to the IR system and from July 1 his government’s Fair Work Australia system will come into effect.

His predecessor John Howard’s Australian Workplace Agreements that many businesses loved are gone.

In its place is a system the government assures us will “deliver a balance that will allow Australia to become more competitive and prosperous without taking away workplace rights”

An AWA was an individual written agreement on terms and conditions of employment between an employer and employee under the Workplace Relations Act 1996.

According to the Workplace Authority more than 40% of the mining industry was employed under an AWA in June 2007.

In the three months leading up to that point 80% of mining employees who entered into new agreements were covered by AWAs.

As Labor’s changes came closer to reality employer groups were eager to spruik the benefits of the system they were happy to operate under.

Australian Mines and Metals Association chief executive officer Steve Knott said at the time that mining sector employers had “used the flexibility offered by AWAs to engage with its employees directly and reward them handsomely”

“Removing AWAs will once again force employers to bargain with unions instead of directly engaging in bilaterally beneficial negotiations with their employees.

“The facts are clear, 85 per cent of employees have consciously decided not to join a union, which should be seen as a clear indication of the feelings of a modern workforce.”

Nonetheless AWAs were given their marching orders with the first round of Labor’s workplace changes last year.

Employees on existing AWAs that have passed their nominal expiry date continue to be subject to the terms of the AWA until it is either terminated or replaced.

This means that although the AWAs have been abolished there are still a large number of Australian workers locked into deals made under Work Choices.

Labor’s Fair Work system creates a two-part safety net comprising the 10 National Employment Standards along with “modern” awards. These will apply to all employees in the federal system from January 1, 2010.

There has been much scrutinising of the redefinition of small business and the new unfair dismissal laws.

Under the previous IR regime a small business was defined by employing less than 100 employees. Under the Rudd rules a small business has no more than 15 workers.

“The Fair Work Act restores unfair dismissal protection for all workers, but is unlikely to have a major impact on the mining industry, which typically consists of larger workplaces and where most employees continued to be protected even under Work Choices,” an Australia Council of Trade Unions spokesman said.

“Even during an often hysterical campaign against the Fair Work Bill, the mining industry lobby did not object to the improved protections from unfair dismissal because it knew it would not be affected.”

The ACTU spokesman said other aspects of the Fair Work Act would be positive for workers in the mining industry such as making collective bargaining the centrepiece of the new IR system.

“Bargaining will be required to be conducted in good faith,” he said.

“This will mean that it will be more difficult for employers to ignore the wishes of their workforce for a collective agreement, as was seen in the recent Pilbara Iron dispute in Western Australia.”

Under the previous Work Choices regime employees working in businesses with up to 100 workers could be dismissed for any reason.

They had no right to challenge the dismissal even if they considered it to be harsh, unjust or unfair.

Employers were also able to dismiss employees for “operational reasons”, leaving the sacked worker no right of redress.

The focus of the new laws is to attempt to resolve any claim before it gets that far.

“I suppose once the legislation comes into effect then it is going to be a bit of a wait and see,” Australian Workers Union Western Australian secretary Stephen Price said.

“It has always been a difficult area to operate in. I think if you look historically at the percentage of applications that went ever through to formal arbitration, they were below 10 per cent anyway.

“The difficulty in justifying your claim, or getting a claim up, is still going to be there.”

Under the Rudd government’s IR legislation, the defining number for a small business has been pared down to 15. Companies with more than 15 workers will have to consider their employment decisions very carefully.

Opposition spokesman for Employment and Workplace Relations Michael Keenan said 15 employees defining a small business would only create problems.

“I think the problem is the definition of what constitutes a small business is so low under Labor in terms of the number of employees they say constitutes a small business,” he said.

“They say 15 people on your books. Any more than that means that you are not a small business any more. That I think is ludicrously low and actually excludes most Australian small businesses.

“The average cafe has more than 15 people on their books but according to Labor they’re no longer a small business.

“That means that they don’t get any relief under these new unfair dismissal laws, and that means they don’t have the confidence to actually provide jobs.”

The Fair Work literature says small business owners benefit from two main differences.

The minimum employment period, during which time employees cannot make a claim of unfair dismissal, has been doubled from six months to 12 months.

A “simple” six-paragraph Fair Dismissal Code also has been introduced that will ensure a dismissal is not unfair as long as the small business owner follows what it says.

These arrangements will apply to small businesses with fewer than 15 full-time equivalent employees until January 1, 2011.

After that date the arrangements will apply to small businesses with fewer than 15 employees.

In reality, there would be few junior exploration companies with more than 15 employees. Most have a couple of directors, a geologist and, if they are doing well enough, a receptionist to do all the work.

Their money should be focused where it belongs: drilling their ground to improve shareholders’ value, not paying for extraneous employees and extravagant office space. Mid-sized mining operations will most likely have more contractors working for them than staff but will also probably employ more than the new threshold of 15 employees.

Under the Fair Work laws small business employers have a full year to realise they may have made a mistake at the interview table and wish to dismiss an employee they deem inappropriate for the position they filled. When that period expires they must, and after waiting that long they should, justify why the employee deserves to be dismissed.

“It is important for the employers to do that but the problem is some people just don’t work out. They’re not a good fit for various reasons,” Keenan said.

“Twelve months is only under that definition of 15 employees or less, and that’s not full-time equivalent employees; that’s just 15 people. They could be working just two hours a week in your business and they count as one employee under that definition.

“So the concern is that it just excludes so many small businesses.”

Unfair dismissal has long been a concern for small business.

“The problem with the unfair dismissal laws, as we have always known, is that they sap the confidence of small businesses to be able to employ people because they are worried about the consequences if people don’t work out,” Keenan said.

“That means there are less jobs around because small businesses are not going to provide those jobs, which is actually the worst outcome we could possibly be having in the current economic climate.”

It would be fair to say the larger companies such as BHP Billiton and Rio Tinto, as well as the mining contracting companies, will have more to worry about as the different unions form battle lines to control their much larger workforces.

These companies would be more concerned with union right of entry laws, especially as unions strive to maintain parity with the technological advancements being introduced to the industry.

Price advocates a patient approach to the legislation.

“I guess if companies do the right thing they will have nothing to worry about,” he said.

Price said he thought Fair Work would cover a broader field than the previous Work Choices laws did.

“At the end of the day the requirements are still there to be able to justify any sort of unfair dismissal claim that you want to run through the commission.

“To be honest I don’t see a great deal of difference.”