On 18 December 2015, the Commonwealth Government released the Productivity Commission’s final report regarding proposed changes to the workplace relations framework in Australia.

What is the report about?

The report was the product of a 12 month long inquiry into perceived deficiencies in the current system, requiring the Productivity Commission to consider numerous submissions from diametrically opposed stakeholders.

What did the Productivity Commission recommend?

The Productivity Commission concluded that the current system was not “dysfunctional” and ultimately did not recommend a replacement system.  However, it did concede that some repairs were needed.

The Productivity Commission offered a range of recommendations, including:

  • Reducing Sunday penalty rates: Sunday penalty rates in hospitality, entertainment, and retail sectors should be aligned to time-and-a-half Saturday rates, creating a weekend rate for each industry.
  • Establishing the Workplace Standards Commission: The role of determining minimum wages and awards would be given to a new body, called the Workplace Standards Commission, with the FWC left to concentrate on tribunal and administrative functions.
  • Introducing enterprise contracts: medium-sized businesses should be able to enter into ‘enterprise contracts’, offering greater flexibility in varying awards.
  • Replacing the “better off overall test”: A ‘no disadvantage’ test should be introduced in lieu of the current ‘better off overall’ test, to make agreement-making less costly and less ambiguous.
  • Introducing a tougher test for sham contracting: The threshold test for sham contracting should be lowered, to make it harder for employers to escape prosecution for breaches of the Fair Work Act.

What will the Government do next?

The Government has stated that any changes it proposes to the Fair Work framework will be considered in light of the Productivity Commission’s report, but no decision has been made as to which, if any, of the Productivity Commission’s recommendations it will adopt.  The Government has flagged that any changes it does propose will be taken into the 2016 election.