Key Points:
Improving workplace productivity requires a flexible, multi-faceted approach
How we achieve real productivity growth is one of the biggest economic challenges facing Australia.
But what does productivity actually mean in the context of a modern workplace? And what exactly is the issue we are trying to address?
Improving workplace productivity is more complicated than simply tweaking with or even significantly changing industrial relations laws. It needs employers, employees, unions and government to agree on what success looks like, and work together towards that common goal. That means a flexible, multi-faceted approach that reflects the realities of the modern economy while also retaining the proper protections for workers.
A good first step would be for Federal Government to legislate to prohibit the inclusion in enterprise agreements of clauses that unreasonably restrict an employer's ability to manage employee performance and conduct, or engage independent contractors. Some enterprise agreements contain detailed provisions requiring employers to give three warnings before taking any disciplinary action against an employee, who is also entitled to representation during the entire disciplinary process. These are not rights enshrined in industrial law. Similarly, many employers are unreasonably restricted in their ability to use contractors, even in circumstances where there are sound business reasons.
Such restrictions exist on top of laws such as the new workplace bullying laws introduced on 1 January 2014. While well intentioned, these new laws expose employers to claims who have simply been exercising their legitimate rights to manage an employee's performance or conduct.
This is not to suggest that employees who lack genuine bargaining power should not have their legitimate interests protected by law. What is more difficult to accept is that employees can effectively hold their employers to ransom to maintain unreasonably generous employment conditions when the business is underperforming or on the verge of collapse.
The barriers to productivity are not limited to legislative restrictions or enterprise agreements. One significant barrier is the result of employers themselves failing to equip their managers with the tools and support to effectively manage employee performance and conduct. Open, transparent and sensitive people and performance management processes are critical to fostering a healthy, productive workplace. Productivity is unlikely to be a feature of a work environment in which poor performance and poor behaviour goes unchecked.
Wage increases should also be linked to productivity gains. In the late 1980s, the national wage case and the Hawke / Keating Wages Accord proved to be a turning point in Australian industrial relations. If employees/unions and employer could not demonstrate a 4% increase in productivity gains through changes to the EBA/workplace, the Industrial Relations Commission could not approve such an agreement. It is time for a return to this collaborative, co-operative approach with a requirement to actually demonstrate (not simply discuss) real productivity and efficiency changes to justify wage increases.
Similarly, the argument for retaining penalty rates makes little sense when many businesses now trade 7 days a week and many people want to work flexibly and outside the traditional 9am-5pm, Monday to Friday working week. This argument is not about cutting working conditions or wages. Rather, it is adapting working conditions and hours to reflect the modern work environment.
Australia can no longer afford to be stuck in the past. Ultimately we will only improve productivity by working towards a common goal. That means employers, employees, legislators and unions finding common ground. The country's future depends on it.
Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.
