A ‘root and branch’ inquiry into Australia’s workplace relations framework has commenced.


In December 2014, and in accordance with the Coalition’s policy prior to the 2013 Federal election, Treasurer Joe Hockey kicked off a broad inquiry by the Productivity Commission (PC) into the workplace relations framework.

The inquiry will examine the current operation of the workplace relations framework (including the Fair Work Act 2009 (Cth) (Act) and the Independent Contractors Act 2006 (Cth)) and identify future options to improve the framework ‘bearing in mind the need to ensure workers are protected and the need for business to be able to grow, prosper and employ’.1

For those nervous about another round of employment law changes, Employment Minister Eric Abetz has stated that the Government will consider all of the recommendations put forward by the PC, and will not seek to legislate any of the recommendations prior to the 2016 election.2

The focus of the PC inquiry 

In January 2015, the PC released five Issues Papers setting out the focus of the inquiry and inviting public submissions from interested stakeholders. The scope of the inquiry is broad. Key matters under the microscope include:

  • Safety nets - including minimum wages, penalty rates, Modern Awards and the National Employment Standards.

  • The enterprise bargaining framework - including the operation of the better off overall (BOOT) test, greater emphasis on productivity for approval of enterprise agreements, good faith bargaining obligations and the practical use and value of individual flexibility agreements.

  • Processes for initiating and ending industrial action and the types of industrial action available for employers (currently limited to lockouts in response to employee action).

  • The role of the Fair Work Commission and Fair Work Ombudsman:  In particular, the experiences of employers, employees and organisations with the Fair Work Commission and Fair Work Ombudsmen and whether there is any need to change the roles and processes of these bodies. 

  • Individual arrangements and the regulation of alternative labour (such as independent contractors, labour hire and foreign workers).

  • Employee protections, including unfair dismissal (and its impact on productivity), anti-bullying orders and general protections claims.

  • Competition law:  The operation of competition law and its relevance to industrial legislation and the issue of secondary boycotts.

Although the Issues Papers paint the picture of a broad inquiry, early signs from the media attention surrounding the PC inquiry are that the following issues will be a key focus for stakeholders:

1. The Safety Net - minimum wages and penalty rates

  • The PC is seeking submissions on the best process for setting the minimum wage and whether the minimum wage should vary by region.

  • Penalty rates will also be scrutinised.  The PC notes in the Issues Papers that, although additional payment for overtime and shift work is not overly contentious, views are polarised on the need for weekend penalty rates. The PC has raised the prospect of penalty rates being calculated differently, replaced by time-off-in-lieu, or being determined by the market. 

  • To date, the potential review of minimum wage and penalty rates has attracted controversy.  By way of example, National Secretary of the Transport Workers’ Union Tony Sheldon wrote recently that consumer spending would reduce if ‘the government unleashes its attack dog the Productivity Commission to cut the minimum wage, scrap extra pay for Sunday and bank holiday pay and attack workplace rights’.3

2. Independent contractors

  • Another key issue will be the inquiry’s potential impact on independent contractors.  The PC is seeking submissions on whether the current industrial relations framework is a ‘barrier’ to independent contractors, and whether there should be a statutory definition of ‘independent contractor’. 

  • Although it unclear how the PC will address this issue, there appears to be support for greater freedom for business to engage contractors.  Recently, small Business Minister Bruce Billson stated that he will pursue more flexible rules for companies to negotiate and engage skilled workers as independent contractors.4

3. Bullying and WHS laws 

  • Although the inquiry’s terms of reference do not permit the PC to examine in detail specific workplace health and safety laws, the terms of reference do permit consideration of the general impact of the workplace relations system on workplace health and safety.

  • The PC has noted that significantly fewer than expected anti-bullying applications have been lodged, and that many stakeholders find the anti-bullying regime to be ‘confusing and complex’.  Given that the PC partly attributes that confusion to an overlap with workplace health and safety laws, and has signalled potential ‘consolidation’ across the different employee protections, it may be that the PC will recommend a simplification of, or a reduced scope to, the anti-bullying regime.

Process from here

From here, the timeframes for the PC inquiry are as follows:

Click here to view the table

Employers wishing to participate in the PC inquiry can make written submissions or otherwise provide comments about workplace relations matters on the PC website

While the PC inquiry is in its infancy, it is already becoming evident that because of the broad nature of the inquiry, there will likely be recommendations for future change to the FW Act.  If, when and how such recommendations are actioned does, however, remain to be seen.