In brief

  • This year is shaping up to be a dynamic year in industrial relations.
  • In this EPI alert, we look at seven key workplace relations issues to monitor in 2015.
  • Herbert Smith Freehills will be analysing these issues in further detail over the course of the year, through:
    • seminars and EPI alerts, and
    • our '2015 Employment and Workplace Relations in Australia' publication.

In this EPI alert, we look at seven workplace relations issues to monitor over the next 12 months.

1. Reform of Australia’s workplace laws

To date, the Federal Government has been unsuccessful in getting its package of proposed workplace relations reforms through the Senate, including changes to the Fair Work Act and new legislation for the construction industry.

The four Bills currently before Parliament propose a variety of changes to existing laws, including changes to bargaining rules, greenfields agreements, right of entry, registered organisations and the re-establishment of the Australian Building and Construction Commission.

Whilst the Federal Government will be seeking cross-bench approval for the current tranche of Bills when Parliament resumes in February, such support is currently doubtful.

Further reform proposals are inevitable in light of the Federal Government mandated Productivity Commission review into the Workplace Relations Framework (WRF Review).

In addition, unions have already commenced a campaign to fight a perceived return to ‘Workchoices’. This campaign has gained some momentum, with the Productivity Commission’s recent release of five initial issues papers.1

The WRF Review and the Productivity Commission issues papers have sparked vigorous debate about potential reforms, including the deregulation of penalty rates and an overhaul of independent contractor legislation (including taxation requirements).

The Productivity Commission has called for public submissions in relation to the WRF Review by 13 March 2015 and is currently expected to release its final report into the WRF Review in November 2015, following a series of public hearings.

Alongside the WRF Review, the Fair Work Commission is conducting its four yearly review of modern awards, which is set down for hearing commencing mid-2015.

In respect of minimum rates of pay, the Federal Government has called upon the Fair Work Commission to take into account the ‘softening economic environment and labour market’ and the ‘impact of employment costs on industry over the next four years’.2

2. Rise in industrial disputation and action

Union activity is likely to increase as Australia emerges from recurrent election cycles (including the 2013 Federal election, 2014 Victorian election, 2015 Queensland election and the upcoming NSW election).

In particular, the persistence of unions with wage and job security claims will lead to industrial disputation during enterprise bargaining across key industries and the public service.

Consistent with the strategy adopted by key industry players in 2014, employers will look to mitigate industrial action and increase bargaining leverage, including by:

  • seeking intervention from the Fair Work Commission or the Courts,
  • engaging with government agencies such as the Australian Competition and Consumer Commission (ACCC) where appropriate, and
  • pressing for penalties and damages.

It is expected that more employers will bring negotiations to an end without union agreement. It is also expected that employers are likely to explore ways to remove inflexible agreement content.

The Fair Work Commission will continue take a rigorous approach to good faith bargaining and agreement making.

3. Big ticket litigation and regulatory scrutiny

The past year saw an increasing number of employees litigating claims in senior courts, with employers having, on the whole, successful outcomes.3

Whether or not the year ahead will see a continued trend of court findings which are broadly supportive of managerial prerogative, we expect a continuation of major litigious disputes, especially in relation to the general protections provisions in the Fair Work Act.

There is also likely to be increased litigious activity by regulators, including the Fair Work Ombudsman (FWO) and the ACCC (in relation to anti-competitive conduct).

The ACCC’s unprecedented prosecution of the Construction Forestry Mining and Energy Union (CFMEU)and senior union officials in relation to secondary boycott involving Boral is listed for a six week hearing in September of this year.4

It is expected that the ACCC will continue to be more active in monitoring anti-competitive conduct on the part of unions over the coming year. This is particularly so, given the Competition Policy Review (Harper Review) recommendations that:

  • the ACCC report annually on the number of complaints made, and how many are investigated and resolved each year,
  • jurisdiction to hear secondary boycott claims be extended to the State and Territory Supreme Courts.5

The FWO has foreshadowed targeted campaigns in relation to supply chain arrangements and ‘exploitation’ of vulnerable workers, including young people and foreign workers. The FWO has also announced that it is seeking to forge close relationships with unions, in an effort to access greater intelligence regarding wages and conditions from the ‘coalface’.6

Further, as contingent employment and the demand for a flexible workforce grows steadily in 2015, alternative work arrangements (including labour hire arrangements, contracting arrangements, and part time and temporary positions) are likely to continue to be a key focus for regulatory agencies and unions.

In the face of increased regulatory scrutiny and litigation, companies will need to allocate significant resources to compliance issues (including through maintaining up to date policies and procedures).

4. Trends in mining and resources sector

With major restructuring occurring across many industries in 2014, there are likely to be further structural changes in 2015. While last year’s dramatic manufacturing sector announcements (such as the closure of Holden, Ford and Toyota vehicle manufacturing plants) may not reflect the likely changes in the mining and resources sector during 2015, there is much pessimism across this sector.

Confidence in the mining and resources sector is particularly low due to vulnerability to market conditions including low commodity prices, escalating costs, fluctuating currency rates, a highly regulated operating environment and global competition.

Further restructuring and consolidation is expected as the industry continues to focus on cost management, operational efficiencies and improved productivity.

Employers will continue to evaluate and restructure their workforces in an effort to reduce operating costs and boost sliding productivity, including utilising alternative arrangements such as off-shoring and contingent workforces where possible.

In this context, intense lobbying by industry for workplace reforms (including regarding bargaining, agreement-making and right of entry laws), deregulation and government assistance will feature strongly in economic policy debate.

5. Heydon Royal Commission into Trade Union Governance and Corruption

The hearing of the Heydon Royal Commission and release of its final report later this year will be the subject of intense political, public and media scrutiny.

The Heydon Royal Commission Interim Report (which was released in December 2014) recommended criminal charges against the CFMEU, HSU and AWU and more than 20 named union officials, for conduct including blackmail, intimidation and coercion.7

A separate volume of confidential material involving serious criminal conduct (including threats to witnesses) has been referred to a specialist Police taskforce for consideration.

The final report, which is due in December 2015, is expected to result in further findings of widespread corruption on the part of unions and others, and will likely recommend further criminal prosecutions, tougher criminal sanctions for union misconduct and changes to union governance arrangements.

6. Workplace Bullying

Despite a lower than anticipated number of claims filed in the Fair Work Commission over 2014, and an unexpectedly low number of orders being made, bullying will remain a high profile and resource intensive issue for business and HR practitioners over the coming year.8

Notwithstanding the inability of employees to seek compensation and damages through the Fair Work bullying jurisdiction, bullying claims remain a strategic lever of choice for employees to pursue various agendas including workplace change and advantageous exit packages.

The scope and reach of the jurisdiction is continually being tested by unions and employees, with the Fair Work Commission recently rejecting employee claims to interpret the provisions broadly.9 The use of social media in this context also continues to present challenges for business.

Employers will continue to invest significant resources into policies and training as internal HR processes are subjected to increasing levels of external scrutiny.

7. Drugs and Alcohol in the workplace

Employers face a myriad of ever-increasing safety regulations, and the challenge of ensuring that they have in place appropriate policies and systems to manage issues arising from use of drugs and alcohol by employees.

Rising issues of substance dependency (including methamphetamines), particularly in regional areas, has reinforced the need for many employers to have appropriate testing mechanisms in place to ensure work is performed safely.10 Given recent Government and regulatory interest in this issue, employers who have to date deferred introduction of testing regimes (due to union and privacy concerns) are expected to invest significant resources in implementing such regimes.

Whilst employees will continue to challenge dismissals for substance abuse, the Fair Work Commission has shown a recent propensity to support management prerogative, particularly where an employee does not perform a ‘safety critical role’, or where the reputational risk to business as a result of a positive test is not significant.11

Navigating the line between management of safety concerns and protection of employees’ rights will continue to present significant challenges for employers. Future litigation in this area will likely focus on consultation requirements, privacy obligations and the legitimacy of disciplinary action and dismissals.

Wrap up: Where to from here?

There is no doubt that we will continue to see a reshaping of employment law over the course of 2015. Workplace relations is placed to be a key issue throughout 2015 and in the 2016 Federal election.

This article was written by Tony Wood, Partner and Karli Evans, Senior Associate, Melbourne.