Small and medium establishments and the new federal workplace relations system

Employment Relations Record, Jan, 2007 by Michael Lyons, Dennis Mortimer, Elizabeth Whiting, Fiona Wilkinson

According to the Howard government and some 'small business' organisations, the changes made to Australian industrial relations arrangements by the 2005 'Work Choices' Act will be of particular importance to small and medium sized establishments (SMEs). Specifically, the dilution of the industrial award system, and State awards in particular, and the exemption to firms employing 100 or fewer staff from unfair dismissal laws will allow SME employers to introduce more 'flexible' employment practices and employ more staff. This paper discusses the survey responses of employers or managers from 121 workplaces in Sydney, the overwhelming majority being SMEs. The results suggest that there is little enthusiasm by management to embrace the decentralisation, deregulation and individualist agenda of the federal government's 'New Workplace Relations System'. Management in most workplaces were found to be reliant on industrial awards, satisfied with the award system, not hostile towards trade unions, rely on the advice of employer associations, and appear to be uninterested in reforming unfair dismissal laws. These results question the motivations behind the Howard government's industrial relations agenda, and challenge the assertions of organisations purporting to advocate on behalf of SME employers.

INTRODUCTION

The federal Workplace Relations Amendment (Work Choices) Act 2005 makes the most comprehensive changes to the Australian industrial relations system since federation (Riley and Sarina, 2006). It ends the 100-year-old federal system of conciliation and arbitration of industrial disputes. The Amendment Act relies on the corporations' power of the Constitution to not only regulate the industrial relations of incorporated employers, but in doing so expand the federal system of industrial relations to regulate the employment relationships that were traditionally regulated by the State industrial relations systems. The amendments to the Workplace Relations Act 1996 basically end the system of industrial awards for the private sector that has dominated Australian industrial relations for a century. It reconceptualises the regulation of employment by putting the primary focus on individual workplace agreements by making individual-level bargaining easier and collective bargaining harder. It effectively sidelines federal and State industrial relations tribunals and State industrial awards. The New Workplace Relations System ('NWRS') does not abolish awards, but they will--like old soldiers--simply fade away (King and Stilwell, 2005: 8). Small and medium sized establishments ('SMEs') are, according to the Howard government, major beneficiaries of the NWRS (Howard 2005, cited in Ford, 2005: 1; Wooden, 2005). However, survey evidence suggests small business employers do not need, or support, the federal government's NWRS (Bourlioufas, 2005), party because they find the complexities of the system difficult to understand (Hopkins, 2005). The attitude of SME employers to industrial relations is important in the context of the NWRS. For instance, Eslake, who describes himself as a 'lukewarm supporter' of the federal government's NWRS, has noticed the self-interested hypocritical positions of some SME employer representatives:

   It is interesting that some of those claiming to speak for small
   business have been assiduously pushing for amendments to the Trade
   Practices Act to allow them to 'bargain collectively' with large
   corporations, in order to redress the alleged imbalance of
   bargaining power between small and large businesses, whilst
   simultaneously being fervent proponents of changes to industrial
   relations legalisation making it more difficult for employees to
   bargain collectively with them. There seems to be an element of
   inconsistency between the two positions. (Eslake, 2005: 8)

This paper discusses research of the employment practices in SMEs to determine if the NWRS is required by SME employers. Particular attention is devoted to two key aspects of the 'WorkChoices' regime, the industrial awards and unfair dismissal laws. The research discussed consists of survey responses of SMEs located in Sydney and interviews with SME managers. The survey questionnaire items were drawn from three similar employment and management practices surveys: the 1995 Australian Workplace Industrial Relations Survey (AWIRS) and the Illawarra Regional Workplace Industrial Relations Survey (IRWIRS) in Australia, and the Survey of Employee Relations Practices in South-East England (White, Drucker and Edmunds, 2002). This postal survey sample was drawn from 1000 SME firms located in Sydney contained in the 'Australia on Disc' business directory, and was dispatched in August 2004. A total of 121 usable survey questionnaires were returned. About 80 per cent of the survey respondents employed fewer than twenty staff, and only six per cent employed more than 100 staff. Overall, the respondents were private sector (90%), stand alone (73%), Australian owned businesses (93%). Generally the respondent firms employed full-time staff rather than part-time or casual employees. Supplementary telephone interviews were conducted with SME employers or managers to examine attitudes to the NWRS. While the interviews were conducted prior to the release of the legislation, sufficient details had been announced by the federal government for employers to form an opinion about the NWRS (e.g. Australian Government, 2005), and there had been considerable media comment and analysis of the (then) proposed legislation. The interviews were conducted in September 2005. In the results reported below we have compared the responses from our Sydney 'SME' survey responses with other Australian employment practices surveys asking similar questions. Generally, our results found SMEs to be contented with the pre-2006 industrial relations arrangements, and thus the motivation for the Howard government's 'reforms' are questioned.